Giving away FCI grains as aid a temporary solution; price support and PDS reforms key in long-term

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Updated: October 16, 2019 6:04:23 PM

Unless the Centre considers reforming its MPS and PDS policies, replacing them with, say, DBT for food and cost-support to farmers, respectively, India will keep facing this problem.

FCI grains stock, food ministry, Global Hunger Index, FCI debt, FCI procurement and storage, DBT, fci grains, india exportsAgainst stocking norms requiring just 307.7 lakh metric tonnes (mt) to be held in the central pool on October 1, the total was 669.15 lakh mt on September 1.

With FCI’s grains stock hitting unmanageable levels, the food ministry has asked the external affairs ministry to explore the possibility of giving away some of the stock to “deserving countries” as aid. India has done this before, but at a much smaller scale than what is probably envisaged now.

Giving away the grains—for a country ranked very low on the Global Hunger Index, this may not be great optics—is still a better option than allowing it to rot. Rather, the government should be thinking of reforming its procurement/price support policy. Against stocking norms requiring just 307.7 lakh metric tonnes (mt) to be held in the central pool on October 1, the total was 669.15 lakh mt on September 1.

Worse, thanks to bad policy, FCI’s outstanding debt in FY19 stood at `2.2 lakh crore.

Procurement policy has meant that existing storage remains perpetually inadequate. One solution is to liquidate the huge surplus, but FCI’s open market sales scheme failed to take off as prices of wheat and rice in the open market don’t cover the economic costs of FCI procurement and storage.

Worse, exports also can’t be an option—even when the grain-quality issue is overlooked—because the price support policy means exports won’t meet WTO norms. Unless the Centre considers reforming its MPS and PDS policies, replacing them with, say, DBT for food and cost-support to farmers, respectively, India will keep facing this problem.

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