After years of deliberations, the food ministry has proposed a hike in buffer stocks with Food Corporation of India.
Sources told FE that the ministry in a Cabinet note had proposed hikes in stocks for the month of July and October when the foodgrain stocks held with FCI are usually at higher levels. At present, the government has fixed a buffer norms for January, April, July and October.
As per the proposal, the FCI is required to hold 41.1 million tonne (mt) of foodgrain, mainly consisting of rice and wheat, on July 1 which is an increase of 9.2 mt from the existing norm.
Similarly, at the start of October, FCI’s grain stocks would be 30.7 mt which is an increase of 9.5 mt from the existing norm.
However, for the April and January buffer stocks norm, the food ministry has recommended marginal changes from the current norms.
“We have not proposed any large scale change in the April and January buffer stock norms as there are sufficient availability of rice and wheat during this period,” a food ministry official said.
The official said that the proposed buffer stocks norm, which was last revised in 2005, would help FCI in deciding the quantum of foodgrain to be stored for buffer purpose.
“The government should work out the norms based on the requirement of two months of operational stocks,” Ashok Gulati, former chairman, Commission for Agricultural Costs and Prices (CACP), said.
Prior to recommending increase in buffer stocks norm, the food ministry had consulted experts from various fields, including Ashok Gulati, Abhijit Banerjee, professor of economics, Massachusetts Institute of Technology, Boston and Mahendra Dev, director, Indira Gandhi Institute of Development, Mumbai.
At present, the buffer stock norms are aimed at ensuring grain supply for targeted public distribution system (TPDS), food security during the periods when production declines and stabilising prices during production shortfall through open market sales.
Under an earlier proposal of the food ministry, which was discussed by agriculture and finance ministries and the Planning Commission, the buffer stock norm was to be revised from 31.9 mt to 53.5 mt for July when the grain stocks are at the highest level. However, the proposal did not find favour with experts.
“Higher buffer stock norms would give us cushion against holding on to higher foodgrain stocks against the present requirement. Besides we can take a call in advance about the quantum of exports and selling excess grains to private traders,” a food ministry official said.