The Hindu Business Line : SC ruling on paddy puts Centre, UP Govt in a bind

THE Food Corporation of India's (FCI) problems stemming from excessive procurement of foodgrains is set to further intensify during the coming kharif marketing season, beginning October.

The reason for this is not just the likely bumper paddy crop on account of munificent monsoon rains, but also a recent Supreme Court order, requiring Government agencies to procure the entire paddy in Uttar Pradesh that is offered by farmers at the Centre's minimum support price (MSP).

Uttar Pradesh is currently the country's second largest paddy growing State (after West Bengal), with its annual production averaging 20 million tonnes (mt), i.e 13 mt in terms of rice.

While this accounts for nearly 15 per cent of the total output, the State, however, contributes only about 1.5 mt of rice (7.5 per cent) to the Central pool. Moreover, the bulk of procurement is in the form of levy rice procured from millers and not as paddy purchased directly from the farmers.

But things may change now, following the order passed on August 29, by a Supreme Court bench comprising Mr Justice S. Rajendra Babu and Mr G.P. Mathur. The order has set aside a ruling made by the Chief Justice of the Allahabad High Court on February 23, 2001, which effectively allowed the State Government to decide on the quantum of procurement.

The February 23, 2001 ruling had also rendered redundant an earlier High Court interim ruling on November 9, 2000, which required the State Government to ensure that wholesale purchases of paddy be made strictly from authorised marketing yards by open auction.

Further, States were directed to set up centres in the mandi yards, with the district magistrates concerned given the responsibility to ensure that farmers did not engage in distress sales and their entire marketable surplus of paddy (as distinct from rice bought from millers) was bought at the MSP.

The UP Government, then, filed an affidavit against the November 9, 2000 interim ruling, stating that it was not in a position to buy the entire paddy brought by farmers and it could at best purchase up to three lakh tonnes every season. The Chief Justice's final order of February 23, 2001 basically endorsed the State Government's position, while not confirming the earlier interim order.

But now, in response to an appeal against the Chief Justice's order filed by Mr V.M. Singh, Convenor of the Kisan Mazdoor Sangathan, the Supreme Court has `revived' the earlier interim order of the High Court. The Court has also asked the State Government to take `consequential action' in this regard "within a period of six weeks".

What this means is that the Mulayam Singh administration, already burdened with huge cane arrears payable by mills to growers, will now have to put in place arrangements similar to those in Punjab and Haryana and guarantee that every grain of paddy sold by farmers is bought at the MSP of Rs 550 per quintal declared for the coming season. This would invariably open the door for yet another `package' from the Centre, this time for paddy farmers in UP. The Centre could well say it is a matter concerning the State Government, but then can it, in this instance, afford to antagonise the Supreme Court?

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