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The Finance Ministry has advised states to clear cash credit limits dues given through Public Sector Banks (PSBs) to Food Corporation of India (FCI) with the consent of the Reserve Bank of India (RBI) for procurement of foodgrains.
This decision was taken recently at a meeting with representatives of PSBs, states, primarily Punjab which had sought fresh line of credit for procurement of paddy, FCI and RBI. This is as per recommendation of the new expenditure committee.
The meeting was called to finalise a cash credit limit of Rs 8,000 crore to Punjab for procurement of paddy during the kharif marketing season. This cash credit limit has been sanctioned in favour of State of Punjab with a direction to clear the pending dues of previous cash credit limits first. Further the ministry has also sought data from all states during non closure previous cash credit limit account for credit given for off take of foodgrains.
Normally, the paddy procurement is done by two routes that is Customed Milled Rice (CMR) and through Levy route. For procurement through Levy route, levy rice limit has been restricted up to maximum 25% of the rice purchased or processed or held by the millers/dealers all over the country with effect from 1st October 2014 onwards. Levy rice means the paddy purchased by a rice miller with his own resources and as per the current policy, 25% of the total rice processed will be procured by the procurement agencies.
Custom Milling paddy means the paddy purchased/procured by the procuring agencies, including FCI and given to the rice mills for milling. Rice procurement through Customed Milled Rice (CMR) mode is increasing steadily. Procurement through CMR route ensures payment of MSP to farmers and avoids chances of irregularities in procurement through Levy route.
As farmers are being benefited through direct procurement by State agencies and this has also resulted in availability of huge stocks of rice in central pool, the levy percentage is decided to be up to 25% of total holding of the stock.
Moreover, there will not be any adverse effect on the overall procurement of rice in the country by reducing the limit of levy upto 25% from 75% of levy obligation earlier as it does not reduce the quantum of Central Pool. This is because procurement is also done through CMR route which is steadily growing.
During the current year 2014-15, the government has allocated additional 27.82 lakh tons of rice and 2.04 lakh tons of wheat for additional BPL families and 27.61 lakh tons of rice and 8.98 lakh tons of wheat for APL families. 6.01 lakh tons of rice and 6.83 lakh tons of wheat have also been allocated to the states for natural calamities, festivals, additional requirement under TPDS.
