Although there is good news in store for the government as output is set to increase on back of increased rabi harvest, there are concerns regarding storage that it would have to address. So, as output for wheat and rice this season hits a record high of 101.2 and 115.63 mt, respectively, excess stock of food grains will mean that it will be difficult for FCI to do more procurement or make space for additional grain, as CACP points out in a report. The problem goes beyond FCI procurement.
The government hasn’t yet shed its lopsided approach of favouring rice and wheat for procurement, as is evident from the fact that it has chosen to continue with the MSP system. An analysis from this year’s Economic Survey shows that higher MSPs have led to higher procurements, even when economic costs have been rising. More important, trends show that even as farmers tend to produce more and government continues to procure more, consumption has been declining. While a local storage scheme, as envisaged in the Budget, may help, the government won’t be able to wish the problem away unless it addresses real concerns regarding MSP and procurement.