Options before government to address the food-grain storage problem

Food Corporation of India’s policy of allowing states to procure grain on its behalf has opened a Pandora’s box.

Now, all grain-producing states have begun to play the minimum-support price card, buying record quantities and passing them on to FCI, creating a storage problem for the agency.

ET looks at the options before the government:

What will the government do now?

1) Build more warehouses.

2) 15 million tonnes capacity will come up under a new scheme.

3) Sell more through targeted public distribution system.

4) Push exports by giving subsidy.

Why could this strategy fail:

1) More food in ration shops bloats subsidy bill

2) For export subsidy, quantum has to be fixed by Rangarajan panel. If the figure is too high, finmin may refuse.

3) Poor returns keep private investors at bay.