SYSTEMATIC DEFICIENCIES IN INDIAN FOOD SECURITY BILL PART 4

A-Z OF INDIAN FOOD SECURITY BILL/FSO

Part 4

TEJINDER NARANG

SYSTEMATIC DEFICIENCIES

Due to anticipation of FSB/FSO for last four years, about 77 million tons (mt)-( $38 billion)- of grains are hoarded in June 2013 under the supervisory control of Food Ministry. Off take has been lower than allocations—indicating demand/takers of subsidized grains are absent, while the Government is thrusting excessive procurement and storage irrationally (ref. charts below). With tightness in the market, 10% average rate of cereal inflation annually in consumer prices (in May2013, 15% in rural areas &21% in urban areas) should not come as a surprise.  Role of private trade stands marginalised by the nationalisation of grain acquisition policies, while the right way forward will be for more participation of private trade and less of Government.

 As of June, buffer norms mandate storage of 32mmt. CACP estimates 47 mt will be adequate under FSB/FSO . In July 2013, surplus of( 77-47)= 30mt ($12 billion) is the sunk cost that needs to be salvaged to fill in twin deficits—CAD and fiscal. 11million tons out of 16million tons of new wheat crop of 2013-14 is exposed to rain in CAP warehousing in Punjab and Haryana. 

Comptroller and Audit General (CAG) in its Performance Audit (2007-12) of Storage Management and Movement of Food Grains in Food Corporation of India (FCI) has underscored  some of the major systematic deficiencies  in Public distribution System(PDS)  in its 7^th report of 2013.  Off-take/lifting of food grains during 2007-12 were 70-80% of the allocations made by the Central Govt. This shows lack of real demand and that the allocations are overestimated by Union Government. Even lower procurement by FCI/agencies is more than sufficient as lifting is much less than the tonnages acquired, replies the Government. Implications--There is a gross overestimation of demand by the policymakers, leading to aggressive procurement, creating shortages the market and fuelling food inflation. There could be hyper overestimation under FSO that may lead to larger unused inventories and wastages.

STORAGE SPACE LACKING

Storage space of about 53 mmt including 4 mmt in CAP (covered and plinth) AND  in horizontal warehouses in highly inhospitable conditions combined with consistent fumigation makes the grain vulnerable to damage and deterioration. Vertical steel silos/elevators with environment control are about only one mmt.  Uncongenial storage is the major challenge required to appropriately operationalize this bill. Response from the Food Ministry is that states are required to create matching adequate infrastructure!!! States require funds and tendering procedures compliance for such constructions and to avoid rampant corruption charges. So the game of shifting onus continues.

ABSENCE OF FOCUSED ACCOUNTABILITY

CAG observes that under  the  existing    policy,  the  total  tonnage  of  food  grains  stocked  by  FCI/  State Governments/their agencies and paddy/rice held by private millers   constitutes  the  Central  Pool. In  practice,  the  indicated  stock  in   Central  Pool  may  not  be  factually available for distribution at a given point of time due to involvement of multiple agencies. CAG therefore points to strong possibilities of mismanagement, theft, pilferages, damage/destruction to the cereals and recommends “single point accountability” of FCI—which is imaginatively impossible under FSB/FSO due to each state having its own agenda of decentralised/non decentralised procurement and distribution. The message of CAG to the Government and visionaries of FSB/FSO is “Doctor heal thyself”. Some of the flaws, even if attempted to be remedied after promulgation of the FSO, cannot be eliminated because  “States” are not necessarily willing to comply with Central directives because of coalition politics of diverse political spectrum.