Centre suspects foul play in Madhya Pradesh's record wheat procurement

The Centre has cast doubt on the record wheat procurement by Madhya Pradesh in the 2012-13 crop marketing year. It suspects private traders may be selling cheap grain from the Public Distribution System (PDS) to the official procurement system, owing to the huge difference between the prices of grains sold through the two mechanisms.

A concerned central government now plans to send a team of senior officials to probe whether there is any discrepancy in the state's wheat procurement.

“We feel private traders may have been channelling wheat meant for PDS operations to the central pool because the price differential between the rate at which wheat is sold through the subsidised PDS and the price at which it is purchased from farmers (the minimum support price and the bonus) is about Rs 10 per kg," said a senior food ministry official. He added it was also possible private traders had sold wheat purchased from farmers at lower rates to state procurement agencies.

Another official from the Madhya Pradesh food ministry told Business Standard, when around eight million tonnes of wheat is being procured in the state, stray incidents of malpractices and traders channelising PDS wheat back into the system was bound to happen.

“Whenever such incidents have come to our notice, be it in Bhopal division, Ujjain division or anywhere, we have taken strict action against the government officials and confiscated the grain along with arresting the trader involved,” the official added. He also denied receiving any communication from the Centre about the irregularities.

Wheat is sold through the PDS at about Rs 4.15 a kg, while the minimum support price (MSP) is about Rs 13 a kg. In Madhya Pradesh, an additional Rs 1 per kg is added to the MSP (the de-facto purchase price), as the state government provides a bonus of Rs 100 a quintal over and above the MSP of Rs 1,285 a quintal.

In the current financial year, wheat procurement in Madhya Pradesh is estimated at about eight million tonnes, about 23 per cent more than the procurement last year and about 128 per cent more than the 3.5 million tonnes procured in 2010-11.

In 2012-13, wheat procurement in Punjab and Haryana, two major wheat-producing states, is estimated to rise 21 per cent and 34 per cent, respectively, compared to 2010-11. In Uttar Pradesh, wheat procurement is estimated to rise about 144 per cent, from 1.64 million tonnes in 2010-2011 to four million tonnes in 2012-13.

Compared to 2009-10, Madhya Pradesh’s wheat output is estimated to rise about 85 per cent this financial year, while those of Punjab, Haryana and Uttar Pradesh are projected to rise 9.6 per cent, 7.4 per cent and 14.5 per cent, respectively.

So meteoric has been the rise in Madhya Pradesh’s wheat procurement this year that the state faces a huge problem of storage, as well as a shortage of bags to transport and store the wheat. Citing the shortage of jute bags, the state had recently allowed the use of plastic bags.