Govt okays change in buffer limit for foodgrain

The government on Friday approved raising the quarterly buffer stock and strategic reserve limits of Food Corporation of India (FCI) for both wheat and rice, for the first time since 2005.

FCI must compulsorily now hold 29 per cent more foodgrain in the central pool than the current requirement as on each July 1, and around 45 per cent more as on October 1 every year.

On every April 1 and January 1, it will have to hold around one per cent and 14.4 per cent less grain than the existing stipulation.

The buffer stocks and strategic reserve norms stipulate the amount to be held at the start of each quarter in a financial year, to efficiently run social welfare programmes like the Public Distribution System (PDS).However, due to bumper foodgrain harvest and an open-ended purchase system, it usually stores much more than stipulated by the buffer norms.

Some experts said Friday's move is also aimed at meeting World Trade Organization obligations that governments must not store foodgrain much in excess of requirement.

The Cabinet Committee on Economic Affairs also cleared the constitution of an inter-ministerial group to offload excess foodgrain stock, if any, in the domestic market through open sale or export. The group will have the secretaries of the food, expenditure and consumer affairs departments.

In 2014-15, the government had approved sale of around 10 million tonnes (mt) of foodgrain in the open market.

The previous government had also tried raising the buffer norm but could not get cabinet approval because it was already holding much more than needed for the PDS (see chart).

In the revised norms, FCI has to maintain a stock of 41.12 mt in the second quarter as on July 1, instead of the earlier limit of 31.9 mt. And, 30.77 mt should be kept in the third quarter as on October 1, against previous norm of 21.2 mt.

A marginally lower 21.04 mt is to be maintained in the first quarter as on April 1, as against 21.2 mt now. Similarly, 21.41 mt to be kept in the financial year's last quarter as on January 1, as against 25 mt.

The annual foodgrain requirement under the new food security law is estimated to rise to 61.4 mt, as against the current 54-56 mt.