States, Pvt Sector May Be Roped In For Foodgrain Purchases

"We are considering the proposal to allow both the state governments and the private sector in the procurement of foodgrains as it will help in reducing the huge procurement cost incurred by the government," the minister said.

He said there was need to change the existing procurement system and induce private sector participation in a big and organised way.

"We have already paved the way for private sector's entry into the storage process with announcement of the national foodgrains storage policy," Kumar said.

Involving the private sector would help in reducing the cost and also help in better management of surplus produce.

 

The expenditure reforms commission had said in its report on "food subsidy" that state governments and private sector should be induced to enter foodgrains trade, including procurement, storage and exports by moderating the increase in minimum support price (MSP) effected every year.

According to the ERC's report, state governments and private sector with surplus foodgrains could be allowed to procure, sell and also export up to 3 million tonnes of rice and five million tonnes of wheat every year.

It had also said that the process should be free from every form of government intervention for at least 15 years and if there was a drop in foodgrains production in any year, "domestic consumption requirements would be met through imports."

Currently, foodgrains like rice and wheat are procured by the Food Corporation of India, at huge economic costs of Rs 830 per quintal for wheat and Rs 1,130 per quintal for rice respectively.

This along with the carrying cost of Rs 2,200 per tonne per year builds up on the total cost, making the foodgrains costlier in the market.

This year, the government is saddled with excess stocks to the tune of 37 million tonne, about 13 million tonne in excess of the minimum buffer stock needed for food security in FCI godowns. Though, the centre has announced special schemes to dispose of the wheat stocks, it has failed miserably.