Centre sets up panel to examine Punjab's Rs 20,000-cr dues claim

FCI officials say Centre dues to state's food procurement plan Rs 5,000-7,000 cr

The central government has set up a committee to examine the Punjab government’s claim of Rs 20,000 crore in foodgrain dues.

The committee, to be headed by P K Jha, additional secretary, Department of Food and Public Distribution, will have officials from the Food Corporation of India (FCI), finance ministry, and the Punjab government. The panel will examine if Punjab’s claims are tenable or not. While a decision is yet to be taken, FCI sources say the amount the Centre owes the state can’t be higher than Rs 5,000-7,000 crore.

“The claims by Punjab are not tenable. Only a portion of it may be correct,” said a senior official from FCI. The person added that any loss incurred by the Punjab government from selling damaged food grains at lower cost is unlikely to be borne by the central government. He also said that the costs incurred by the state on account of carrying and forwarding charges for paddy sent to mills would have to be authenticated before settling.

UNDER LENS

• The central government has set up a committee to examine the Punjab government’s claim of Rs 20,000 crore in foodgrain dues
   
• The panel will have officials from the Food Corporation of India, finance ministry, and Punjab government

Jayant Sinha, Union minister of state for finance, is said to be in constant discussions with the Reserve Bank of India, the banks, as well as officials of the expenditure and financial services departments.

Around 30 banks, led by State Bank of India (SBI), had extended loans of Rs 12,000 crore to the state for its foodgrain procurement programme.

Officials aware of the deliberations admitted that there was a lack of clarity on whether these banks should classify the outstanding dues as non-performing assets (NPAs) before they continue lending for Punjab’s foodgrain procurement.

They said that a decision regarding this matter would be taken by the end of the week.

Sinha had said in Mumbai on Monday that the Centre was working with the regulator, lenders, and stakeholders to find a solution. State Bank of India (SBI) chairman Arundhati Bhattacharya had also said on the same day that RBI had asked lenders, including SBI, to make provisions for foodgrain loans extended in Punjab. She, however, declined to elaborate on the exposure and the status of provisions.

Asked about RBI’s letter to banks to make higher provisions, Sinha had said the issue raised by RBI was correct from a regulatory standpoint, while banks’ explanation that loans for foodgrain procurement were sovereign in nature and, hence, did not require to be classified as NPAs was also correct.

Punjab Chief Minister Prakash Singh Badal visited New Delhi on Monday and met Prime Minister Narendra Modi and food minister Ram Vilas Paswan. According to a press release by the Punjab government dated April 18, Badal sought an immediate release of cash credit limit (CCL) worth Rs 20,094 crore to enable the state government to make timely payment to farmers for wheat procurement.

“Badal apprised Modi that inordinate delay in CCL clearance would jeopardise the ongoing procurement operations. This, he said, could lead to disaffection in the farming community, which might lead to law and order complications,” the press release noted.

Badal assured Modi and Paswan that the wheat payment crisis would be resolved soon and that the position of wheat stock in papers and at the godown level would also be reconciled. Officials said that Punjab produces bill to the Centre three years after procurement while other states do so after one year.

The Centre has set up a procurement target of 30 million tonnes for the 2016-17 marketing year starting this month. The wheat procurement has already started and the state has purchased about three million tonnes as on April 17. Punjab and Haryana contribute in a big way to the central pool.