Levy Procurement Of Rice May Be Extended To Punjab

"We have already initiated talks with Punjab chief minister Parkash Singh Badal, and he had shown his willingness in implementing the levy procurement route for rice," civil supplies and consumer affairs minister Shanta Kumar said.

At present the government procures rice through levy route in all states except Punjab and Haryana, where it procures paddy under the custom milled rice (CMR) route.

He said the ministry was considering the abolishment of the CMR route system as it led to widespread corruption, wastage and procurement of poor quality of paddy.

"Moreover, CMR is more costly as the government has to pay incidental charges for procurement and storage," Kumar said, adding currently, the ministry was paying a huge amount to the tune of Rs 2,200 per tonne per year on storage.

The CMR system involves procurement of paddy from mandis, its storage, carting to mills and storing the milled rice by the Food Corporation of India, and government has to bear the entire cost.

The expenditure reforms commission, headed by former finance secretary K P Geethakrishnan, has also recommended a shift to levy route for procurement in its report on food subsidy.

Kumar said the commission recommended procurement of rice directly from millers at a fixed rate as per the levy orders as this would help to reduce its economic cost.

The current economic cost on rice works out to be Rs 1130 per quintal.

The storage and interest paid to state agencies for more than eight months held no justification as millers, shellers and modernised rice mills in Punjab could complete the milling process in less time, he said.

"There are about 6,000 modernised rice mills with an estimated milling capacity of over 108 lakh tonnes and if proper conditions are created where they can take paddy from farmers at the minimum support price (MSP), there will be no need for the CMR route system," the minister added.

He added the CMR system was also choking storage space as the yield of rice after milling of paddy was 67 per cent.

"Paddy requires one and a half times more storage space compared to rice, leading to scarcity of storage for the next procurement season," Kumar said adding it also led to lot of wastage.

The market arrivals of paddy in Punjab during 1999-2000 was 108.66 lakh tonnes out of which 26 lakh tonnes was purchased by millers and 83 lakh tonnes by state agencies and food corporation.