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Revamping Food Corp: Panel wants Food Security Act changed but will BJP bite the bullet? -Seetha
-FirstPost.com

In 2001, the Hyderabad-based Administrative Staff College of India (ASCI) was asked by the National Democratic Alliance (NDA) government to study the costs of acquisition and distribution of food grains by the Food Corporation of India (FCI).

After making a slew of suggestions, the report's author Gautam Pingle said the report was not making recommendations on "the more serious issue - of food grain policy" because it was beyond its scope. But the report underlined the fact that "the shape and dimensions of the policy affect FCI operations".

Thirteen years later, a committee set up by another NDA government decided not to hold itself back. The report of the High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India submitted to the Prime Minister on Wednesday, makes a slew of suggestions on seemingly unrelated topics - the National Food Security Act (NFSA), cash transfers to farmers as well as below poverty line (BPL) consumers, minimum support prices (MSP), deregulating urea prices and much more.

Rejecting criticism that the committee was exceeding its brief - nowhere in its terms of reference has it been asked to look into these issues - committee chairman Shanta Kumar and member Ashok Gulati pointed out (much like Pingle did in his report) that all these issues are deeply inter-related and have a bearing on how FCI goes about its work.

The report notes that the FCI has three main objectives in terms of the food economy - giving effective price support for farmers, providing foodgrains for the public distribution system (PDS) and maintaining buffer stocks for food security.

It then points out that none of these three objectives are being met - MSP benefits only 6 percent of farmers, PDS suffers from huge leakages, and the buffer stocks are often far above the requirement leading to huge costs being incurred in storing them and food grains often rotting.

Acknowledging that the FCI is not responsible for a lot of this - it is not involved in food policy formulation - the report says "a desirable solution to FCI's restructuring cannot be found unless one looks at the issue of food security somewhat holistically".

Yes, many of these suggestions are not radically new. They have been part of the food economy reforms discourse for some time now. But, along with the proposals relating specifically to FCI's operations, they give the Narendra Modi government a template to work on to bring about a complete much-needed overhaul of the food economy.

But will it lead to an overhaul of the FCI? And isn't that needed? The report admits that FCI has been in the phase of diseconomies of scale and has been due for restructuring and unbundling long back.It does talk about FCI becoming an Agency for Innovation in Foodgrain Management Systems. But it has not recommended an unbundling of FCI either on functional lines or on geographical lines (something the ASCI report did).Gulati says the report's recommendations relating to re-orienting the role of FCI in procurement and movement of foodgrains amount to a restructuring.

However, it skips the issue of autonomy for FCI (barring saying that it should get more freedom in open market sales), even though it acknowledges that the Corporation does not operate on business principles in spite of its terms of reference saying it should.

Can any public sector undertaking act on commercial principles unless it is assured a large measure of autonomy? The ASCI report had made a clear case for full autonomy for FCI in all its operations, saying this was the only way to hold it responsible for its performance.

The report is also silent on the role of the artiya (the middlemen) in the whole procurement process. The commissions to these artiyas runs into a few hundred crores and the ASCI report had called this an unnecessary cost.

By not dealing with these issues in detail (its brief, after all, was restructuring the FCI), the report could attract the criticism that it was using FCI as a cover to push unpopular food economy reforms.

Indeed, many of its recommendations are going to be unpopular, notwithstanding their soundness. The proposal on amending the NFSA will promptly be dubbed a dilution, even though it talks of better targeting and giving more to BPL families.

The Congress, Left and all the rights-based entitlements supporters will be up in arms over this. Shanta Kumar did not make things easier by saying, while addressing a press conference, that there had been misgivings about the 67 percent coverage of the NFSA within the BJP but it had voted for the bill because it was an election issue.

Another proposal to bring down statutory levies on food grains be restricted to 3-4 percent and later it should be incorporated in the MSP will also be strongly opposed by states like Punjab, Andhra Pradesh, Haryana and Odisha where it is upwards of 10 percent.

Large farmers and governments of states where they dominate will also try and block any changes to the MSP policy on the lines the committee has recommended.

And there's going to be huge opposition within FCI, not just from the unions but also the managerial cadre. A lean and mean organisation on the lines the report envisages will mean more accountability for the employees.

But despite some of its shortcomings, the report sets out a comprehensive overhaul of the food economy. This overhaul is long overdue. The government may have to bite many bullets in implementing these recommendations, but these need to be bitten.