The Hindu Business Line : Govt yet to decide on McKinsey for FCI recast plan

THE Government on Thursday said that it is yet to formally appoint McKinsey & Company to undertake a study for improving the operational efficiency of the Food Corporation of India (FCI).

"No decision on appointment has made as yet, though a proposal is under consideration," Mr S.K. Tuteja, Secretary, Department of Food and Public Distribution, told presspersons here.

He said that while there are already many reports on FCI's operations, including those prepared by the Hyderabad-based Administrative Staff College of India (ASCI) and a former Food Secretary, Mr Arun Sinha, "we will consider McKinsey's proposal after taking into account all these studies".

Mr Tuteja said that the Food Ministry has found the concept of food stamps proposed in the 2004-05 Union Budget as "a not very attractive scheme". In his Budget speech, the Finance Minister, Mr P. Chidambaram, has proposed the introduction of a pilot scheme for distributing food stamps in place of the existing system of distributing subsidised grains through fair price shops. Under the scheme, each eligible family would be able to collect its monthly quota of food stamps from a designated distribution centre, with these being then used to buy grains from any food shop.

"The scheme may come under misuse and we could have a Telgi-type scam involving printing of fake food stamps. Also, we could have a situation where the shops collecting these stamps from the beneficiaries would queue up before State treasuries causing practical problems of disbursement of money. We will be conveying our views soon to the Finance Ministry," he noted.

Regarding the move to involve States in procurement of foodgrains in order to bring down unnecessary freight expenses in movement of grain across the country, Mr Tuteja said that the Centre has taken some decisions to make the scheme attractive. Firstly, the Centre would meet the cost of transporting paddy from the mandis to the storage godowns and further to the mills. Secondly, the Centre will henceforth also foot the expense of moving gunny bags from the railhead to point of use.

"We have also decided to raise the milling charges on par-boiled rice from Rs 15 to Rs 20 per quintal of paddy. Further, village societies undertaking procurement would be provided one per cent commission from the Centre. All these would make the decentralised procurement scheme more attractive to the States, so that FCI's role would be confined to handling the grain from surplus States," he said.

Mr Tuteja said that the Centre has also asked the Reserve Bank of India (RBI) to ensure sufficient credit availability from banks to finance grain purchases by State agencies. "The banks were earlier lending to FCI at 10.85 per cent, which we have been able to gradually reduce to 9.5 per cent and now 8.25 per cent. State agencies will also be able to borrow at these very rates", he added.

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