Implementing panel's suggestions on FCI may save Rs 33K cr annually, says Ashok Gulati

A six-member committee set up by the NDA government under former food minister Shanta Kumar has recommended a reorientation in the role of Food Corporation of India (FCI) to enable the agency to focus more on the eastern states while allowing room for a larger role of other competent agencies and the private sector.

It, however, also ventured into the politically sensitive issue of reducing the coverage under the National Food Security Act (NFSA) to supply higher grains to the poor.

Implementing the recommendations will help the government save Rs 33,000 crore every year, claimed Ashok Gulati, one of the committee members.

The committee, which submitted its report to Prime Minister Narendra Modi on Wednesday, wants the FCI to give charge of grain procurement to state governments in states such as Punjab, Haryana, Andhra Pradesh and Madhya Pradesh.

"FCI should focus on states such as Uttar Pradesh (eastern belt), Bihar, West Bengal and Assam where distress sale of grains take place," said Kumar, addressing a press conference at FCI headquarters in Delhi on Thursday's afternoon.

He added that the benefit of procurement at minimum support price only reaches to 6 per cent of the 90 million farmers.

FCI, the committee said, must focus on creating bulk grain handling godowns and upgrade the grain supply chain.

FCI Chairman C Viswanath said FCI will trim the staffs at its zonal officers and deploy more staff in eastern states once government approves the recommendations.

FCI has about 24,000 employees on its payroll.

In order to encourage the private sector to purchase grain from market the committee has advised that state level bonuses must stop and state's statutory levies and taxes on procurement must be made uniform.

Today, these levies and taxes range from 2 per cent to 14 per cent in different states.

The committee has also suggested that the fertilizer industry should be deregulated and fertilizer subsidy should be passed on directly to farmers at Rs 7,000 per hectare every year.

The committee has also suggested that the beneficiaries of public distribution of grain must be given a direct cash subsidy to end the pilferage and black marketing of grains.

It has also recommended that coverage under NFSA should be reduced to 40 per cent of the population instead of the current 67 per cent while augmenting the monthly support to priority households from 5 kg to 7 kg per person.

It also bats for an increase in price of grain to priority households from Rs 3 and Rs 2 per kg of rice and wheat to half of the minimum support price.