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Problems of abundance

Even as a season of bountiful harvest of the rabi season crops, wheat followed by rice, gets under way, India's food management policy has come under a great deal of stress. The main objectives of food management are unexceptionable: procurement of food grains from farmers at remunerative prices; distributing them to consumers, particularly deprived and vulnerable sections of the people at affordable prices, and maintaining buffers for food security and price stability. It is the instruments used — the minimum support price (MSP) and the central issue price (CIP), and the nodal agency, the Food Corporation of India (FCI) — that have come under scrutiny at a time India is facing problems of plenty. An immediate problem has been one of storage. As of March 1, the FCI was reportedly holding 45.8 million tonnes of rice and wheat — more than twice the prescribed buffer stock norm, which includes a food security reserve of five million tonnes. A sizable part of this is stored in the open, with minimal protection. The FCI has also used private warehouses for stocking grain for which it incurs a heavy carrying cost. The problem of storage will become acute if, as expected, the FCI procures another 15-20 million tonnes of wheat during this season.

There are no easy ways out. Export of grains to reduce the surplus may not be an optimal solution. Like many countries, India has been very selective in permitting exports of food grains. The interests of domestic consumers have been paramount. There have been occasions when Indian exporters were priced out. Sales in the domestic markets to reduce the stocks are possible but even here a coherent strategy is needed. In many places, open market prices of wheat are reportedly ruling below the MSP. Solutions to the storage crisis will have to be found in a larger context of reordering the food management and procurement policies. The old fixes will not work at this juncture. Procurement of wheat and rice is open ended and the MSP, which has been raised by successive governments, sets the floor price, thereby contributing to higher prices. There is, at this point, very little chance of restricting each year's procurement to actual production. Nor can the mechanism of MSP be revisited in its entirety, given the political sensitivity involved. According to the Economic Survey 2010-11, the economic cost of food grains to the FCI has increased substantially over the last few years but the issue price has not gone up, so the food subsidy bill will go up. The continuing tragedy is that the Indian system is not able to deliver the ‘surplus' food grain to the hungry.

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