• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

THIS IS THE rhyme ringing in government office corridors in Delhi. But this could remain wishful thinking, unless accompanied by hard-headed decisions. The Centre's desperation to liquidate the mountains of food stock (58 million tonnes at last count) is no secret. These stocks did not collect overnight, but were painfully garnered over the last three-four years with ever higher annual support prices and open-ended procurement at great cost to the exchequer. Ironically, no less than a fourth of the population continues to live below the poverty line with limited access to food. Antyodaya Anna Yojana, Food-for-Work programme, Sampoorna Gramin Rozgar Yojana, doubling entitlement of BPL families, additional allocation for drought affected States, allotment for welfare schemes and many other programmes have all failed to make a dent in the rapidly expanding wheat and rice inventory.

Theofftake of foodgrains under the public distribution system (PDS) has fallen to below 50 per cent of the allotment over the last two years. Even the sharp reduction last July in the Central issue price of wheat and rice for above-poverty-line (APL) families failed to improve the offtake. The only scheme that has worked is the Open Market Sale of wheat under which about 45 lakh tonnes has been sold so far this fiscal — substantially up from some 9 lakh tonnes last fiscal. The total value of the foodgrain stocks with FCI is put at Rs 30,000 crore. Now, a further cut in grain prices under the PDS for both BPL and APL families is in the offing. Without doubt, the welcome step will bring some relief to consumers, help improve offtake and reduce public stocks to an extent. But make no mistake, the decision has been forced on the government by circumstances, rather than made on its own volition out of concern for poor consumers. With 73 million tonnes of wheat ready for harvest, once again the Centre finds itself under intense pressure to announce a higher minimum support price and continue unlimited procurement. For New Delhi, the only facile way to buy more grain is by disposing off existing stocks at lower prices. It is unfortunate that despite the admittedly fragile fiscal situation, ad hocism continues to characterise policy initiatives in grain management, leading to a massive food subsidy burden.

TheGovernment is known to do the most rational thing, but only after exploring other possibilities. As most of the possibilities in foodgrains management seem to have been explored and expectations failed, a rational thing to do would be to stop accumulating stocks in the first place. Wheat growers in Punjab and Haryana should be encouraged to shift at least a part of acreage away from the fine cereal. This can be done by the simple expedient of freezing the MSP and limiting procurement in terms of both volume and time-period. Such a bold step calls for tremendous political will. Given the fragile nature of the coalition politics, it remains to be seen if the Centre has the will to take apparently unpalatable but potentially beneficial decision.

Send this article to Friends by E-Mail

Stories in this Section
Grain, grain, go away...

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line