Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

CACP trashes food Bill, says farm sector to be hit

Dec 22 2012, 10:44 IST
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CACP chief Ashok Gulati and his co-authors point to major lacunae in the Food Security Bill. (reuters) CACP chief Ashok Gulati and his co-authors point to major lacunae in the Food Security Bill. (reuters)
SummaryCACP chief Ashok Gulati and his co-authors point to major lacunae in the Food Security Bill.

Even as the government readies to come out with a Food Security Bill (FSB) by the next Budget, the head of the Commission for Agricultural Costs and Prices (CACP) has come out with a striking critique of the programme.

The jointly authored study is hosted on the CACP’s website while saying the views are those of the authors and not necessarily of the organisations they work for.

Apart from saying the FSB will likely cost double the R95,000-120,000 crore the government estimates it will cost each year, CACP chief Ashok Gulati and his co-authors point to other major lacunae in the Bill. At the outset, they wonder why, when the government is working on Aadhaar-based cash transfers to take care of the problem of huge leakages in most government programmes — they estimate leakages under the targetted PDS at over 40% — it should be looking at expanding the existing PDS in such a massive manner.

While FCI is already groaning under the burden of the current levels of procurement — around 50-55 million tonnes annually — and doesn’t have the space to store the grain, the FSB will require FCI to procure around 25-30% more. Right now, while FCI has around 80 mt of grain, it only has covered or pucca storage facilities for 45 mt; another 17 mt is kept under tarpaulin on raised blocks (“covered and plinth” storage, in jargon), leaving the rest in the fields in the open. In other words, even before the issue of leakages in grain distribution, there will be a 10-15% loss just due to inadequate storage facilities.

As it is, Gulati argues, FCI and state government procurement is edging out private trade from major grain markets, the FSB will only make things worse.

The paper has a lot worse to say in terms of the impact of the FSB on the agricultural sector and on the country’s water table. For one, it points out, there has been a dramatic fall in the yields of wheat from the 1990s to the 2000s. Given this, and the fact that there has been a dramatic fall in the water table in major rice and wheat-producing states, the FSB will mean the water table will be further damaged and major investments will need to be made to achieve higher rice and wheat production.

Given that the need of the sector is to increase diversification — this fetches higher yields and

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