FIs may hold 51% in pulses management agency

If things go according to the plan, India’s proposed new agency to manage, procure, store and distribute 2 million tonnes of pulses could be a mirror-image of the existing holding structure of the goods and services tax network (GSTN).

In the GSTN, the Centre and state governments hold a combined stake of 49 per cent stake, while the remaining 51 per cent is divided among five financial institutions (FIs). LIC Housing Finance, with 11 per cent stake, is the biggest, while others like ICICI Bank, HDFC, HDFC Bank and NSE Strategic Investment Corporation hold 10 stake each. Although Central and state governments together hold less than a majority stake in GSTN, they are the largest shareholders in GSTN, holding 24.5 per cent each.

With government holding the strategic control of GSTN, the Centre and state governments together have seven members in a 14-member board, including the chairman.

Private stakeholders only have three members. The remaining three are independent members and a board-appointed chief executive officer. The proposed agency on pulses could be just a replica of this model.

“Yes, the preliminary template thought for this body (on pulses) is modelled broadly on the lines of the GSTN, as suggested by the Arvind Subramanian panel,” a senior government official said. He said a final decision on what shape the agency would take will be decided later. The Centre is also in the process of floating tenders for inviting agencies to store and manage pulses.

Simultaneously, sources said, work is on towards floating a Cabinet note on creation of this agency to manage pulses buffer. The Subramanian panel had suggested that new pulses management company could have an initial paid-up equity of Rs 250 crore, with the government contributing Rs 122.50 crore — Rs 65 crore contributed by promoter, while the balance Rs  62.25 crore is contributed by other private institutional entities.

In a related development, a section within the government is of the view that creation of a separate body to manage pulses stocks, its procurement, storage and subsequent distribution is not needed at this juncture and should be attempted only if it is economically viable.

Officials said there are divergent views on the entire issue and both sides are being considered before a final call is taken.

The Centre had constituted a high-powered panel under Chief Economic Advisor Arvind Subramanian to incentivize pulses production through MSPs and related policies.

The panel in its report released last month had advocated a steep almost 17-20 per cent increase in pulses MSPs starting from the coming rabi season.

Creating of a separate agency to deal with pulses stocks, its procurement, storage and distribution is part of the panel’s recommendations.

Other recommendations included a robust procurement agency, lifting of stock holding limits and export curbs on pulses, activating procurement agencies to purchase maximum quantities of pulses from farmers at MSP rates etc.

THE PROPOSED AGENCY ON PULSES COULD  BE A REPLICA OF GSTN MODEL

• In the GSTN, the Centre and state govts hold a combined stake of 49% stake
   
• Remaining 51% is divided among five financial institutions
   
• Central and state govts  are the largest shareholders in GSTN, holding 24.5% each
   
• The Centre and state govts together have seven members in a 14-member board