FCI reforms itself

Since the Congress-led, Left-supported government at the Centre has clearly expressed its lack of interest in slashing the food subsidy, all one can hope is that the money is well spent. And, for a change, the Food Corporation of India (FCI) seems to be attempting to do just that.

For one, it has offered to provide financial assistance for rural infrastructure development to selected states in order to prompt them to procure foodgrain locally for their public distribution systems (PDS). At present, despite being food surplus, these states prefer to rely on spoon feeding by the FCI""in part because the subsidy burden then gets picked up by the Centre.

By encouraging them to buy grain locally, the FCI will save on transportation and other costs and use that money to fund the schemes of the state concerned, for the development of market-related rural infrastructure.

Thus, the move is cost-neutral for the FCI even as it transfers Central funds to the states ""which is what the PDS subsidy is all about. Going a step further, the FCI now allows states to raise additional revenue from grain purchases by way of mandi charges, purchase tax, cess and other levies, which, in some states, add up to 10 per cent of the grain cost.

At the same time, it lends market support to farmers who have thus far been denied it. The ball, indeed, is now in the states' court and they will do well to accept the FCI offer.

Regardless of what the states' response turns out to be, the FCI seems to realise that this initiative alone is not enough to put in place an efficient foodgrain management regime. For that, it has conceived of several other measures.

It has drastically cut its staff strength by some 9,000, or a third of its total workforce""including many senior officials""through the voluntary retirement route. Simultaneously, it has launched a computerisation programme to link its network of depots and administrative offices and improve the speed of both information flow and decision-making.

Further, it has spruced up its administrative functioning and product quality to successfully bid for and receive the ISO 9000-2001 quality certificate. And in yet another significant initiative, it has entered into arrangements with the National Commodity and Derivatives Exchange (NCDEX) and National Collateral Management Services (NCMSL) for mutual business benefits.

These bodies will be sharing the FCI's business operations, including procurement, sales, godown capacity and laboratory facilities. And, to reduce its debt servicing costs, the FCI is now meeting a part of its funding requirements by borrowing directly from the market at much lower interest rates than that charged on food credit by the State Bank-led consortium of commercial banks.

Most of these are common good business practices that all organisations, including public sector units, are expected to follow in the normal course. But considering the FCI's image and past record, replete with inefficiencies and corruption, these measures signal a special effort that deserves to meet with success.