Brimming granaries and begging bowls

While a majority of the people are undernourished, with some even dying of hunger, the Government is sitting on a mountain of grain. Gargi Parsai reports.

IT IS with a certain measure of embarrassment that the Union Food Ministry officials tell you that foodgrain stock in the Central pool reached 510 lakh tonnes on June 1. The discomfort stems from the recognition that while a majority of the people are undernourished, with some even dying of hunger, the Government is sitting on a mountain of grain, part of which is rotting in godowns.

With the ongoing rabi (wheat) procurement having crossed 200 lakh tonnes, the stock is expected to touch 600 lakh tonnes by July as against a minimum buffer norm of 243 lakh tonnes on July 1. As of now, the glut does not augur well for offtake in the Public Distribution System (PDS) where the issue price of rice and wheat is higher than in the open market. The offtake is almost nil in the above-the-poverty-line (APL) population segment and about 55 per cent in the below-the-poverty-line (BPL) category.

For quite some time now, the Food Ministry has been grappling with the question of how to dispose stocks without adding to the food subsidy bill, budgeted at Rs. 13,675 crores this year. On the one hand is the requirement of not lowering the issue price of grain in the PDS, so as not to add to the subsidy, and, on the other, is the compulsion to raise the minimum support (procurement) price (MSP) payable to farmers for wheat and rice every season. In between is the issue of the market rates having dipped lower than in the PDS in keeping with the general downward trend in grain prices internationally after food and agriculture trade came under the World Trade Organisation (WTO) regime.

But, it must be pointed out, broadly the reasons for a poor offtake from the PDS are the poor quality of grain, the lack of purchasing power with the BPL segment, the poor delivery system in States, the high cost of grain for the APL segment and the lack of monitoring by the Centre to ensure effective distribution. Even under the food-for-work programme, the employment opportunities for the poor are limited, the payment lopsided, and there are complaints of diversions.

The Food and Consumer Affairs Ministry has moved a proposal to reduce the issue price (CIP) of grain for better offtake and to lower stocks by an additional 75 lakh tonnes. It entails an additional subsidy of over Rs. 3,000 crores but a reduction in storage costs of about Rs. 1,500 crores at last year's average offtake of 60 per cent. The net addition to the bill thus will be around Rs. 1,500 crores, pegging the total subsidy at about Rs. 15,000 crores. The proposal awaits the return of the Prime Minister, Mr. Atal Behari Vajpayee, from Mumbai and the approval of the Union Cabinet.

Broadly, the idea is to reduce the issue price for APL families to 75 per cent of the economic cost and round off the sale price at about Rs. 6.20 per kg for wheat and Rs. 8.50 per kg for rice. For the BPL families, the rates are proposed to be reduced by Re. 1 per kg (to 40 per cent of the economic cost) to Rs. 3.15 for wheat and Rs. 4.65 for rice. At present, the APL rate is Rs. 8.30 for wheat and Rs. 11.30 for rice. The current BPL rates are Rs. 4.15 for wheat and Rs. 5.65 for rice.

The proposal is based on the interim recommendations of the High Level Committee on Grain Policy chaired by Prof. Abhijit Sen, former Chairman of the Commission of Agriculture Costs and Prices (CACP). The Committee has recommended that the APL population be brought into the PDS net by reducing the issue price of grain to either 75 per cent of the economic cost including statutory levies or to 80 per cent of the economic cost excluding levies. The BPL price should be 50 per cent of the economic cost excluding levies.

The Food Ministry has also taken up with the Finance Ministry the Committee's observation that the payments made by the FCI on the statutory levies imposed by States on purchase of grain - totalling 12.5 per cent of the procurement price - were essentially transfers from the Centre to State Governments and should be taken as such. The Committee has recommended elimination of such levies on grain.

The Committee frowned upon the tendency of grain-producing States to get the quality norms relaxed from time to time. It said the Fair Average Quality norms should be adhered to; failing which any relaxation of quality norms should be accompanied by appropriate MSP reduction, besides exemption from statutory levies.

The Targeted PDS now has three components, tailored to enhance offtake. The APL, for whom 105 lakh tonnes have been set aside, the BPL, with an allocation of 124 lakh tonnes, and the Antyodaya (one crore poorest of the poor), 30 lakh tonnes at Rs. 2 a kg for wheat and Rs. 3 a kg for rice. Besides this, 15 lakh tonnes have been distributed under the food-for-work programme, 25 lakh tonnes have been allocated for the mid-day meal scheme and about 3 lakh tonnes given under the Annapurna scheme for the destitute elderly and the wheat-based nutrition programmes.

Significant progress has been made in the export of grain, albeit at subsidised rates. This year, 50 lakh tonnes of wheat and 30 lakh tonnes of rice are proposed to be exported. Already 30 lakh tonnes of wheat has been contracted, the rejection by Iraq notwithstanding. Export rates are lower than even the open market price, ostensibly to be competitive in the international market. It is ironical that international buyers get them at cheaper rates than domestic consumers.

Despite burgeoning food stocks and growing demands, the Government has been slow in bringing the APL segment back into the PDS net. Under the economic restructuring agenda of the World Bank and the IMF in the early 1990s, the APL segment was nudged out of the system by 1996. Apprehensions about poor delivery systems, diversions and lack of proper monitoring to ensure that the grain actually reached the targeted poor were ignored. The ad hocism that marked the food policy then remains.

The FCI, a mammoth body with 66,000 employees, is the central agency involved in procurement and distribution of grain. It is admittedly full of inadequacies - storage and distribution losses and corruption at several levels. Yet, when the Centre recently moved to take away the task of procurement and distribution from the FCI, almost all States protested saying they lacked infrastructure and resources to take over.

The Government's move to privatise bulk handling and storage of grain has also raised questions whether it will pave the way for dismantling of the FCI and entry of multinational seed and grain giants such as Monsanto and Cargill to handle India's food security.

The fears are baseless, the Food Minister, Mr. Shanta Kumar, told TheHindu when asked specifically. He said the aim of decentralisation was to make available better quality grain locally, and to maintain a minimum buffer stock with the FCI for non-grain-producing States.