The Punjab challenge: No honeymoon period for Captain

The Punjab challenge: No honeymoon period for Captain

The Congress government will face its first major test in ensuring smooth wheat procurement.

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Labourers cleaning wheat at a mandi in Punjab. pti

Captain Amarinder Singh might have to hit the ground running, even as he takes over as chief minister of Punjab after a ten-year interlude. His first test will come in as less as 3-4 weeks, when government agencies get ready to procure a likely bumper crop of wheat that would arrive in the 150-plus mandis across the state. Till a couple of years ago, grain procurement was a smooth and routine affair in Punjab. But it hasn’t been so since the paddy procurement season from October 2014, when the new BJP-led dispensation at the Centre delayed the release of a second Rs 10,000 crore cash credit limit (CCL) installment from banks to the state government. The amount — out of a little over Rs 20,000 crore demanded — was finally released, but only after the Punjab government had partly cleared what the Centre claimed to be outstanding payment dues from earlier years.

Subsequently, the issue of clearing outstandings was raised before every kharif (October-December) and rabi (April-June) procurement season. This was accompanied by delayed release of CCL installments from banks, necessary to enable state agencies undertake grain purchases from farmers. Matters came to a head last April, when the Reserve Bank of India (RBI) claimed that grain stocks worth Rs 12,000 crore supposedly procured using bank monies had gone “missing” from Punjab’s godowns. It resulted in the central bank’s authorisation for the first CCL instalment of Rs 17,523 crore – as against the state government’s demand of Rs 20,094 crore – coming only on April 20. And even that happened only after the chief minister Parkash Singh Badal – whose Shiromani Akali Dal (SAD) is an alliance partner of the BJP both at the Centre and the state – personally met and sought Prime Minister Narendra Modi’s intervention.

During the 2016 paddy procurement season, the CCL installment releases were staggered to the extent that state agencies could pay farmers Rs 12,000 crore between October 1 and October 16, and nothing thereafter till November 21. Subsequently, payments of Rs 7,437 crore were made till December 6 and the balance Rs 5,000-5,500 crore towards mid-December. “In the past two years, we have been getting payment 40-60 days after sale of our crop, when the prescribed norm of the state agencies is 72 hours,” noted Jagir Singh, a five-acre farmer from Jamsher village near Jalandhar. His real fear, though, is that things could worsen with a new state government ruled by a party (Congress), which is in the Opposition at the Centre.

“We never had such a problem during 2002 to 2007 under Amarinder Singh. We hope he will save us from uncertainty and harassment this time, too,” said Sulkhan Singh, who farms seven acres near Nurmahal in Jalandhar district. His confidence is, however, not shared by Balbir Singh Rajewal, president of a Bharatiya Kisan Union faction. “How can we expect timely release of CCL installments now, when the current government at the Centre did not care for its own ally ruling here?” he quipped.  The outgoing SAD-BJP government in Punjab had sought a CCL amount of Rs 20,863 crore for procurement of up to 12.5 million tonnes (mt) of this year’s wheat crop, which will start coming in from early April. The Centre is said to have already given its approval, even as the RBI is yet to issue directions to the 67-bank consortium led by the State Bank of India to release the funds.


Equally serious an issue is the Badal government’s decision in October to borrow an amount of Rs 31,000 crore, to settle the state’s “legacy food cash credit account” piled up until March 31, 2015 and not secured by grain stocks. The conversion of these supposed outstandings into a term loan, repayable in half-yearly instalments over 20 years, has come under flak, as it adds to the state’s already heavy debt burden. “Earlier, we were being told that the Punjab government was being owed money by the Centre against various unreimbursed costs of procurement. But suddenly now, it is the state government that has agreed to repay the Centre, without giving a convincing reason for doing so. The cost will ultimately be borne by Punjab’s people and if the new government does not agree to pay, the Centre will simply stop releasing CCL amounts,” Rajewal pointed out.

Wheat procurement from Punjab stood at 10.90 mt in 2013-14, 11.64 mt in 2014-15, 10.34 mt in 2015-16 and 10.65 mt in 2016-17, out of the country’s total of 25.09 mt, 28.03 mt, 28.09 mt and 22.96 mt for these respective four rabi marketing seasons.