According to the sources, the central government has been hoarding food grains that were supposed to be distributed to the poor population of the country. This information also highlights the fact that the storage facilities were inadequate since approximately 65 lakh tonnes of grains have been damaged.
The Food Corporation of India (FCI) had claimed to have a surplus of food grains. However, during the four months, i.e., January 1 to May 1, the supply of rice and wheat was deemed to have not been “readily issuable,” which is evidently, a lot more than the amount that was dispensed in the Pradhan Mantri Garib Kalyan Yojna in April and May. This only heightens the plight of the vulnerable section of society.
To understand this ordeal, we need to first dismantle the political aspect of the NDA government’s food policies to understand why such a large amount of foodgrains was held back, and consequently, pulled down.
The decisive implementation of the public distribution system has been hindered. Moreover, the strategy reserved has incurred shortfalls in the procurement and production of stocks. These were the functional duties the FCI was expected to execute, since the stocking norms of the government indicate that grains are not to be hoarded at different spots in a given year.
Nevertheless, the FCI has garnered more stocks than it is allowed to hold as per the norms and regulation. In the last 3 years, a rising trend has been observed in the number of stocks that are being held.
The primary reason for the same is that the central government has not been keen on extending the consideration of schemes, and particularly of the public distribution system, which is run under the provisions of National Food Security Act.
Thereby, the government upheld the precepts of fiscal caution, to avoid lifting the grain and keep its fiscal deficit low. Historical instances of similar occurrences reflect that the FCI was principally covering corporation costs; which has altered in the present day scenario.
About 60% of the FCI’s food subsidy expenditure is being looked after by the central government. The FCI was been circumstantially propelled to display its losses in the books while having to cover them through borrowing. Correspondingly, the finance ministers have also exhibited a low fiscal deficit. As a result of this, the FCI has incurred a debt of over Rs. 2.36 lakh crores. The FCI has to feel the surplus grain generated through an Open Market Sales Scheme, which requires the government’s intervention to regulate an acute rise in the prices of food grains.
In consequence of this, the state governments have also adhered to the lines of protocol insinuated by the central government. Despite this endeavour, the government has been unsuccessful in discharging a vital amount of excess stocks. Now, this is because large surplus stocks shoot the economic cost of grain for the FCI in specific, since the maintenance and storage costs incurred tend to regress the open market prices.
Between 2019-2020, the FCI sold close to 14.5 lakh tonnes of wheat via the Open Market Sales Scheme. However, this backslid in December 2019, as the stocks were to be sold at a grave loss.
About 23% of the 21.8 lakh tonnes of grain were sold to state government from January to March 2020, but the inequitable allocation of the grain to the poor restricted the quantity that was to be disbursed. Therefore, accumulating a stock of 823 lakh tonnes of grain.
It is crucial for the central government expend the public distribution system to prevent a further shortage of food.