Implementation of the electoral promise of the new Congress government in Chhattisgarh to provide a big bonus over the Centre’s minimum support price (MSP) for the state’s paddy farmers has hit a hurdle as the Food Corporation of India (FCI) has invoked a 2014 Union food ministry circular to refuse lift or pay the MSP for a quarter of the paddy procured by the state.
The Bhupesh Baghel-led Chhattisgarh government has already procured 80.4 lakh tonnes of kharif 2018 paddy (rice equivalent — 54.7 lakh tonne).
But the FCI has recently communicated to it that it would not bear the MSP cost of any quantity above 41 lakh tonne of rice, the state’s PDS requirement limit. For the state government, this would mean an outgo of Rs 3,500 crore in addition to over Rs 6,000 crore estimated for the payment of the bonus.
The Bhupesh Baghel government in Chhattisgarh, which assumed office in December last year, is implementing a poll promise of Rs 750/quintal bonus for paddy farmers over and above the Rs 1,750/quintal MSP fixed by the Centre for the kharif 2018 crop.
In fact, the FCI has estimated the PDS requirement of the state at just 23.5 lakh tonne of paddy (16 lakh tonne in terms of rice); it has already relaxed the 2014 norm by agreeing to foot the MSP bill for 60 lakh tonne of paddy (40.8 lakh tonne of rice).
“Our paddy procurement is over and we have purchased a total 80.37 lakh tonnes this year,” P Anbalagan, managing director of Markfed, Chhattisgarh’s grain procurement agency, told FE. The state government is working on a plan to dispose of the extra quantity bought since the FCI has declined to take some 20 lakh tonnes of paddy purchased or bear the MSP cost, he said. There will be a transparent system of auction to sell the paddy in the market, the official added.
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On its part, the cash-strapped FCI has already spent Rs 10,500 crore (excluding incidentals) for paddy MSP operations in the state for the kharif 2018 season. The additional quantity of paddy it has procured over and above the state’s PDS requirement will be converted to parboiled rice and distributed in southern states where it is in demand, officials said.
Apart from the issue of higher costs, the food ministry’s policy not to procure from a state above to its own PDS requirement is also because such extra purchases could distort the market. It feels that additional bonuses by state governments should be discouraged as these could adversely impact the market.
In the past, other state governments namely Madhya Pradesh and Rajasthan also gave bonuses over MSPs fixed by the Centre for different crops.