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LATEST NEWS UPDATES | Grain stocks pile up at FCI on slipup

Grain stocks pile up at FCI on slipup

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published Published on Aug 26, 2010   modified Modified on Aug 26, 2010


Has the food ministry been misleading over changes to its subsidised grain sale in the open market, resulting in massive excess stocks still lying with the Food Corporation of India (FCI) and huge wastage of grain at at time of high food inflation?

In a letter to the PMO this month, the food and consumer affairs ministry has acknowledged that wheat and rice to retail consumers in states under the open market sales scheme, direct, (OMSS-D) was provided out of earlier unlifted quantity from the previous scheme, out of the total allocation.

In effect, there was no major change in the subsidised grain sale policy, including additional grain allocation and tempered prices, to ensure that crucial flaws in the earlier scheme were corrected and small consumers had easy access to cheap grain in the open market. Nor indeed, has there been any attempt to analyse and rectify the reasons why huge quantities of grain remained unlifted in the first place.

The OMSS (D) for 2009-10 is in force up to September. Under this scheme, the Centre has released 20 lakh tonnes of wheat and 1 million tonnes of rice to states for distribution to household consumers. In addition, 2.08 mt of wheat has been allocated to bulk consumers through open tenders by the FCI.

But it appears that same grain from earlier unlifted quantities is being recycled, without any attempt to right earlier wrongs in the policy. A substantial part of the Centre’s huge food subsidy bill is on account of holding excess grain for long periods, leading also to much loss in rotting grain. Storage, in fact, is a key worry of the Central government at present. Despite this, the subsidy may not be targeted to the really needy under the OMSS as it exists.

The “lean “ season for wheat runs through October to March and it is considered crucial that retail consumers have easy access to reasonably priced wheat in this period. The government currently has excess stocks about 16 mt wheat.

“(Some) ...2.50 lakh tonnes of rice and 65,000 tonnes of wheat, out of the unlifted quantity, have been re-allocated to Tamil Nadu and 250 tonnes of wheat to Lakshadweep under OMSS (D) for distribution to retail consumers. Interestingly, although high price for wheat under OMSS was considered the key reason why offtake by states was abyssmally low compared to high allocation.

Ex-Ludhiana prices, in addition to a caveat that allowed state governments to charge “up to Rs 200 a quintal” higher than base price, analysts maintained, was the key reason for low offtake.

 


The Economic Times, 27 August, 2010, http://economictimes.indiatimes.com/news/economy/agriculture/Grain-stocks-pile-up-at-FCI-on-slipup/articleshow/6443075.cms


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