Stick to reform

Do not roll back crucial food procurement reform

Food Minister Ram Vilas Paswan, in an interview to this newspaper, has said that his ministry has not come to any "firm conclusion" on his directive to states about procurement. The Centre had told states to stop offering a bonus on top of the Centre's minimum support prices (MSPs) for wheat and rice, and to limit their procurement to match the needs of the public distribution system. Mr Paswan must hold firm. This was one of the few signals that suggested welcome reforms in food policy might be on the way. The idea is to replace the outmoded system of open-ended procurement with a need-based grain acquisition to leave more staple cereals in the market. This might help food inflation, and control the food subsidy bill, which has more than doubled in the past six years to Rs 1.15 lakh crore. If the financial load of buying, holding and distributing surplus food stocks is borne by the states, the Centre will save over Rs 5,200 crore a year. It will also reinstate private trade in the food market, from where it was eased out, thanks to the cornering of the bulk of the marketed surplus by state agencies.

Excessive procurement had also tended to distort the food market and needlessly bloated official stockholding, putting pressure on storage space. Besides, the old policies had skewed the cropping pattern by giving farmers incentives to grow rice and wheat at the cost of other needed commodities, such as pulses and oilseeds, which have to be imported in substantial quantities. The suggested changes in the procurement policies have come at a time when India's guaranteed pricing and grain-stocking practices are being questioned at the World Trade Organization. At home, these policies had evoked criticism from various quarters, including government organisations, such as the Planning Commission and the Commission for Agricultural Costs and Prices.

Expectedly, the states that are likely to be affected by the Centre's decision have teamed up to lobby against the mooted changes. These states include the Bharatiya Janata Party (BJP)-ruled Madhya Pradesh, Rajasthan and Chhattisgarh, as also some non-BJP governed states, such as Kerala and Bihar, that buy staple cereals at prices higher than the MSPs. They stand to lose an opportunity to appease the farmers, as also to corner greater central resources by way of subsidy on the procured foodgrain. The expected fall in procurement as a result of the denial of bonus will hit states' finances in another respect as well - their revenues from the mandi tax and other market levies will drop sharply.

But these reforms are long overdue. The existing food management system that evolved during the food scarcity era in the 1960s has outlived its utility. Now that India is food-surplus, incentives for perpetuating cereal mono-cropping or maintaining huge stockholdings are no longer required. More important is to diversify the country's farm production base. It is, therefore, imperative for the government to withstand the pressure from states and other lobbyists, and stick to its prudent decision.