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Govt set to review buffer stock norms -Madhvi Sally
-The Economic Times


The government is reviewing the norms for keeping buffer stocks of wheat and rice required at a particular time of the year to feed the public distribution system and welfare schemes.

The demand for wheat and rice distributed through welfare schemes is expected to rise with the implementation of the food security law.

"The government is looking at the issue and we are discussing it with different departments," KV Thomas, minister for consumer affairs, food and public distribution, told ET. He said he was going to take up the issue with the Commission for Agricultural Costs and Prices (CACP). The prime minister has already recommended the issue to C Rangarajan, chairman, Prime Minister's Economic Advisory Council.

Thomas said the government was looking at three issues which would determine the buffer norms.

"We are looking at the government's role in procurement and marketing of the grains, protecting the farmer's interest by setting a minimum support price and the subsidy we are giving to private traders for bulk purchase under the Open Market sale Scheme (OMSS)," he said. Buffer norms for wheat and rice have not been revised since April 2005.

According to the norm, the minimum quantity of grains available with the government should be 4 million tonne (mt) of wheat and 12.2 mt rice on April 1 every year. But as on April 1 this year, the Food Corporation of India (FCI) was holding 24.2 mt wheat and 35.5 mt rice.

The government anticipates that by July1, stock holding of grains will touch 93 mt including wheat stocks at 60 mt.

"The government had kept buffer norms at a time when grain production in the country was low, which is not the situation now. As per our projection till 2040, we will have grain (wheat and rice) production touching 253.24 mt compared to the 2013-14 projection of 192.02 mt," said Thomas.

According to FCI officials, the expenditure incurred by the government on holding one lakh tonne wheat per annum was 25 crore and 32 crore for rice.

"It is high time that the country evaluated how much buffer stock we need and liquidate excessive stock. This will tame food inflation, reduce food subsidy and bring rationalisation to grain market," said Ashok Gulati , chairman, CACP.

The National Centre for Agricultural Economics and Policy Research (NCAP) has submitted its recommendations on buffer norms a few months ago. "We feel that buffer norms have to increase with rising production and population," said Ramesh Chand, director, NCAP. He said the Food Security Act will now ensure that the government will need around 64 million tonne wheat for the scheme as against 56 million tonne currently required to run the public distribution system.