The high-level committee on the Food Corporation of India (FCI) has confirmed what everybody knew, that it has been a total failure in achieving its objectives. In its report submitted to the prime minister last week, the committee said it had failed on all three fronts. The FCI does not provide effective price support to the farmers, as only 6 per cent of them receive the minimum support price (MSP). The leakage of foodgrains supplied to the public distribution system (PDS) is as high as 48 per cent. The buffer stocks it maintains are often far above the requirement leading to huge costs on maintenance, not to mention rotting of grains. In short, it is a white elephant.
The FCI continues in its present avatar only because it is in the public sector. Otherwise, it would have been wound up a long time ago. The committee has suggested a series of measures to achieve the three objectives for which the FCI was set up. The first and foremost is the unbundling of operations and outsourcing some of them like quality assessment, transportation, storage and handling processes to the private sector and state-level agencies. If these systems are modernised, that itself will lead to plugging of leakages to a large extent. There is also need for a new look at the whole concept of PDS, given the government’s failure to meet the common man’s needs.
It is not an exaggeration that agriculture in India has not benefited much from the FCI’s operations. In fact, the system of MSP has led to the farmers’ dependency on the government. Ideally, they should have the freedom and the ability to produce and sell at the price they fix, rather than the government. If the farmers find that grains are not economical to produce, they should be able to produce pulses or other cash crops. The government incurs a huge expenditure on the foodgrains it supplies through the PDS. If the people are given the subsidy directly through their bank accounts, both the government and the consumers will benefit.