Introduction:

Food Corporation of India (FCI) was formed in 1960’s and was part of larger plan directed toward food security and self-sufficiency. Other major institution was CACP. These two institutions along with MSP regime and Public distribution system were expected to work in tandem. FCI’s responsibility was to procure, Store and discharge grains as per policy of the government. Over the time, as in other cases these institutions too failed to adapt to changing circumstances such as changing demands of economy. As a result FCI now reels under chronic inefficiency through huge wastages, and storage cost of grains keeps on cumulating.

Body:

Reforms needed in FCI due to:

• Issues with procurement:
  • Open-ended Procurement: All incoming grains accepted even if buffer stock is filled creating a shortage in the open market.
  • The recent implementation of Nation food security act would only increase the quantum of procurement resulting in higher prices for grains.
  • The gap between required and existing storage capacity.
• Issues with storage:
  • Inadequate storage capacity with FCI.
  • Food grains rotting or damaging on the CAP or Cover & Plinth storage.
• Issues with allocation of food grains:
  • Inaccurate identification of beneficiaries.
  • Illicit Fair Price shops: The shop owners have created a large number of bogus cards or ghost cards(cards for nonexistent people) to sell food grains in the open market.
• Issues with transportation:
• Leakages in food grains distribution to be reduced as most leakages in PDS takes place in initial stages.

The government had set up a six-member committee under Shanta Kumar to suggest restructuring or unbundling of FCI to improve its financial management and operational efficiency in procurement, storage and distribution of food grains.

Important recommendations made:

• Reduce the number of beneficiaries under the Food Security Act—from the current 67 per cent to 40 per cent.
• Allow private players to procure and store food grains.
• Stop bonuses on minimum support price (MSP) paid by states to farmers, and adopt cash transfer system so that MSP and food subsidy amounts can be directly transferred to the accounts of farmers and food security beneficiaries.
• FCI should involve itself in full-fledged grains procurement only in those states which are poor in procurement. In the case of those states which are performing well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the states should do the procurement.
• Abolishing levy rice: Under levy rice policy, government buys certain percentage of rice (varies from 25 to 75 per cent in states) from the mills compulsorily, which is called levy rice. Mills are allowed to sell only the remainder in the open market.
• Deregulate fertiliser sector and provide cash fertiliser subsidy of Rs 7,000 per hectare to farmers.
• Outsource of stocking of grains: The committee calls for setting up of negotiable warehouse receipt (NWR) system. In the new system, farmers can deposit their produce in these registered warehouses and get 80 per cent of the advance from bank against their produce on the basis of MSP.
• Clear and transparent liquidation policy for buffer stock: FCI should be given greater flexibility in doing business; it should offload surplus stock in open market or export, as per need.

Government has taken up few of the reforms as follows:

• Aadhaar Linked and digitized ration cards: This allows online entry and verification of beneficiary data. It also enables online tracking of monthly entitlements and off-take of foodgrains by beneficiaries.
• Computerized Fair Price Shops: FPS automated by installing ‘Point of Sale’ device to swap the ration card. It authenticates the beneficiaries and records the quantity of subsidized grains given to a family.
• Direct Benefit Transfer: Under the Direct Benefit Transfer scheme, cash is transferred to the beneficiaries’ account in lieu of foodgrains subsidy component. They will be free to buy food grains from anywhere in the market. For taking up this model, pre-requisites for the States/UTs would be to complete digitization of beneficiary data and seed Aadhaar and bank account details of beneficiaries. It is estimated that cash transfers alone could save the exchequer Rs.30,000 crore every year.
• Use of GPS technology: Use of Global Positioning System (GPS) technology to track the movement of trucks carrying food grains from state depots to FPS which can help to prevent diversion.
• SMS-based monitoring: Allows monitoring by citizens so they can register their mobile numbers and send/receive SMS alerts during dispatch and arrival of TPDS commodities
• Use of web-based citizens’ portal: Public Grievance Redressal Machineries, such as a toll-free number for call centers to register complaints or suggestions.

Government has come up with a roadmap with the following highlights:

• Primacy will be given to ensuring that the functioning of FCI is streamlined and fast paced as per recommendations of the Shanta Kumar Committee.
• 100 lakh ton silo storage capacity will be created in the country. For this, RITES has been assigned the task of changing the silo model and they will give their recommendations in 90 days to FCI.
• At present, there are 3 types of labourers in FCI namely Departmental, Daily Payment System (DPS) and No work no pay workers along with contractual labour. Government of India is deliberating to finish the 3 different arrangements and bring all workers of FCI under a single, uniform system which will bring stability of tenure and secured wages for all.
• To improve the usage of Information Technology in FCI, a Human Resource Management System (HRMS) will be implemented, the work for which will begin in August, 2019 and will be completed by August 2020. This move will benefit 22,000 employees in 196 offices of FCI.

Conclusion:        

The Committee recommendations however was criticized due to suggestions like limiting NFSA, cash subsidy, privatization of FCI despite suggesting useful reforms to reform FCI, PDS. A closer scrutiny in the recommendation is needed today in times of agricultural distress & drought prone years.