The Prime Minister in an address to the Parliament talked about reforms in the Food Corporation of India.
Here is the gist, for exam point of view :
The problem with FCI
- High inefficiecy
- High food inflation despite record buffer stock
- High corruption and leakage
But what is the problem with FCI?
Primarily, the problem can be traced to the way it is organised – two aspects – Structural & Functional
Structural Problem
- FCI is NOT a govt. company. A govt company is accountable to the owner – the government. Since it is not a company, its accountability to government is difficult to enforce
- FCI is NOT a govt department. A govt department is accountable to the Parliament via the Minister. Hence, little accountability to Parliament.
Functional Problem
FCI does two things : All messed up.
- Procurement : It procures food grains from the farmer at the MSP.
- Then it tries to do three things with it. Ek kaam nahi hota theek se aur teen karne chale hain. It is also responsible for storage, transportation and distribution
No autonomy, hence no responsibility. Let us see how.
1. Procurement price , base don MSP is officially decided by CACP (Commission for Agricultural Costs & Prices ), jiski koi sunta nahi hai. Govt declares high MSP every year and FCI has to buy at that price.
2. Issue price: The price at which the FCI will sell. This also is not decided by FCI
So technically FCI doesn’t decide the cost at which it buys, doesn’t decide the sale price or the quantity.
Result?
1. High buffer stock , due to high MSP
2. Rotting Grains due to poor storage facility of warehouses of FCI and state level bodies.
3. High subsidy burden , as MSP keeps increasing and Issue price remains same.
But why?
Govt wants to reconcile two things with the procurement policy:
1. It wants to support poor farmers – High Buying Price
2. It wants to provide food subsidy under Right to Food, a right now – Low selling Price.
#populismUnlimited
Aise system mein kisi ki bhi dukan band ho jayegi. FCI ke saath bhi kuchh aisa hai.
These are irreconcilable goals.Ghoda ghaas se dosti karega to khayega kya.
But for UPSC, you will write that we should try to balance the needs of farmers with the poor consumers.
Solution (What you have been waiting for) :
1. Segregation of functions of FCI break it into three entities – one for Procurement , second for logistics and Distribution.
2. Engage the private sector in both activities.
3. Reinvigorate National Warehousing Development Authority – the body that was created to ensure private sector involvement in improving warehousing.
4. Turn these two agencies as companies . With annual profit loss records. This will make them accountable.
5. Last but not the least, no populist measures. Policy decisions based on fiscal prudence and viability, sustainability etc. (Write something nice in your own words.)
