Planning Commission member Abhijit Sen talks about food inflation, agricultural GDP growth and the proposed food security Bill in an interview with FE?s Anto Antony and KG Narendranath. Excerpts:

Does your projection that food inflation will come down to about 5% by November hold good even if prices of petroleum products are deregulated or hiked in the interim?

What I have said is that provided the monsoon is good, food inflation would come down to 5%-6% by November. There is already a palpable downward slide in the prices of sugar, cereals, pulses and most of the vegetables?items that form a big chunk of the food basket. The prices of milk, meat and fish may not be showing any signs of easing right now, but if the monsoon is good, they would also start declining, as feed prices go down. Further, my projection is also in the light of the fact that all prices had peaked in November, and that the base effect will then keep the annual inflation down. This holds good even in the case of a 10% hike in fuel prices. A hike in the price of petrol wouldn?t anyway influence food prices much. An increase in the price of diesel would have some effect on food prices, but only a marginal one, and cause a difference of 0.2-0.3% in the annual inflation rate at the most.

Given the unpredictability of domestic grain output and the volatile global market conditions, don?t we need a change in the buffer norms?

Looking at what the wheat stock was in April and what the rice stock will be in October, there is room to bring down our current stocks further. The Planning Commission has said that stocks could be brought down to as low as 27- 30 million tonne (mt), but not lower than that. (Our current buffer norms are 14 mt).We are suggesting a buffer stock of 27-30 mt, keeping in view the vagaries in weather conditions. In the last 8 years, we had had two very bad droughts. If the food security Bill makes an allowance for APL population, we will also need more grains.

What is the best-case agricultural growth scenario for the current fiscal?

If the monsoon is normal, we will have a farm output growth in the range of of 5-6%. The last year was very bad. So, if the rains are close to 30% higher than last year?s, there will obviously be some improvement in agricultural production. When that happens on a very low base, we should be looking at a 5-6% increase in food production.

The food security Bill is being drafted with the Planning Commission?s inputs.

The empowered group of ministers (eGoM) headed, by the finance minister, will be taking the final call on the Bill. We have given suggestions on our estimate of poverty, the subsidy needed and the requirements of foodgrain for the scheme. We have also sent a note to the eGoM on whether to give 25 kg or 35 kg of rice. We have endorsed the Tendulkar Committee?s report which holds that 37% people are below the poverty line. It is worth knowing what this number translates into in terms of the number of BPL households. Currently, we have two different yardsticks for defining households?common kitchens (used by NSSO) and nuclear families (based on the employment guarantee scheme entitlement). Defining entitlements on the basis of the two disparate criteria would make a difference to the quantum available to a chunk of the intended beneficiaries. A third and probably better option could be to link entitlements to individuals rather than households. The Planning Commission has in fact suggested such a shift. There are operational difficulties if we consider households as beneficiaries. The average size of the Indian household is somewhat on the decline.

Won?t we need an overhauling of the public distribution system before the food security scheme is implemented?

The Prime Minister had called a meeting of chief ministers some time ago to tackle high food inflation. Among the committees that were formed in the meeting, there was one headed by the Planing Commission deputy chairman to look into reforms needed in the PDS system. The chief ministers of Assam and Chhattisgarh are members of the committee. We will give our inputs on whether prices will be the same under the scheme and whether a part of the benefits should be given in cash, that is, the direct transfer of money.

External factors can impact India?s food prices significantly (as was seen in 2008). What should be our policy with regard to foodgrain exports and imports?

I am not in favour of a complete ban on grain exports. All I am saying is that India should look at its own interest first. Clearly, there is no case for subsidised exports of foodgrain now or later. In case of rice, and to some extent, sugar, we should not be thinking of producing these items for exports. These crops are water guzzlers are exporting them is tantamount to exporting water, which we can ill-afford. Whether it be grains or cereals, instead of going for exports and imports alternatively, we need to manage stocks properly.

Higher minimum support prices for various crops in recent seasons are said to be one reason behind food inflation. How much have farmers benefitted from elevated MSPs?

Farmers have benefited from higher MSPs, though unevenly across crops and areas. A basic administrative measure required to ensure that all the people benefit is to make sure that FCI or its agents are present in many more markets. Also, market facilities must be present. It may be noted that MSP will not help cultivators of vegetables and fruits. We need more vibrant markets and more private players should come into this segment. For this, we need a climate where it becomes profitable to invest in the infrastructure required like cold chains.

What exactly is the Panning Commission?s view when it comes to genetically-modified crops?

We have maintained that we should not do anything about them (GM crops) as long as we are not in a position to assure the public at large that scientific opinion is unanimous. This, I?m afraid, has not happened so far. In the case of GM foods, there needs to be more circumspection. GM crops lack a credible regulatory mechanism.