Taking part in discussions with Bharatiya Janata Party (BJP) parliamentarian Shanta Kumar, who is heading a committee to give suggestions on unbundling of the Food Corporation of India (FCI), Punjab chief minister Parkash Singh Badal has said the agency should procure its allotted share of foodgrain, which it has reduced drastically in recent times.
FCI has, as its allotted share 20% of wheat and 10% of paddy production, but it procures around 15% of wheat and about 5% paddy. Badal also said unbundling of the FCI should benefit farmers and consumers and ensure smooth procurement of foodgrain through public distribution system (PDS). Badal also asked Kumar, who is on two-day tour to Punjab, to devise a formula to rationalise the FCI’s storage charges.
Why the unbundling
The present NDA government decided to unbundle FCI as it is under debt and its efficiency is under the scanner. The Shanta Kumar committee is expected to submit its report by December 31 and that is expected to give the FCI a new look by the beginning of the next Kharif season.
The FCI has a credit limit of `55,000 crore, of which `41,000 crore has been availed of. Over and above this, they have raised `17,000 crore by selling bonds and `12,000 crore is taken as loans to pay for wages and this means the agency has a total outstanding of `70,000 crore.
The FCI has a credit limit of `55,000 crore, of which `41,000 crore has been availed of. Over and above this, they have raised `17,000 crore by selling bonds and `12,000 crore is taken as loans to pay for wages and this means the agency has a total outstanding of `70,000 crore.
On an average, the FCI every is `200 crore loss a year from storage, and a same amount while transporting food grains.
Kumar had hinted that the corporation with an annual outlay of `2-lakh crore could be split into four companies to separate procurement, transportation, storage, and distribution.
Badal also suggested that a mutually agreed Memorandum of Understanding (MoU) must be signed between the FCI and the state government in advance of the procurement season, fixing obligations and rights of both the stakeholders in detail. Badal added that the MSP mechanism must not be done away with abruptly until a self-sustaining mechanism of income support to farmers is introduced.