Procurement: Centre’s curbs force Punjab to streamline system

Officials overseeing paddy and wheat procurement in Punjab say the curbs were in the offing for a few years because discrepancies in the system were hitting the state’s finances severely
The Punjab government was caught off guard when the Centre restricted paddy procurement from the state to 168 lakh tonne. (HT File Photo)
The Punjab government was caught off guard when the Centre restricted paddy procurement from the state to 168 lakh tonne. (HT File Photo)
Published on Dec 06, 2021 01:05 AM IST
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By, Chandigarh

The central government is gradually tightening the noose around the poor procurement system in Punjab, pushing the state’s food and civil supplies department to streamline the process that annually involves 60,000-70,000 crores for lifting of wheat and paddy crops during the rabi and kharif seasons, respectively.

Officials in the Punjab food and civil supplies department and the four procurement agencies feel that the restrictions were in the offing for the past few years because discrepancies that had cropped up in the system were hitting the state’s finances severely.

The whopping 31,000-crore legacy amount recovery imposed on Punjab is seen as a result of this mismanagement, for which the state is now supposed to pay 250 crores every month for the next 20 years.

From open to restricted procurement

The state government was caught off guard when a communication from the Centre’s ministry of food and public distribution, at the very onset of procurement this kharif season, restricting paddy purchase from Punjab to 168 lakh tonne.

The state may have purchased 188 lakh tonne this season, but so far there is no approval for extension in the total procurement. However, the Reserve Bank of India has allowed increase in the cash credit limit for paying the minimum support price of 1,960 per quintal on paddy.

“There are apprehensions that it would become a practice in future, and the Centre might ask the state not to go beyond a certain quantity of food grain purchase in the upcoming rabi procurement as well,” said an officer of the state’s food department. The Centre has also put curbs on labour and transport charges.

Contention over rural development fund

Not giving any commitment on the rural development fund (RDF) in the provisional cost sheet for the paddy procurement than ended on November 3, the Centre’s food and public distribution ministry has asked the state government to justify the accruals.

Punjab charges 3% RDF on the total procurement value each season, and expects to earn 1,100 crore through it in the kharif procurement that has just ended.

The Centre raised objection to the RDF during kharif procurement last year, insisting that the state should use it only for the intended purpose — development in rural areas — and suggested that Punjab should bring corresponding amendments in the Act the governs its use.

Notably, the state keeps the revenue generated from the RDF out of the state budget, and its major portion is spent as per the will of the dispensation.

“The RDF is used as an exigency fund by the state government. When it is in a crisis, the future accruals are pledged to raise money from banks and financial institutions. Also, the flagship programme of the state government — farm debt waiver scheme — was funded by raising liquidity using the RDF, and reportedly future accruals have also been pledged. Previously, the entire Sangat Darshan cost was borne from the RDF,” said an officer of the state food department on anonymity.

But, the Centre has objections to this “splurging” of the fund and wants it to be used only for development works in villages. The state so far has not amended the Act, leading to a hurdle in its release. The state finance department has also sought to audit the fund so that its use could be streamlined.

Meanwhile, against 2.5% dami (commission) charged by arhtiyas (commission agents) on the MSP, the Centre has fixed it at 45.38 per quintal. “Though the dami fixed by the Centre didn’t make much of a difference to our earnings, it has sounded alarm bells for the future,” said commission agents’ association president Vijay Kalra.

Other than the RDF, the state charges 3% mandi fee to manage the grain markets and procurement system, through its agency Mandi Board. Earlier, the Centre had stopped paying 5% infrastructure development cess charged by the state on procurement, which in present terms is an annual loss of 3,500 crore.

Limit on per acre procurement

The Centre has also started a system to fix procurement per acre. The instructions were rolled out by the Centre ahead of the kharif season, wherein the state was asked to link land records to the procurement portal, in order to give the average per acre paddy production in each district.

“When you link land records to the procurement portal, it is suggested to fix the yield too, the Centre has been telling us,” said the food department officer. The current season has passed smoothly, as the crop arrivals from across the state were reported to be uniform, but it is to be seen how it pans out during future procurement seasons.

“Some steps are to be appreciated, and will benefit Punjab, such as direct payment to the farmer and land record integration to check bogus billing and smuggling of paddy from other states,” said food and civil supplies minister Bharat Bhushan Ashu.

However, according to him, the Centre can’t raise aspersions on funds meant for the state’s development. “The RDF has been stopped unnecessarily. It is our tax. Why do you (Centre) want to change the state’s mandate?” he said.


    Gurpreet Singh Nibber is a special correspondent with the Punjab bureau. He covers agriculture, power sector, Sikh religious affairs and the Punjabi diaspora.

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Thursday, January 20, 2022