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Essay On Food Corporation Of India

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Food Corporation of India

  1. Procurement

  2. Storage

  3. Operational Stock

  4. Strategic and Buffer stock

  5. Open Market Sale Scheme

  6. FCI reforms

  7. Entrepreneur Guarantee Scheme

Public Distribution System

  1. Identification of Beneficiaries

  2. Food Security Act

  3. Other Welfare Schemes

  4. Central Issue Price and Economic Cost

Topics from Syllabus Covered

  1. GS paper 2 –

    1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

    2. Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections

    3. Issues relating to poverty and hunger.

  2. GS paper 3 –

    Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing.


In previous 2 articles we covered agricultural inputs, issues related to input subsidies and pricing policy of the government along with WTO. Next most deserving issue comes out be procurement, storage, domestic and international trade. These stages are also heavily controlled by government. Minimum Selling Price regime forces government for an ‘open ended procurement policy’. This takes away discretion of FCI both in determining quantity to bought and price to be paid. Grains are squeezed out of open market and land into Godowns. Further, even grain which is left in open market and notified under APMC are meant to be brought to agricultural markets for sale and this increase costs and delays the movement of products in value chain. There are other interventions too, such as interstate cesses and taxes which further add upto the costs. Government has made relentless efforts to remove these hindrances, but agriculture being a state list subject has met with very limited success.

A. Food Corporation of India

It was formed in 1960’s and was part of larger plan directed toward food security and self-sufficiency. Other major institution was CACP. These two institutions along with MSP regime and Public distribution system were expected to work in tandem. FCI’s responsibility was to procure, Store and discharge grains as per policy of the government. Over the time, as in other cases these institutions too failed to adapt to changing circumstances such as changing demands of economy. As a result FCI now reels under chronic inefficiency through huge wastages, and storage cost of grains keeps on cumulating.

FCI deals in rice, wheat and coarse grains only. NAFED deals with pulses and oilseeds

1. Procurement

As we have already learned that government is buyer of last resort and due to rising MSPs, government most of the time becomes preferred customers to farmers. In past few years government is buying about a third of total food grain production. New Food Security Act changes the situation dramatically. Previously, government had to distribute subsidized foodgrains only to below poverty line people and those covered under Antyodaya Anna Yojna (about 2.5 crore families). But now government is committed to provide food to 50% of urban and 75% of rural population at even higher subsidy. Act is expected to Increase procurement significantly.

FCI follows two models of procurement viz. centralized and decentralized procurement.

The decentralized procurement was introduced by the Government of India in 1997-98 where states, which voluntarily become part of this program, procure, store and distribute food grains under the targeted public distribution system (TPDS) and other welfare schemes (OWSs), on behalf of the central government. The idea was to enhance the efficiency of the process by encouraging local participation. All expenses are centrally met. In Centralized procurement, grain is first moved to FCI godowns and then reallocated to states. This results in extra expenditure on storage and transportation. Currently, only 10 states undertake decentralized procurement.

Functions of FCI

-To procure foodgrains

-To Maintain operational stock and buffer stock for food security

-Allocation of grains to state

-Selling grains to state at ‘Central Issue Price’

-Distributing and transporting grains to state

(Procureà Stock àAllocateàSellàTransport)

2. Storage

For what purposes FCI maintains stock of food grains?

All countries maintain some backup to tackle with any possible food crises due to Drought or any other natural calamity. At times there can be violent fluctuations in prices of important commodities due to macroeconomic imbalances for e.g. due to short term price rises in production can soon shift from essential food crops to cash crops. Countries have two options to secure, either to maintain physical stock of foodgrains or to maintain enough FOREX reserves so that at time of crisis country is able to import sufficient stocks. In case of latter country can lose its own capacity to intervene.

In aftermath of LPG reforms, India struck to its policy of maintaining sufficient physical stocks, in spite of pressure from developed countries in forums such as WTO. In contrast most of ASEAN countries turned away from physical Stock toward international market. In year 2007 there was food prices crisis due to low global production, which pushed global agro prices higher. India’s stocks saved it from any hardship, but ASEAN countries had to spend substantially higher FOREX reserve to overcome the shortage.

Further, in developed countries big agro corporations maintain huge inventory of agricultural products. And they have to depend lesser upon government support. Again, in India private sector despite having promising future doesn’t yet have capacity to take care of any crisis.

Another major reason for stocking of food is to serve world’s largest public distribution system. As already said, passage and implementation of FSA is expected to raise procurement upside, which in turn will raise need for stock maintenance.

Last but not least, FCI under an open ended policy has no option but to buy whatever is offered to it by farmers. So unless a similar policy of regular disbursement is not followed, stocks will keep piling up.

These points makes stocking of food grains imperative. But, on the grimmer side India’s stock are almost double than it needs and per year carrying cost of grain is as high as Rs 5 per kg. Carrying costs Include rent, management, maintenance and interest on money blocked in stock. This coupled with pilferage, theft and quality deterioration fails whole concept and turns a virtue into vice.

  1. Operational Stock :

    Operational Stocks are defined as the minimum quantities required for running the TPDS/NFSA and ‘Other Welfare Schemes’ until quantities procured from the new crop. These are made out of current year production and are meant to be consumed in following year.

    It should be noted that new wheat comes into market every year in April and most of the rice comes October, more particularly in north. But consumption and disbursement is almost even throughout the year. While maintaining Operational stocks ‘intra-year variations’ are taken care of and in case of buffer stocks, ‘inter year’ variations are considered.

  2. Strategic Stock and buffer stock

    FCI maintains stocks of grains in excess of what is needed for meeting operational needs, and these stocks are called strategic stocks. Buffer stocks are part of strategic stock. In addition to buffer norms, government has prescribed a strategic reserve of 3 million ton of wheat in 2008 and 2 million tons of rice in 2009. So, total strategic reserves are 5 million tons. There’s a bit lack of clarity regarding terminologies. (Strategic reserves = Buffer stock + Strategic reserves)

    The government fixes the buffer stock norms, prescribing the minimum quantities of food grains (wheat and rice) to be maintained in the central pool at the beginning of each quarter, namely for January, April, July and October.

    How buffer stock is determined?

    A Technical Group, chaired by the Secretary of the Ministry of Food, with representations from the Ministry of Agriculture, FCI, Planning Commission and Ministry of Consumer Affairs, periodically evaluates both the levels and composition of buffer stocks of food grains (rice, wheat and coarse cereals) to be maintained through the year with both the central pool (with FCI) and with the states.

    Technical group determines buffer stock scientifically and taking into account production and consumption/offtake by states patterns of the past, and expected patterns of future. For e.g. In last 12 years only twice (in 2002 by 12.4% and 2009 by 5.83%) cereal output declined. So, something like average of 12.4 % and 5.83% can be a factor in determining requirement of backup stocks.

  3. Open market Sale Scheme

    This is a price control mechanism. As we know Central Pool of foodgrains has been created primarily to maintain a minimum buffer stock for meeting the unforeseen exigencies like drought, flood and other natural calamities and also for providing foodgrains required for Public Distribution System and the other foodgrains based welfare program of the Government. In addition, the FCI on the instructions from the Government has been resorting to sale of foodgrains i.e. wheat and rice at predetermined prices to the open market from time to time to achieve the objectives as under:-

    -To enhance the supply of foodgrains especially during the lean season and thereby to have a healthy and moderating influence on the open market prices.

    -To offload the excess stocks in the Central pool and to reduce the carrying cost of foodgrains to the extent possible.

    -To save the foodgrains from deterioration in quality and to use foodgrains for human consumption.

    -To release valuable storage space for stocks procured during the ensuing marketing season of wheat / rice

    FCI reforms

    FCI has no discretion at all in any of the matters. Food Corporations of India Act, 1964 lays down that all its operations will be financed by the Government of India. FCI does not even have a profit and loss account.

    As we have seen procurement is open ended, MSPs and bonuses are beyond FCI. Neither quantity for buffer stock nor distribution through TPDS or other welfare schemes is in its hands. There are many suggestions to revamp FCI including breaking it into 3 entities, one for procurement, storage and disbursement each. Other one is fully decentralize FCI and its operation in hands of state. But these efforts can bring comparative better practices but not any radical change. For this to work, whole value chain from MSPs to PDS is needed to be considered under a single integrated policy.

    Let’s say, in place of MSP, income support policy is adopted, in which farmers will get income support on basis of land they hold and they won’t get some different benefits as per crop. In this scenario, FCI will have to purchase at market prices and this can end its open ended procurement and maintain stock precisely required for buffer and operational purposes. If farmer is getting income support (or even direct benefit transfer) it will make no difference to him whether he sells in market or FCI.

    On other hand, if for FSA and TPDS, government adopts direct transfers, then again FCI will get its whole economic cost recovered and grains will be sold on market prices.

    This will make grain much cheaper as –

    -It will reduce carrying costs.

    -It will result in good quality sale, less pilferage etc.

Government recently formed ‘high-level committee on restructuring Food Corporation of India (FCI)’ to suggest for reforms in FCI.

There are three storage agencies- Food Corporation of India (FCI), Central Warehousing Corporation and State Warehousing Corporations. The storage capacity could be either owned by these agencies or be hired from private owners. The grain is stored either in covered godowns, or silos or in uncovered godowns called covered and plinth (CAP). The storage capacity here is the grand total storage capacity of all the three agencies- hired/owned and covered/CAP

Storage capacity with FCI is largest and it is increasing reasonably. But capacity under Cover and Plinth is increasing faster than covered ones. CAP is unscientific and FCI is recommended to store only operational or temporary stocks here. Here quality deterioration, pilferage and theft is substantially higher.

CAP storage is an indigenous method developed by FCI, whereby foodgrains are stored in the open with precautions such as rat and damp proof plinths and covering of stacks with specially fabricated polythene covers etc.

Entrepreneurs Guarantee Scheme

Private sector is being roped in to create capacities for the government (on a five to ten year guarantee period) under the Private Entrepreneurs Guarantee (PEG) Scheme since 2008; the progress has been tardy as private entrepreneurs do not find it profitable.

As against the buffer norm of 16.2 million tons and strategic reserves of 5 million tons, total foodgrains
storage in the FCI godowns was reported at 57.38 million tons as on August 1. Currently rice and wheat are released from godowns after 24 and 36 months respectively. Food Ministry issued orders to bring this period down to 18 months. It was decided that 10 million tons of wheat and 5 million tons of rice will be released in the market. Consequently now, as per news stocks has come down substantially and newly procured rice will not be stored under cover and Plinth. This also partially explains recent cooling of CPI inflation.

Transportation – In addition to this, transportation of grains from FCI/ CWC godowns to state godowns is with FCI and from State Godowns to Fair Price Shops is of State 

B. Public Distribution System

PDS was 1st introduced in post WW2 period due to crippling food shortages and then in times of food crisis of 1960’s was significantly expanded. In early days it was Universal subsidized delivery, in 1990’s Revamped PDS was launched to include hilly and inaccessible areas, then finally Targeted PDS was introduced.

In 2001 Public distribution system order was passed under ESSENTIAL COMMODITIES ACT,it governs rules regarding identification of beneficiaries and commodities to be included .

Identification of beneficiaries –

-National Sample Survey Organization -Every 5 years Identifies BPL based on per capita consumption expenditure

-Ministry of rural development through BPL surveys provides Criteria for inclusion or exclusion

-States finally identify eligible Households

-Planning commission make state wise list of identified households

-Central govt. Allocates Food grains to each state based on above.

This is current system, and
Enactment of Food security Act has done away need for BPL based identification. As Food security act is currently implanted by only 11 states, other states are following BPL based system. Still identification will be done by state governments only and Socio Economic Caste Census will be instrumental in this.

States can also increase entitlements at their own expense. Tamil Nadu, Chhattisgarh and Madhya Pradesh are proving

National Food Security Act,2013

  1. Coverage and entitlement under Targeted Public Distribution System (TPDS): Upto 75% of the rural population and 50% of the urban population will be covered under TPDS, with uniform entitlement of 5 kg per person per month. However, since Antyodaya Anna Yojana (AAY) households constitute poorest of the poor, and are presently entitled to 35 kg per household per month, entitlement of existing AAY households will be protected at 35 kg per household per month.

  2. State-wise coverage: Corresponding to the all India coverage of 75% and 50% in the rural and urban areas, State-wise coverage will be determined by the Central Government. Planning Commission has determined the State-wise coverage by using the NSS Household Consumption Survey data for 2011-12 and also provided the State-wise “inclusion ratios”.

    This means that coverage ratio will be different for states. Poor states will get more than 75% and 50% of coverage and rich states will get lesser coverage

  3. Subsidized pricesunder TPDS and their revision: Foodgrains under TPDS will be made available at subsidized prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains for a period of three years from the date of commencement of the Act. Thereafter prices will be suitably linked to Minimum Support Price (MSP).

  4. In case, any State’s allocation (of food grain from FCI) under the Act is lower than their current allocation, it will be given atleast average offtake during last three years, at prices to be determined by the Central Government.

    Existing prices for APL households for wheat and rice has been determined as issue prices for the additional allocation to protect the average offtake during last three years.

  5. Nutritional Support to women and children: Pregnant women and lactating mothers and children in the age group of 6 months to 14 years will be entitled to meals as per prescribed nutritional norms under Integrated Child Development Services (ICDS) and Mid-Day Meal (MDM) schemes. Higher nutritional norms have been prescribed for malnourished children upto 6 years of age.

  6. Maternity Benefit: Pregnant women and lactating mothers will also be entitled to receive maternity benefit of not less than Rs. 6,000.

  7. Women Empowerment: Eldest woman of the household of age 18 years or above to be the head of the household for the purpose of issuing of ration cards.

  8. Cost of intra-State transportation & handling of foodgrains and Fair Price Shop Dealers’ margin: Central Government will provide assistance to States in meeting the expenditure incurred by them on transportation of foodgrains within the State, its handling and FPS dealers’ margin as per norms to be devised for this purpose.

  9. Food Security Allowance: Provision for food security allowance to entitled beneficiaries in case of non-supply of entitled foodgrains or meals.

  10. Penalty: Provision for penalty on public servant or authority, to be imposed by the State Food Commission, in case of failure to comply with the relief recommended by the District Grievance Redressal Officer.

Other Welfare Schemes

Apart from TDPS and Food Security Act, there are number of other schemes for which FCI stocks and issue grains. Important among them are –

  1. MID-DAY MEAL SCHEME – by Ministry of Human Resource Development

    The Scheme presently covers students of Class I-VIII of Government and Government aided schools, Education Guarantee Scheme/Alternative and innovative Education Centers. It was launched with a view to enhance enrollment, retention, attendance and simultaneously improving nutritional levels among students in primary schools.

  2. WHEAT BASED NUTRITION PROGRAMME (WBNP): by Ministry of Women & Child Development

    The foodgrains allotted under this Scheme are utilized by the States/UTs under the Integrated Child Development Scheme (ICDS) for providing nutritious/ energy food to children below 6 years of age and expectant/lactating women.

  3. ANNAPURNA SCHEME – by Ministry of Rural Development

    Needy senior citizens of 65 years of age or above who are not getting pension under the ‘National Old Age Pension Scheme’ are provided 10 kgs of foodgrains per person per month free of cost under the scheme.

  4. RAJIV GANDHI SCHEME FOR EMPOWERMENT OF ADOLESCENT GIRLS (RGSEAG) – ‘SABLA’

    By Ministry of Women & Child Development

    The Scheme aims at empowering adolescent girls of 11-18 years by improvement of their nutritional and health status and upgrading various skills like home skills, life skills and vocational skills. It also aims at equipping the girls on family welfare, health hygiene etc. and information and guidance on existing public services along with aiming to mainstream out of school girls into formal or non-formal education. The requirement of food grains under the scheme for nutrition is @ 100 grams of grains per beneficiary per day for 300 days in a year

    Central issue Price (CIP) and Economic Cost

    CIP is the price at which food grains are issued by FCI to states. CIP are different for APL and BPL beneficiaries. For APL beneficiaries, CIP is equal to the ‘economic cost’ of the foodgrains, which includes procurement, storage, interest and transportation cost. For BPL CIP is same as was fixed in 2000. Interestingly, APL’s CIP (at economic cost of Rs 8.30 per kg in the case of rice and Rs 6.10 per kg for wheat) which was fixed in 2002 is still continuing and in effect APLs to whom subsidy is not intentionally directed are still getting subsidized food.

    Given these problems direct benefit transfers seems to be best bet. In some developed countries food coupons are used. Government issues coupons which entitle holder to get subsidized things or benefits. This coupon comes back to state agency who is then compensated by government as per value of coupon.

    Role of FCI in ensuring food security in India is magnificent. It is in center of Indian Agro-economy and any tinkering with structure or process can’t survive in isolation. Reform in FCI perhaps is biggest part of general economic reforms in the country. It needs to work toward efficiency and cost effectiveness, and live upto its purpose of food security. It is said that for every 1 kg that reaches beneficiary FCI releases 2.5 kg grain. This, if true, is unethical negligence. It would mean substantial amount of grain is being diverted into black markets.

    Another data provided by NSSO claims that 5 kg provided at subsidized rates fulfils just fewer than 50% of needs of an average individual (10.2 kg and 9.8 kg/month is rural and urban areas respectively). As a result, still he has to get 5 kg grains from open market. To provide this 5 kg grains at highly subsidized rate, there is huge web of inefficient, underperforming and struggling institutions and systems (that we just studied). It is often doubted that these push costs of grains in open market substantially higher. In last few years India’s comparatively much higher food inflation indicates toward this.

    Agricultural policy ought to leave more than sufficient grains in the open market, it is only then market forces will able to work

    Questions

    1. Explain need for reforms in FCI. What steps government has taken so far?
    2. Is farmer’s interest for high crop realization, contradictory public’s concern for low food prices?
    3. What impact does food security act has on current PDS system?

    Next Article

  5. Agriculture Products Market Committee

    -Model Act

    -Issues with Model Act

  6. Stock Limits under Essential Commodities Act
  7. Interstate Movement Barriers
  8. Future and derivatives in Agro products
  9. International Trade in Agro Products

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Food security in India

The focus on accelerated foodgrains production on a sustainable basis and free trade in grains would help create massive employment and reduce the incidence of poverty in rural areas.

INDIA AT present finds itself in the midst of a paradoxical situation: endemic mass-hunger coexisting with the mounting foodgrain stocks. The foodgrain stocks available with the Food Corporation of India (FCI) stand at an all time high of 62 million tonnes against an annual requirement of around 20 million tonnes for ensuring food security. Still, an estimated 200 million people are underfed and 50 million on the brink of starvation, resulting in starvation deaths. The paradox lies in the inherent flaws in the existing policy and implementation bottlenecks.

Challenges ahead

India's food security policy has a laudable objective to ensure availability of foodgrains to the common people at an affordable price and it has enabled the poor to have access to food where none existed. The policy has focused essentially on growth in agriculture production (once India used to import foodgrains) and on support price for procurement and maintenance of rice and wheat stocks. The responsibility for procuring and stocking of foodgrains lies with the FCI and for distribution with the public distribution system (PDS).

Minimum support price: The FCI procures foodgrains from the farmers at the government announced minimum support price (MSP). The MSP should ideally be at a level where the procurement by FCI and the offtake from it are balanced. However, under continuous pressure from the powerful farmers lobby, the government has been raising the MSP and it has now become higher than what the market offers to the farmers. Also, with quality norms in the procured grains not strictly observed, farmers pressurise the FCI to procure grains beyond its procurement target and carrying capacity. The MSP has now become more of a procurement price rather than being a support price to ensure minimum production. The rich farmers and traders have cornered most of the benefits under the support price policy. The small farmers lack access to FCI and being steeped in poverty resort to distress selling. Constricted warehousing facility has further aggravated their miseries. At times, the same farmers later pay more to buy it from PDS.

Input subsidies: Over the years, to keep foodgrain prices at affordable levels for the poor, the government has been imposing restrictions on free trade in foodgrains. This has suppressed foodgrain prices in the local market, where the farmers sell a part of their produce and as compensation, they are provided subsidies on agriculture inputs such as fertilizers, power and water. These subsidies have now reached unsustainable levels and also led to large scale inefficiencies in the use of these scarce inputs. Overuse of fertilizer and water has led to waterlogging, salinity, depletion of vital micronutrients in the soil, and reduced fertility. The high subsidies have come at the expense of public investments in the critical agriculture infrastructure, thereby reducing agriculture productivity. Besides the high MSP, input subsidies and committed FCI purchases have distorted the cropping pattern with wheat and paddy crops being grown more for the MSP they fetch, despite therebeing relatively less demand for them. Punjab and Haryana are classic examples here. This has also led to a serious imbalance in inter-crop parities despite no significant increase in the yield of wheat and paddy.

Issue price: The people are divided into two categories: below poverty line (BPL) and above poverty line (APL), with the issue price being different for each category. However, this categorisation is imperfect and a number of deserving poor have been excluded from the BPL fold. Moreover, some of the so called APL slip back to BPL, say with failure of even one crop and it is administratively difficult to accommodate such shifts.

To reduce the fiscal deficit, the government has sought to curtail the food subsidy bill by raising the issue price of foodgrains and linking it to the economic cost at which the FCI supplies foodgrains to the PDS. The economic cost comprises the cost of procurement, that is, MSP, storage, transportation and administration and is high mainly because of the artificially inflated MSP and also due to the operational inefficiencies of the FCI. This has pushed the issue price to APL category higher than the market rates and to BPL category beyond their purchasing power, resulting in plummeting of offtake from the PDS.

Also, the low quality of PDS grains and the poor service at PDS shops have forced many people to switchover to market, which offers better quality grains, allows purchase on credit and ensures flexibility to purchase in small quantities.

Also, the high-priced, low-quality Indian rice and wheat find little place in the international market. Recently, two Indian consignments were rejected even by Iraq on quality considerations. The result is bulging stocks with FCI amidst widespread starvation.

Market demand: The PDS entitlement meets only around 25 per cent of the total foodgrain requirement of a BPL family and it has to depend more on the market for meeting its needs. Also with the APL families essentially opting for market purchases, the market demand has risen. However, the massive FCI procurement has crowded out the market supplies, resulting in a relative rise in rates. The poor are the most hurt in this bargain.

Food-for-work scheme: The government is running food-for-work scheme to give purchasing power to the poor who get paid for their labour in cash and foodgrains. The scheme is, however, not successful, since the Central Government is required to meet only the foodgrain component and the cash strapped States are expected to meet the cash component (almost 50 per cent of the total expenditure). In many States the scheme has even failed to take off.

Suggested recommendations

There is a need to shift from the existing expensive, inefficient and corruption ridden institutional arrangements to those that will ensure cheap delivery of requisite quality grains in a transparent manner and are self-targeting.

Futures market and free trade: The present system marked by input subsidies and high MSP should be phased out. To avoid wide fluctuations in prices and prevent distress selling by small farmers, futures market can be encouraged. Improved communication systems through the use of information technology may help farmers get a better deal for their produce. Crop insurance schemes can be promoted with government meeting a major part of the insurance premium to protect the farmers against natural calamities.

To start with, all restrictions on foodgrains regarding inter-State movement, stocking, exports and institutional credit and trade financing should be renounced. Free trade will help make-up the difference between production and consumption needs, reduce supply variability, increase efficiency in resource-use and permit production in regions more suited to it.

Food-for-education programme: To achieve cent per cent literacy, the food security need can be productively linked to increased enrolment in schools. With the phasing out of PDS, food coupons may be issued to poor people depending on their entitlement.

Modified food-for-work scheme/ direct subsidies: With rationalisation of input subsidies and MSP, the Central Government will be left with sufficient funds, which may be given as grants to each State depending on the number of poor.

The State government will in turn distribute the grants to the village bodies, which can decide on the list of essential infrastructure work the village needs and allow every needy villager to contribute through his labour and get paid in food coupons and cash.

Community grain storage banks: The FCI can be gradually dismantled and procurement decentralised through the creation of foodgrain banks in each block/ village of the district, from which people may get subsidised foodgrains against food coupons. The food coupons can be numbered serially to avoid frauds. The grain storage facilities can be created within two years under the existing rural development schemes and the initial lot of grains can come from the existing FCI stocks. If culturally acceptable, the possibility of relatively cheap coarse grains, like bajara and ragi and nutritional grains like millets and pulses meeting the nutritional needs of the people can also be explored. This will not only enlarge the food basket but also prevent such locally adapted grains from becoming extinct. The community can be authorised to manage the food banks. This decentralised management will improve the delivery of entitlements, reduce handling and transport costs and eliminate corruption, thereby bringing down the issue price substantially. To enforce efficiency in grain banks operation, people can also be given an option to obtain foodgrains against food coupons from the open market, if the rates in the grain banks are higher, quality is poor or services are deficient. A fund can be set up to reimburse the food retailers for the presented coupons. This competition will lead to constant improvement and lower prices. It must also be mandatory to maintain a small buffer stock at the State level, to deal with exigencies.

Enhancing agriculture productivity: The government, through investments in vital agriculture infrastructure, credit linkages and encouraging the use of latest techniques, motivate each district/ block to achieve local self-sufficiency in foodgrain production. However, instead of concentrating only on rice or wheat, the food crop with a potential in the area must be encouraged. Creation of necessary infrastructure like irrigation facilities will also simulate private investments in agriculture.

The focus on accelerated foodgrains production on a sustainable basis and free trade in grains would help create massive employment and reduce the incidence of poverty in rural areas. This will lead to faster economic growth and give purchasing power to the people.

A five-year transitory period may be allowed while implementing these. Thus, India can achieve food security in the real sense and in a realistic timeframe.

Prashant Goyal

Secretary to Government Chief Secretariat, Pondicherry
(The views expressed here are the author's personal)

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