New Delhi: The economic survey on Wednesday called for redesigning the food security framework terming the current regime as fiscally unsustainable.

Economic cost of rice and wheat at Rs 1,262.51 and Rs 924.82 a quintal this fiscal up from Rs 1074.80 and Rs 887.51 a quintal respectively in 1999-2000 is much higher than their purchase price.

"The fiscal unsustainability of providing food security through buffer stock operations is becoming increasingly evident", it said, adding, "carrying cost of buffer have been rising substantially in recent years, currently accounting for about 25 per cent of the food subsidy bill."

Storage losses are high, procurement incidentals, distribution and administrative cost, together with the carrying cost form a very high proportion of the actual purchase cost of grains, making it imperative to redesign the food security framework.

In the last two years, foodstocks have been used as a principal resource for poverty alleviation programmes under welfare schemes. In the long run, with resources currently being spent on holding stocks, it should be possible to eliminate hunger.

The survey said there should be restrain on hike of grains MSP till it equals 'C2' cost of production of the least cost state.

There has to be rationalisation of the existing high level of state levies on grains. The proposal to announce a procurement price inclusive of four per cent state levies in lieu of the MSP, needs to be pursued, it said.

It pointed out that mid-day meal scheme and the Sampoorna Gramin Rozgar Yojana were the two major welfare schemes that absorbed a substantial off-take of grains.

Resources spent on holding stocks can be used to make a significant dent on the current appalling levels of malnutrition among the country's children and augment the quality of human resources.

With rising acquisition cost of both rice and wheat, the Survey said there was no alternative to decentralised procurement operations to help save transport cost and reduce overall economic cost.

State governments and private trade need to be included in grains trade, covering procurement, storage and exports, and all barriers to private trade, economic as well as legal should be removed.

Assam, Tripura, Orissa and Andamans have evinced interest in DPO. Reservations expressed by states for its adoption must be addressed to persuade more states to go for this cost-effective system.

Under DPO, instead of FCI procuring grains, states carry out the operations locally and are paid the difference between the economic cost and the Central Issue Price as subsidy. It has been introduced in a limited way in Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh.