States to get bigger role in PDS

The Centre plans to modify the foodgrain procurement system, giving a greater role to state governments in buying, storing and supplying wheat and rice to the public distribution system (PDS) outlets.

The proposal in this regard has already been discussed with nine states. Three more states have now been identified to be involved in this process.

Food Secretary S K Tuteja has convened a meeting of the food secretaries of these states on August 18, to thrash out the issues concerning the proposed decentralised procurement system.

The matter will subsequently be finalised at the meeting of the state food ministers or chief ministers to be convened by Food and Agriculture Minister Sharad Pawar next month.

At present, about 80 per cent of wheat that goes into the Central grain pool is procured from Punjab and Haryana. Similarly, over 70 per cent of rice is bought from Punjab, Haryana and Andhra Pradesh. Movement of these grains from Punjab-Haryana region to the other parts involves heavy transportation costs, swelling the food subsidy.

The objective of the new scheme is to let states, having surplus wheat or rice, buy the stuff themselves for their PDS. Those having such potential include Bihar, Orissa, Madhya Pradesh, Chhatisgarh, Tamil Nadu, Uttar Pradesh, Uttaranchal, West Bengal, Assam, Jharkhand, Gujarat and Maharashtra.

"The Centre is willing to assist states in this venture in every respect, including financial assistance," Tuteja told Business Standard. "The government will still be saving on food subsidy", he added.

States had some apprehensions over the issues like high interest rate on food credit, unreasonable milling charges, out-turn norms for converting paddy to rice and overhead expenses, including the cost of gunny bags. The process of sorting out these issues was already on, he said.

The food secretary pointed out that the interest on food credit charged by the consortium of banks led by the State Bank of India had already been brought down from around 11 per cent to 9.10 per cent.

It is likely to be scaled further down to around 8.10 per cent with the food ministry offering no-default guarantee. This will help save around Rs 600 crore, annually.

The issue of milling charges had already been got examined afresh by the tariff commission, which had suggested raising it to Rs 26 from the existing Rs 15.

The Central Food Technology Research Institute (CFTRI) had been asked to look into the out-turn norms, especially in the case of parboiled rice. The present norms were fixed on the basis of the CFTRI study of 1993, which was deemed to have become out-moded now.

A committee had been set up to go into other issues raised by states in the last meeting on the subject held on July 21.

Tuteja made it clear that the procurement in the traditional grain surplus states of Punjab, Haryana, Andhra Pradesh and others would not be scaled down or stopped.

"We will procure all the grains that is offered for sale by the farmers at the minimum support price", he stated. The grains procured from the traditional belt could be put to various other uses.