The nodal agency which undertakes procurement and storage of food grain is the Food Corporation of India (FCI). The distribution of food grains is primarily under the National Food Security Act, 2013 (NFSA) and other welfare schemes of the Government and is governed by the scale of allocation and its offtake by the beneficiaries.
VARIOUS COMPONENTS OF FOOD MANAGEMENT
Procurement: The cost incurred by FCI for the procurement of food grains is referred to as Economic Cost of Food grains. It comprises of 3 components - Pooled cost of grains (weighted MSP of stock of food grains), Procurement incidentals (Labour charges, Transport charges, storage cost etc.) and cost of distribution.
The States have also been encouraged to undertake the procurement of food grains on their own through the Decentralised procurement scheme. It has been introduced to reduce the transportation and storage costs of FCI.
FOOD GRAIN STOCKING NORMS: It has 2 components:
- Operational Stocks: For meeting monthly distributional requirement under TPDS and other welfare schemes.
- Strategic Reserves: To meet emergency situations.
- Note: The norms are defined for a quarter of financial year i.e., how much buffer has to be maintained for each quarter of financial year.
DISTRIBUTION OF FOOD GRAINS in accordance with National Food Security Act 2013
Note: The Central Issue Price is the price at which centre allocates food grains to the states. It can be considered as the price at which food grains are sold through the network of fair price shops. For instance, it is Rs 1/2/3 per kg for nutri-cereals/wheat/rice respectively. Under the NFSA, the CIP is Rs 200/quintal in case of wheat and Rs 300/quintal in case of rice.
VARIOUS ISSUES IN PUBLIC DISTRIBUTION SYSTEM (PDS)
RECOMMENDATIONS OF SHANTA KUMAR COMMITTEE ON PDS REFORMS
- Need for End to End Computerisation: Given that leakages in PDS range from 40 to 50 percent, Government should defer implementation of NFSA in states that have not done end to end computerization; have not put the list of beneficiaries online for anyone to verify, and have not set up vigilance committees to check pilferage from PDS.
- Reducing the Coverage: Reduce the current coverage of 67% of the population under NFSA to 40% (comfortably cover BPL families and some even above that)
- Increasing the Food grains: The amount of food grains should be increased to 7kg/person from the present 5kg grain per person.
- Pricing: Antyodaya households can be given grains at Rs 3/2/1/kg for the time being, but pricing for priority households must be linked to MSP, say 50 percent of MSP
- Timely Allocation: Targeted beneficiaries should be given 6 months ration immediately after the procurement season ends. This will save the consumers from various hassles of monthly arrivals at FPS and also save on the storage costs of agencies.
- Cash Transfers: Gradual introduction of cash transfers in PDS, starting with large cities with more than 1 million population; extending it to grain surplus states, and then giving option to deficit states to opt for cash or physical grain distribution. This would lead to saving of Rs 30,000 crores.
- Storage, movement and Transport of Food Grains: FCI should outsource its stocking operations to various agencies such as Central Warehousing Corporation, State Warehousing Corporation to bring down costs of storage. Covered and plinth (CAP) storage should be gradually phased out. The Movement of grains needs to be gradually containerized to reduce transit losses.
- Buffer Stocks: During the last five years, on an average, buffer stocks with FCI have been more than double the buffer stocking norms costing the nation thousands of crores of rupees loss without any worthwhile purpose being served. The underlying reasons for this situation are many, starting with export bans to open ended procurement with distortions. There has to be a comprehensive liquidation policy which gives sufficient amount of flexibility to FCI to either export or sell the surplus stocks in the market.