The outbreak of the coronavirus has thrown up an opportunity for the central government to make a virtue of necessity — the pandemic is coming in handy for the overweight national granary to shed some of its flab.
For long, the Food Corporation of India (FCI) is maintaining a stockpile that is way above the buffer norm requirement set for the corporation. While preserving food grain is itself a headache, the bigger worry is the rising cost of maintaining such a huge stock. Higher inventory means higher storage and financing costs for the FCI and a higher food subsidy bill for the Centre.
Spooked by the apprehension that the once-in-a-century health crisis may lead to a rush among consumers to hoard essential commodities, the government has proactively decided to increase grain supply through fair price shops, thereby somewhat easing the burden of excess stock on the national granary.
While unveiling the Rs 1.7-lakh crore Pradhan Mantri Garib Kalyan Package on Thursday, finance minister Nirmala Sitharaman announced that the Modi government has decided to provide 80 crore poor people 5 kg wheat or rice and 1 kg of preferred pulses for free every month for the next three months. Though not explicitly mentioned, these 80 crore are the beneficiaries under the National Food Security Act (NFSA) who, at present, get 5 kg of subsidised food grain through ration shops.
The distribution of food grain would obviously be done by states. In February, the states were allocated 4.55 million tonnes (mt) of wheat and rice under the NFSA, of which states have lifted around 4.42 mt, that is almost 97 per cent. That apart, grains are being allocated for distribution under other welfare schemes, that include the mid-day meal programme, the Integrated Child Development Scheme, and defence forces. India annually distributes around 55-60 mt of wheat and rice among beneficiaries of its welfare schemes through its network of ration shops across the country.
While states have been allowed to lift more from the FCI godowns, Ram Vilas Paswan, who is the Union minister of consumer affairs, food and public distribution, has said around 80 crore beneficiaries under the public distribution system will be allowed to lift their quota of subsidised food grain for six months in one go. According to the Union minister, beneficiaries are lifting food grain in advance for a maximum of two months, while the Punjab government is already distributing six-month quota in one go.
“We have enough food grain in our godowns. We have asked state governments and Union Territories to distribute six-month quota of grains to the poor in one go," Paswan said.
The minister’s view on the stock position is echoed by FCI chairman D.V. Prasad. According to Prasad, India will have enough food grain stockpiles to feed its poor for at least a year-and-a-half as the reserves are likely to balloon after record harvests this year. Going by his estimate, the country will have 100 million tonnes in warehouses across India by the end of April compared with an annual requirement of 50 million to 60 million tonnes under various welfare programmes for the poor. India is likely to produce record 292 million tonnes of food grain in 2019-20.
All these statements from government officials give us the assurance that there is enough food stock in the granaries to ensure steady supply and keep prices stable during this crisis period.
However, the haste on the part of the government to step up food grain supply has much to do with the fact that the FCI is saddled with excess wheat and rice stock. With some of this lying in the open, the national granary is under pressure to clear the stock before the southwest monsoon, which can damage the grain.
Paswan admitted as much when he said the lifting of more food grain in one go will ease pressure on central storage as some quantity of wheat is kept in the open. Experts, however, point out that while the FCI, burdened with excess stock, is eager to offload, fair price shops may not have enough space to store the increased supply.
Given the storage headache of the FCI and other related issues, many economists in the past had recommended certain measures, that included the gradual withdrawal of the government from the open-ended procurement of wheat and rice, to put the corporation back in shape. Critics of such a proposal are quick to cite the current situation to underline the danger of tinkering with the present food procuring system.
Definitely there is an immense need for food security in a country that ranks 102nd in a list of 117 countries and the role of the central government and its agencies are paramount in this regard. At the same time, the FCI should not simply wait to cash in on catastrophes to offload excess stock and stay fit. There’s definitely food for thought.
Abhijit Kumar Dutta is a freelance writer. Views expressed are personal.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
