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In view of the crop damage due to bad weather conditions, the Central government has allowed the state to procure higher quantities of lusterless, shriveled and broken wheat.
Though there will be a cut in prices against procurement of damaged crop, the state government can now buy lusterless wheat up to 40%, shriveled and broken wheat up to 10% of its total procurement of the grain.
"The central government has prescribed to pare Rs 7.25 per quintal against each percentage above the prescribed permissible limit, but the state government would compensate the farmers from its own resources. As a result they will get the minimum support price of Rs 1,450 per quintal," Ashok Barnwal, principal secretary, state food and civil supplies department told Business Standard.
So far, the state was allowed to buy only 20% of lusterless wheat and 6% of shriveled and broken wheat. "This would put an additional financial strain of Rs 40-50 crore on state kitty in the entire procurement exercise," the official said, adding, "it would depend how much wheat arrives at state procurement centres."
The state has announced it will procure 10 million tonnes of wheat. In the month of March this year, as many as 34 districts have reported crop loss on an area of 4,29,660 hectares.
The state has expected 20 million tonnes of wheat this year, but the crop damage has been estimated at Rs 2,123 crore and a relief of Rs 398 crore has been sought by various districts.
This year, Madhya Pradesh faced the twin problems of crop damage due to bad weather and a temporary restriction to fund exposure. Under normal practice, the Central government officer guarantees any loan which state government obtains from any bank through credit limit offered by RBI for procurement of the commodity.
"This year, there was a slight delay in the process and state had already announced its procurement schedule. As a result, the state government had readied a back-up plan by offering credit limit of Rs 17,000 crore to its own agency, State Civil Supplies Corporation. Also, in order to attract private players, the state offered purchase tax exemption to any firm with a turnover of Rs 300 crore. The State levies 5% purchase tax on wheat. Later the Central government funded the state government to an extent of Rs 9,000 crore against the total demand of Rs 12,000 crore for entire procurement season," Barnwal said.
The State needs approximately 2.5 million tonnes of wheat for public distribution system (PDS), while the rest of the wheat is supplied to Maharashtra, Gujarat and Karnataka through PDS.
"Arrival in mandis is to slow due to continuous holidays and late arrival of the crop due to bad weather conditions, the procurement process will now pick up," another official in the state Mandi Board said.
