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India’s excess grain stocks worth Rs. 50,000 crore: expert

Reducing them is crucial for reducing inflation, fiscal deficit

India is holding excess foodgrain stocks worth nearly Rs. 50,000 crore, over and above the stipulated buffer limits, according to experts. At close to 49 million tonnes, the stocks are more than twice the norm, former chairman of the Commission for Agricultural Costs and Prices (CACP) Ashok Gulati told The Hindu .

The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi on Friday reduced the norm for January 1 to 21.41 million tonnes from 25 million tonnes with the aim of better management of food reserves in the country. Reducing excess stocks is crucial for reducing both inflation in foodgrain prices and the Centre’s fiscal deficit.

Mr. Gulati said the Modi government had taken a decision four months ago to reduce the excess holdings. However, it was able to offload less than 2 million tonnes from the 15 million tonnes (10 million tonnes wheat and 5 million tonnes rice) to be liquidated, said Mr. Gulati.

“What is the point of announcing new norms if you are sitting over a heap of foodgrain that is well above the old limits… there is no rationality in India’s food stock holdings,” Mr. Gulati said adding that the excess reserves are worth Rs. 50,000 crore.

Ahead of recommending the new buffer stocks norms to the CCEA, the Food Ministry had consulted experts from various fields, including Mr. Gulati.

Besides revising the buffer norms, the CCEA also decided to offload excess stocks through open market sales or exports. An inter-ministerial group, comprising the Food Secretary, Consumer Affairs Secretary and Revenue Secretary, will work out the strategy for offloading the excess stocks to contain inflation and reduce storage costs.

The revised buffer norm for April 1 is 21.04 million tonnes of wheat and rice as against the present 21.2 million tonnes. For July 1, it is 41.12 million tonnes as against 31.9 million tonnes. On October 1, the stock should be 30.77 million tonnes as against 21.2 million tonnes and on Jan. 1, it should be 21.41 million tonnes as against 25 million tonnes.

The buffer will include five million tonnes of strategic reserves of wheat and rice. The proposal is to upgrade the quarterly buffer requirement to bring it in line with the distribution needs under the National Food Security Act.

As much as 61.4 million tonnes of foodgrain is required a year for welfare schemes — Antyodaya Anna Yojana and for the provision of 5 kg to each member of a priority household under the National Food Security Act.

Norms for buffer stocks had not been revised since 2002, while the stocking of strategic reserves for calamities and so on has been done since 2005.

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