Govt begins spadework for unbundling FCI

Three separate entities will be created to focus on procurement, storage and distribution; move expected to stem inflation

In order to bring down food inflation at the earliest, the department of food has started preliminary work in implementing Prime Minister Narendra Modi's idea of unbundling the Food Corporation of India (FCI).

Officials in the know said that minister for food and consumer affairs, Ramvilas Paswan, had recently held a meeting with senior officials of the Corporation to understand and review its working, where the issue of unbundling was also mentioned. Food inflation rose from 9.10 per cent in March to 9.66 per cent in April.

“The views of the Corporation have been sought on unbundling of FCI and it is in very formative stage of discussion,” a senior official said. Unbundling of the Corporation would entail creating three separate entities focused on procurement, storage and distribution of foodgrains.

The BJP in its manifesto for the 2014 General Elections had promised to unbundle the FCI into three separate entities to bring about efficiency in administration and also to ensure that non of the three operations supplement each other. Prime Minister Narendra Modi in its suggestions made to the previous UPA government way back in 2011 had suggested unbundling of FCI as one of measures to control food prices.

The idea to unbundle FCI was first mooted during the tenure of previous National Democratic Alliance (NDA) government under the Prime Ministership of Atal Bihari Vajpayee. However, it could not be pushed forward because of lack of consensus from some quarters.

“It is a good idea and will enable all the three arms of FCI which are procurement, distribution and storage be more sharper and focused in their operation and also enable in cost cutting, which grips the monolithic organisation,” said Alok Sinha, a former Chairman of FCI and one of the brains behind the earlier move had told Business Standard recently.

He had said that setting up of three different entities performing three different functions will stop monopoly in the whole system. However, all do not agree that unbundling FCI could be the panacea of all ills.

“There are some practical difficulties in the whole process as FCI has a staff strength which could get affected if three separate corporations are created. This needs to address adequately,” a former official from the ministry said.

Apart from unbundling of FCI, the department of food has also started work on host of other measures to control food prices at the earliest, which include sounding off state governments to crackdown on hoarders and black marketers and is also in the process of forming a stand on suspension of futures trade in essential commodities. It could also soon decide on offloading 10-15 million tonnes of foodgrains from state godowns in the open market to control prices.