News Analysis

FCI’s burden to reduce with additional grains given out through PMGKAY

Rajalakshmi Nirmal BL Research Bureau | Updated on July 03, 2020 Published on July 02, 2020

The availability with FCI this year through procurement will be 38.9 million tonnes in wheat and 43.3 million tonnes in rice

To meet the increased allocation of 5 kg grains a month for 80 crore people, FCI’s current year procurement won’t suffice, it has to use up its carried forward stock

It is well known that FCI has done record procurement in wheat. But all this wheat and rice that may be procured in the upcoming Kharif season may not suffice to meet the requirements under the PM Gharib Kalyan Yojana (PMGKAY).

With Prime Minister Narendra Modi announcing that 5 kg grains for 80 crore people under the National Food Security Act (NFSA) will continue till November, the total allocation under National Food Security Act (Antyoday Anna Yojana, Priority Household, Mid-Day Meal Scheme and Integrated Child Development Services Scheme) is set to increase sharply. While the total procurement of grains this year may be around 82 million tonnes, it may not be adequate to meet the demand of the regular allocation under NFSA and other welfare schemes (Scheme for Adolescent Girls, Annapurna Scheme and Allocation of foodgrains under Welfare Institutions and Hostels Scheme) plus additional requirements under PM Gharib Kalyan Yojana.

Look at these numbers

Total allocation towards NFSA and other welfare schemes works out to about 59 million tonnes a year. But for the year 2020-21 the allocation will be higher. Since the PMGKAY scheme has been enforced since April and is now set to continue till November, a total of 32 million tonnes will be the additional requirement for the year. So, the total demand will be around 91 million tonnes. If we count the amount of grains sold via the Open Market Sales Scheme (OMSS), demand will be a tad more.

 

On the other hand, the availability with FCI this year through procurement will be 38.9 million tonnes in wheat and 43.3 million tonnes in rice (if assumed at the average level of last three years procurement in Kharif), adding to a total of 82 million tonnes. So, supplies with FCI will fall short of demand. But given there is a large stock carried forward from last year, FCI won’t be stressed. As of March 2020, FCI had stock of 58 million tonnes of grains ― 30.9 million tonnes rice, 27.5 million tonnes wheat and another 28 million tonnes of un-milled paddy (amounting to 18 million tonnes of rice).

Deficient storage capacity

The Centre has to fast track the building of silos to create storage space for grains, say experts. Given the trend of rising procurement of grains, the country faces shortage of storage space every year during Kharif and ends up storing wheat in CAP (covered and plinth) storages where the risk of spoilage due to rain and moisture is high. While in the current year, some space will be freed up, in 2021-22, there may be a problem again. The total storage capacity with FCI is about 41.2 million tonnes. If the capacity of 35 million tonnes with state agencies is added, the total storage space available is 75 million tonnes. As of last month, the total stocks including the un-milled paddy was about 93 million tonnes.

In 2015-16, the Centre approved creation of steel silos of total capacity 100 lakh tonnes for wheat by 2019-20. But the progress has been very slow. Only two States ― Madhya Pradesh and Punjab ― have seen some progress. While the Madhya Pradesh government has completed construction of 4.5 lakh tonnes of silo capacity, Punjab has completed 1.5 lakh tonnes capacity. Of the targeted 100 lakh tonnes, the total silo capacity created so far (June 2020) is 8.25 lakh tonnes ― of which 2.25 lakh tonnes capacity is created by FCI.

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Published on July 02, 2020
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