Centre has asked Punjab to reconcile its food accounts: Ram Vilas Paswan

NEW DELHI: The Centre has asked Punjab to reconcile its food accounts, and an official committee is examining the matter, food minister Ram Vilas Paswan said in response to ET’s report that RBI had asked banks to take a hit because the state’s loans for buying grain were not matched by actual food stocks.

Paswan, who is scheduled to visit Punjab this week to discuss issues related to procurement, said his ministry also wanted to make sure the state has adequate credit facilities so farmers do not suffer. Farmers depend heavily on national grain procurement agency Food Corporation of India (FCI) and state agencies to sell output at an attractive price fixed by the government.

“There’s a committee already looking into Punjab reconciliation issues. A finance ministry officer heads the committee and officials of State Bank of India, other banks, joint secretary food procurement and officials from the Food Corporation of India are members,” Paswan told ET.

Officials said Paswan will be in Chandigarh on Monday and is scheduled to meet Punjab food minister Adesh Partap Singh Kairon and FCI officials. “The food minister will be visiting Asia’s biggest grain market, Khanna mandi, along with the ministers and senior state officials on Monday,” said a Punjab government official. Officials said they have yet to raise loans from consortium of banks to meet working capital requirements for this season.

Of the 30-million tonne procurement target by FCI and states, Punjab is expected to procure 11 mt. Minimum support price (MSP) for wheat has been fixed at Rs 1,525 per quintal this season. Paswan said he wants to ensure the interests of farmers are protected. “To protect farmer’s interest we've been writing to the finance ministry to ensure sufficient cash credit limit to the state of Punjab,” he said.

The Reserve Bank of India has asked banks to make provisions for loans taken for food procurements but not matched by actual stocks. This could burn a hole of Rs 12,000 crore in bank books, already stretched by astronomical bad loans in industrial sector. The Punjab government, however, denied any disappearance of stocks and said all foodgrains procured over the years have been duly accounted for and handed over to FCI through well-documented audited transactions. The controversy comes just as farmers are harvesting wheat.