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Ram Vilas Paswan, the minister in charge of food and public distribution talks with Sanjeeb Mukherjee
-The Business Standard


Interview with Union minister in charge of food and public distribution

Ever since the new government took office in May, food prices and related issues have been one of the most discussed subjects. Ram Vilas Paswan, the minister in charge of food and public distribution, says hoarders are to blame. And, speaks of the various other priorities under his charge. Edited exceprts of a talk with Sanjeeb Mukherjee:

* The sugar industry in Uttar Pradesh has issued an ultimatum that they would stop cane crushing unless the state government fixes a price in line with the C Rangarajan committee report.

The Centre will do everything possible to ensure that dues to farmers are cleared at the earliest. Unless cane farmers are paid in time, it will impact future production. Simultaneously, it must be noted that millers say they are going through a crisis due to high cane prices imposed by state governments. We have not fixed this rate...from the Centre's side, the cane price is decided by the Commission for Agricultural Costs and Price. It is the responsibility of state governments to ensure mills make timely payments and only they are authorised to take action.

* What more can the Centre do to ensure that farmers are paid and mills don't stop operation?

To help the millers, we are planning a series of measures, which includes increasing the import duty on sugar to 40 per cent from the current 15 per cent, aggressively pursuing a 10 per cent ethanol blending programme, which at present in less than five per cent, and extending the tenure of interest-free loans for five years from the current three years. With these, the mills will have some room to make early payments. We are also talking to all state governments concerned and have also called a meeting of state representatives, cooperative and private sugar mills on Thursday.

When I took charge of this ministry, the total sugarcane payment arrear was around Rs 13,000 crore, which I have brought down to around Rs 9,000 crore. The largest is still in UP, at Rs 5,000-5,500 crore.

* One big job of your ministry is unbundling of the Food Corporation of India (FCI). What has been the progress?

FCI primarily performs three functions - storage of grain, transportation and distribution. Distribution of grain in many cases is with the state governments, so the Centre is left with only storage and transport. If we delink transportation, it can be problematic. For example, take wheat. It is produced in Punjab and sent to say Bihar for consumption. If we delink this, two separate authorities will have to handle it...one will be obviously the railways and the other the transportation wing of FCI. It is because of problems like these that we have to take a considered view on the unbundling.

* The ministry of food recently decided to limit its foodgrain procurement from states which declare a bonus over and above the Centre-fixed Minimum Support Price (MSP). It has been opposed by some states. How does the government plan to implement this?

Our view is if any state wants to promote a certain cropping pattern, raise yields or protect the interest of its farmers, they can do so with other methods as well, which sometimes might not be very populist in the public view, for example giving input subsidy, interest subvention on crop loans, etc. By doing so, they (states) will not only help the farmers, but will also not distort the market in the process. In the same breath, I'd like to make it very clear that the ministry has not arrived at any firm conclusion on the demand made by state governments (to scrap the order). My view is the farmers' interest should be definitely protected but a bonus over MSP is not the only way.

* The government recently extended the deadline for identification of beneficiaries under the National Food Security Act (NFSA) by another 90 days, but states seem to be unwilling to speedily implement this law and also have many objections to the various provisions. Does the government plan a comprehensive review of the legislation?

Till now, 11 states have implemented the NFSA but most have done it in haste, which is why we gave them another three months. However, no state has responded after the implementation period was extended. It is in the interest of state governments to implement the NFSA at the earliest, as they would get grain much cheaper than the current prices. The Union food ministry would take corrective measures only after the Act is implemented in its entirety across the country; we can then identify the problem areas more efficiently.

* Food inflation is a matter of grave concern for all. Data show it is primarily in onions, potatoes and tomatoes. What is the reason?

One major reason is that fruit and vegetable producing centres are too few and consuming centres are many. I'm also of the firm opinion that speculation and hoarding by middlemen is a big reason for the jump in prices; it becomes more pronounced between July and October. Moreover, we do not have a common market for fruit and vegetables and there is a lot of information asymmetry at both the farmers' end and also at the end of consumers. This asymmetry is exploited by intermediaries like wholesalers and big retail chains.

* The food subsidy in 2014-15 has been estimated at Rs 115,000 crore, around 25 per cent more than in 2013-14. This is expected to go up further, as and when NFSA is implemented. How does the government plan to keep this under check?

I can't do much about that part of the food subsidy which is mandated under this Act but what I can do and vigorously pursuing is to look at the other side of the matter. That is, cutting storage and distribution losses and increasing the FCI's efficiency. I'm addressing the problem of storage and transportation losses with full sincerity.

* What short-term and long-term strategies are the government adopting to check prices of fruit and vegetables?

I have taken some measures in the past couple of months and will do more as the need arises. I'm making necessary changes in the Essential Commodities Act to make hoarding a non-bailable offence and in the black-marketing Act to increase the detention period from six months to one year. We are also closely monitoring the wholesale and retail price of as many as 22 essential commodities on a regular basis. The government has started the process of delisting of fruits and vegetables from Agricultural Produce Marketing Committees.

* Long-term measures?

I'm working on improving the supply chain management, developing scientific storage facilities and scientific warehouses and a comprehensive strategy to link producers directly with consumers. The Budget 2014-15 provides for a Warehousing Infrastructure Fund of Rs 5,000 crore.

* The foodgrain stock in the central pool is far more than the required quantity. What long-term plan does the government have to ensure proper storage?

The food ministry is adopting a multi-pronged strategy to ensure grains don't get wasted during rains and the Centre stores only what is required. The first thing is to release increased quantities of wheat in the open market and allocating enough rice through the Public Distribution System. I have also started taking foodgrain only to the extent required for the central pool. This does not mean the Centre won't procure grain from farmers in the event of distress sales. Further, to ensure purchase at the MSP and to reduce recycling, the percentage of levy rice from mills has been limited to 25 per cent next year (2014-15), which till now was up to 75 per cent in certain states.

* What about storage facilities?

Apart from the plan schemes in the northeastern states, the Private Enterprise Guarantee scheme involving private land and silos on a public-private partnership mode have been initiated and as much as 15 million tonnes of additional storage capacity has been created. I sincerely feel with all the measures mentioned, we should be able to take care of excess foodgrain procurement in the coming times.

 

The Business Standard, 11 August, 2014, http://www.business-standard.com/article/economy-policy/mi
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Image Courtesy: The Business Standard