Cash credit limit: Wheat procurement crisis looms as banks say no to Punjab

Cash credit limit: Wheat procurement crisis looms as banks say no to Punjab

Top News ‘Want my freedom of expression back,’ says 2012-batch IAS officer who quit service Detention at Srinagar airport 'undemocratic, unconstitutional', says Rahul-led Oppn delegation Jaitley: BJP govt's go-to man who built political consensus for GST A major procurement crisis is looming before the SAD-BJP government in Punjab in the last wheat season before the 2017 […]

A major procurement crisis is looming before the SAD-BJP government in Punjab in the last wheat season before the 2017 elections, with the nationalised banks that lend money to the state for foodgrains procurement refusing to release the Cash Credit Limit (CCL).

The state government had asked the Centre for CCL of slightly over Rs 20,000 crore before the procurement began. But the banks turned down the request, owing to Punjab’s failure to account for the money received for procurement in previous years and the state’s foodgrain stocks. Since the time of the previous Congress-led UPA government at the Centre, Punjab has not submitted accounts for Rs 20,000 crore, sources in the state food ministry said.


Over a fortnight into the procurement season, Punjab farmers who, according to the State Agriculture Minister Tota Singh, have produced “virtual gold” this time with not a single grain discoloured, have not received any money from the government.

According to Tota Singh, 8.5 lakh tonnes of wheat had been lifted from mandis across the state so far. Not a single farmer, the sources said, had been paid yet as the state was yet to receive its first installment of CCL.


Punjab is already in the grip of a serious agrarian crisis after the failure of two successive crops. There have been a number of farmer suicides. Farmers were pinning hopes on this harvest to bail them out of financial difficulties. But despite the good harvest, their woes may continue because of the standoff between the Punjab government and the Centre.

Punjab had sought Rs 20,000 crore for procurement for an expected harvest of 120-130 lakh tonnes of wheat. Punjab food supply officials say the first installment of CCL is received by the government before the procurement season sets in.

The second installment is received before the season gets over. The season normally lasts 45 days, but this year, said Tota Singh, it may not last that long as the wheat had already ripened and was ready for harvest.

Food and Civil Supplies Minister of Punjab, Adesh Partap Singh Kairon, and his team of officials had met with Finance Minister Arun Jaitely and other officials twice in the past fortnight in a bid to get the CCL released but to no avail.

Kairon was unavailable for comment. Tota Singh, however, put up a brave front.

“What is this issue of CCL? We will get the money. Farmers will be paid. It has never happened in Chief Minister Parkash Singh Badal’s time that farmers do not get the money. It has been just 15 days… the wheat is being lifted,” he told The Indian Express.

The state government seeks a cash credit limit from the Reserve Bank of India (RBI) against its existing foodgrain stocks before every procurement season. The state gets the funds after a recommendation by the union food ministry. This time too, the ministry recommended the release of the demanded amount and the RBI directed the national banks to pay the state. The banks, however, want the earlier accounts cleared first as a report on total amount of foodgrains in Punjab’s granaries by the Food Corporation of India (FCI) does not match with the claims of the state government.

The situation that the state finds itself in is partly an extension of its failure to provide the accounts during the time of the first UPA government, when despite outstanding amounts and a Congress-led Centre, the state, ruled by the SAD-BJP combine from 2007, managed to get its CCL on time.

When the NDA government took office in 2014, Punjab had an unaccounted outstanding of Rs 45,000 crore. Jaitley, as Union Finance Minister, raised the issue for the first time during the paddy procurement season in October 2014. That time too, the second installment of CCL was released only after Kairon prepared a presentation and managed to clear accounts pertaining to grains worth Rs 25,000 crore.

Jaitley had objected then to the state diverting foodgrains from the Central pool to distribute wheat to its atta-dal scheme beneficiaries. After that brief stand-off, for two subsequent procurement seasons, the state did not face problems.

None of the FCI officials posted in Punjab and the Food department were available for comment.