Panel unlikely to set cap for FCI purchases

new delhi: a proposal that a long-term timeframe for capping foodgrain procurement by fci be outlined by the buffer stocking committee is set to die a quiet death, thanks to the politician’s reluctance to bell the cat. the proposal has come up before the panel going into the norms for 2002-2007. specifically, it means amending government directives that shape the fci act. this says that a satisfactory buffer is to be maintained keeping the food security aspect central in mind. at present, the wording in act reads “minimum� buffer stocks. this, together with the removal of the market borrowing cap of the fci last year, are the moves which permit the unending procurement of foodgrains under political pressure. in short, it is these that have led to the ballooning food subsidy bill. the current proposal is that a timeframe be outlined for amending the “minimum� buffer stock provision to a “maximum� buffer stock. this should be done in tandem with the firm establishment of the private sector in the bulk handling, storage and transportation sectors and in tandem with moves to dismantle the msp scheme. “the underpinning logic is that these developments should move in tandem, in order to prepare the procurement states well for an identified period in the future when the centre’s role in food management is well pruned. the cap on fci procurement can go into effect at that time,’’ sources held. the proposal is also that, to help the private sector in exports, the centre should free them from state taxes, give them subsidises directly and permit them to credit to purchase foodgrain for export from banks at a lower interest rate. this should be at the same rate as central government borrowing, which is at prime rate of 9 per cent. foodgrains should be given priority in berthing on railways and roads, next only to defence, it is felt. the proposal acquires significance against the background of fci’s bursting godowns as well as the gravity-defying food subsidy bill. the buffer carrying costs alone total 42 per cent of the total food subsidy, which is rs 13,670 crore in all. the fci’s own storage capacity is only 15.6 million tonnes. but thanks to the huge foodgrain stock procured by the government — the lucrative msp set by it has ensured that the centre is the biggest buyer of foodgrains — fci has to had to hire another 15 million tonnes of storage capacity just to park the foodgrain it has procured. the only other development likely to ameliorate the subsidy issue is if states adopt procurement decentralisation. thus far, only three states have done so: mp, west bengal and up. just this alone has meant a saving of rs 200 crore for the centre. the figures are enough reason for the government to consider a long term procurement capping suggestion, particularly in the context of its macro objective of eliminating its own role in foodgrain management. but the msp dismantling suggestion, as in the procurement cap proposal, will all likelihood be axed by the political class.