Having messed up the country's food management system to the extent of necessitating imports, the food and agriculture minister, Sharad Pawar, is now talking about measures that can undo the damage. For this, he has mooted cutting the supply of foodgrains from the public distribution system (PDS) to the non-poor and charging them higher prices in order to reduce the outflow from government stocks. He has also talked of allowing free import and export of foodgrains. And even more significantly, he has sought to make a distinction between the minimum support prices (MSP) and procurement prices for foodgrains, reflecting the belated realisation that official agencies can buy grain at the MSP only during grain glut, when market prices normally drop down to the MSP level. Otherwise, they will have to resort to procurement prices (read commercially realistic purchase prices) for mopping up the desired quantities of cereals for running the PDS. | |
| All this makes sense, though many components of the recipe are not novel. In fact, changes in the pricing and monthly entitlements of foodgrains from the PDS were mooted by the food ministry in January. It had even got these cleared by the Cabinet Committee on Economic Affairs (CCEA). However, they could not be implemented in the wake of stiff opposition from the UPA's key allies, the Left parties. As such, one wonders how Mr Pawar will be able to get round such hurdles now, especially since these parties have issued a stern warning against such a move. |
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| Meanwhile, what is new in this agenda is the concept of the procurement price as something distinct from the MSP. This is a notion which even the Left parties may choose not to oppose. For, the procurement price is bound to be higher than the MSP, and when the government enters the market to buy stocks at that price, it would become the benchmark price to the advantage of farmers. But where the liberalisation of international trade in foodgrains is concerned, the Left's reaction may pose a hurdle. Even so, it will have to be sidestepped as this is the only rational option available. The involvement of government agencies in the import and export of sensitive products like foodgrains has seldom been free of controversy. The current process of importing 3.5 million tonnes of wheat through the State Trading Corporation (STC) is no exception. In any case, the disabilities of the STC in handling this task have been adequately exposed because of its failure to firm up orders even for half the approved quantity. |
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| Under these circumstances, it would be much better for Mr Pawar, and more so for the government, to recognise the ground realities and leave foodgrain trade to market forces to take care of. The PDS in its present form should be downsized substantially to cater strictly for the targeted population. All these are changes that are long overdue. Mr Pawar has shown less dynamism in the last two years than might have been expected of him. It is encouraging that he is now addressing issues from the correct perspective. |
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