States may resent decentralisation

By Gargi Parsai

NEW DELHI, MARCH 9. The Centre's attempt to cut the food subsidy bill by decentralising procurement for the Public Distribution System (PDS) is not likely to go down well with the States, already facing a resource crunch.

The move to decentralise procurement had been initiated before the budget as a policy of the Food Ministry. In fact, the Food and Civil Supplies Minister, Mr. Shanta Kumar, had written to the States seeking their cooperation. Only Uttar Pradesh, Madhya Pradesh and West Bengal responded, whereas the move is targeted more at initiating food-growing States such as Punjab, Haryana, Andhra Pradesh and Orissa to procure their own requirements.

The idea was to have the States produce, procure, store and distribute their requirement of foodgrains, and hand over the surplus to the Food Corporation of India for buffer stocking. Only Uttar Pradesh, Madhya Pradesh and West Bengal have been procuring their grain. But after the budget announcement by the Finance Minister, Mr. Yashwant Sinha, to allow the States to make their own procurement, States such as West Bengal have already started crying foul. Others have alleged that the ``Centre is shirking its responsibility''.

However, the fact is that last year the Centre has had to bear a subsidy of nearly Rs. 700 crores for procurement by the States. The subsidy is the difference between the Central issue price and the economic cost. The subsidy to Uttar Pradesh was about Rs. 400 crores, to Madhya Pradesh about Rs. 70 crores and to West Bengal about Rs. 100 crore.

Uttar Pradesh procures both rice and wheat on its own. West Bengal procures rice and buys partly from Chhatisgarh. Madhya Pradesh procures wheat on its own, but buys its rice requirement from the Centre. Tamil Nadu is another State that procures its own requirement.

Sources in the Food Ministry said the measure was being initiated to reduce the economic cost of handling foodgrains by the Food Corporation of India, encourage procurement of quality grains, ensure distribution of local preferences of foodgrains in the PDS and rid the FCI of demurrage costs on transportation.

The proposed step is also an attempt by the Centre to get out of the political arm-twisting by food- producing States to procure sub-standard grains that nobody wants to lift.

In the post-budget scenario, the Ministry is reviewing its internal policy to work out the modalities. However, the crunch lies in the fine-print of the budget declaration which says: ``FCI will continue to procure foodgrains for maintaining food security reserves and for such State Governments who will assign it this task on their behalf.''

For the moment, it seems all State Governments will want the FCI to procure for the Public Distribution System.

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