Grain down the drain

At long last, the Bharatiya Janata Party has woken to the absurdities of the Centre's food procurement and distribution policies. Somethin...

At long last, the Bharatiya Janata Party has woken to the absurdities of the Centre8217;s food procurement and distribution policies. Something is terribly wrong somewhere when thousands of crores go on food subsidies and government granaries are full to overflowing but millions of people remain hungry and undernourished. Now the BJP has brought the full weight of its national executive to bear on the question of what can be done to improve things. Will it be content to tinker with the system or will it recommend bold remedies? One of those remedies should certainly be the break-up of the leviathan Food Corporation of India which has been for three and a half decades the main agency in the country for the procurement, storage, transport and distribution of foodgrain. With so much market power and so many functions concentrated in one body, the FCI was, and is, a constant temptation to politicians who have turned it into an instrument to satisfy their political aims. As a result of political agendas the FCI hasnot managed to strike a balance between the many interests it was set up to serve.

Consumers, particularly rural ones, have been badly served relative to farmers over the last decade during which procurement prices rose continuously. The figures are very telling. Between 1990 and 1999, the cost of procuring and distributing a quintal of wheat and rice rose ten per cent each year. In theory, the FCI should enjoy economies of scale because of its size but if it does they are not visible and the benefits have not trickled down to the consumer. On the contrary, the government8217;s burgeoning subsidy bill has necessitated massive increases during the 1990s in the prices of foodgrain sold through the public distribution system. Part of the reason for high costs is also mismanagement and corruption on a scale to match the FCI8217;s huge size. Breaking up the FCI will make it more manageable and will reduce, if it does not completely end, the diversion of foodgrain by corrupt officials.

Ideally the FCI should manage India8217;s buffer stocks though not necessarily maintain them itself. That function can be performed just as well by the private sector on behalf of the government. Buffer stocks should be maintained at a reasonable level unlike what prevails at present when stocks are way over what is essential. All the rest, procurement, distribution and storage and transport, can be left progressively to the private sector and to other public agencies like panchayats and state government bodies. Several policy changes are called for including lifting restrictions on inter-state transport of foodgrain, establishing a strong regulatory framework for the private trade and setting up efficient price monitoring mechanisms. All this needs careful thought. It would do no good to jump from the frying pan into the fire of monopolistic and exploitative private traders. The government must bear the responsibility of delivering foodgrain to remote and inaccessible regions and the responsibility of ensuringthe undernourished get food at subsidised prices. But the FCI as presently constituted is not essential for the tasks.