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LATEST NEWS UPDATES | Grain stocking policy needs prompt overhaul

Grain stocking policy needs prompt overhaul

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published Published on Jul 16, 2013   modified Modified on Jul 16, 2013
-The Economic Times


It is scandalous that inflation in cereals remains above 17 per cent even as food grain stocks with the Centre are close to 80 million tonnes. The Committee on Agricultural Costs and Prices (CACP) paper estimates that the buffer stocking requirement would go up, thanks to the Food Security law, but not higher than 41.5 million as of July 1. The rest is excess.

The government must sell off excess stocks at a price recommended by the CACP, Rs 13,500 a tonne in the case of wheat. The food minister and his secretary must explain to the people why they are hoarding one-third the annual output of grain, a criminal activity that pushes up prices in the market, and locks up huge government funds: Rs 70,000-92,000 crore, or nearly 1 per cent of GDP. The CACP notes this infusion of "excess" money into the economy without corresponding flow of goods has led to the paradox of rising prices of rice and wheat, 'amidst overflowing stocks in government godowns.'

Clearly, the warped grain stocking policy needs prompt overhaul. Procurement and distribution of grain remain highly inefficient, high in cost and unnecessarily centralised. Large-scale public procurement has simply strangulated private grain trade in Punjab, Haryana, MP and elsewhere, and massively padded up costs right across the board not just in logistics, storage and transport but has also resulted in questionable add-on levies by various state governments. And such a system of monopoly grain procurement would merely further escalate overall costs, waste limited government funds and result in wholly sub-optimal results.

Blame it on incompetence, not the Food Security law. The paper says that buffer stocks can be limited to 10-15 MT and still ensure food security, with innovative, state-specific local solutions, including direct income transfers.


The Economic Times, 15 July, 2013, http://economictimes.indiatimes.com/opinion/editorial/grain-stocking-policy-needs-prompt-overhaul/articleshow/21075262.cms


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