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MSP politics: The Price of Rice

The Congress government’s paddy populism in Chhattisgarh could hit a hurdle in New Delhi.

Written by Dipankar Ghose , Harish Damodaran | New Delhi, Raipur | Updated: February 21, 2019 12:15:08 am
Chhattisgarh, MSP, MSP for Kharif crops, MSP announcement for rice, Narendra Modi, What is MSP, Minimum support price, msp hike, Minimum support price, Indian express In the current marketing season between November 1 and January 31, the Chhattisgarh government procured 80.37 lakh tonnes of paddy, an all-time high. (Archive)

Even as the Chhattisgarh Congress government says it has implemented its Assembly election promise of paying an unprecedented Rs 2,500 per quintal price for paddy and procuring a record 80.37 lakh tonnes (LT) from 15.71 lakh farmers in the state, the Centre has thrown a spanner in the works.

The Union Food Ministry has conveyed to the Bhupesh Baghel-led government that it will not accept the excess paddy procured from the state on account of the latter giving a bonus of Rs 750 per quintal, over and above the Centre’s minimum support price (MSP) of Rs 1,750 fixed for the 2018-19 marketing year beginning October.

“This is not a new policy. We had taken a decision in June 2014 that if any state government declares a bonus above the MSP, the procurement of grain for the Central pool would be limited only to the extent of that state’s public distribution system (PDS) requirement under the National Food Security Act (NFSA). The state will, then, be responsible for the disposal of any surplus quantity that gets procured and would have to bear the entire financial burden in this regard,” said a top Food Ministry official.

During the current marketing season from November 1 to January 31, an all-time-high 80.37 LT of paddy was procured from Chhattisgarh (see Table 1). However, the Food Corporation of India’s website shows total procurement from the state at only 60 LT. The difference is what the Centre might treat as surplus procurement.

“It’s not that we won’t accept any of this surplus grain. Last year, we took 16 LT of parboiled rice from Chhattisgarh (which is equivalent to about 24 LT of surplus paddy). This year, we have offered to lift 24 LT of parboiled rice, for which there is demand particularly in the southern states (24 LT of rice translates into roughly 36 LT of paddy at 67 per cent milling ratio),” the official added.

Chhattisgarh Chief Minister Bhupesh Baghel told The Indian Express that the state government has “earnestly requested” the Centre to accept the entire additional paddy procured by it. But that request hasn’t been granted as yet. “The Centre can easily accommodate this additional quantity. Chhattisgarh farmers have contributed to national food security by selling a record quantity of grain and our government has given them the best remuneration in the country. We are disappointed that the Centre isn’t willing to support this endeavour,” he stated.

The 80.37 LT of paddy purchased at Rs 2,500/quintal — which has also catapulted Chhattisgarh into the No 2 spot in paddy procurement, behind Punjab (see Table 2) — would result in over Rs 20,000 crore being transferred to an estimated 15.71 lakh farmers in the state. “The payments have been almost completed,” said Principal Secretary (Food and Civil Supplies) Richa Sharma.

Of the Rs 20,000 crore, Chhattisgarh government’s outgo from the extra Rs 750/quintal price would be over Rs 6,000 crore. The financial burden could be more if the Centre does not bear even the MSP liability on what it deems as excess paddy procurement.

The practice of declaring bonuses over the Centre’s MSP was started by the previous Raman Singh-led BJP government. The latter, in 2008-09, granted a bonus of Rs 220/quintal for paddy, which was reduced to Rs 50 in the following three years, before being enhanced to Rs 270/quintal in 2012-13 and further to Rs 300/quintal in 2013-14.

After the Narendra Modi government came to power at the Centre and the Food Ministry issued its June 12, 2014 order, the Raman Singh administration did not announce any bonus in 2014-15 and 2015-16. But on August 31, 2017 — a year ahead of state polls — his government extended a Rs 300/quintal bonus for 2017-18, which was also made retrospectively applicable for 2016-17. BJP faced flak for not fulfilling its Assembly election promise in 2014-15 and 2015-16.

The new Congress government has now gone one step ahead, by not only promising a Rs 2,500 procurement price — via a Rs 750/quintal bonus — in its Assembly poll manifesto, but implementing it when the Lok Sabha elections are round the corner. The Congress might well make this a talking point: At a rally in neighbouring Odisha on January 25, the party president Rahul Gandhi committed to pay an even higher MSP of Rs 2,600 per quintal, in a state where Assembly elections are due along with the national polls in April-May.

But Chhattisgarh, meanwhile, has to find ways to deal with the surplus paddy it has procured.

The state’s annual rice allocation under the NFSA is only 13.84 LT, which comes to around 21 LT of paddy. NFSA entitles all ‘priority’ households, both below and above poverty line, to 5 kg of rice per person per month at Rs 3/kg. In addition, the ‘Antyodaya’ or poorest of the poor households are given 35 kg per month at the same rate per family, irrespective of the number of members.

The Baghel government, earlier this month, announced that every ration card-holding family, whether priority or Antyodaya, will henceforth get 35 kg of rice per month. The state’s total PDS rice requirement would, accordingly, go up to 25.62 LT. That, together with the 24 LT of surplus parboiled rice lifted by the Centre, will add up to 49.62 LT or just over 74 LT of paddy.

“We will still be left with some 6 LT of paddy, which would have to be milled into rice and disposed of before the monsoon,” admitted Sharma, adding that the Chhattisgarh State Cooperative Marketing Federation (Markfed) has been asked to explore options to sell this rice in the domestic market.

Ajay Chandrakar, a former minister in the Raman Singh government, alleged that the “wild spending” by the current Congress dispensation will produce “disastrous results” in a state, which has always controlled its fiscal deficits and debt. Further, he did not rule out payments being made to “bogus farmers”, as “it is not possible for procurement figures to go up this high”.

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