Changes in Foodgrain Procurement Policy

The Centre tells States to avoid bonus over and above the MSP

Published: 26th June 2014 08:48 AM  |   Last Updated: 26th June 2014 08:48 AM   |  A+A-

NEW DELHI:  In a major change in its procurement policy of paddy and wheat, the Centre has asked the state governments to avoid bonus over and above the Minimum Support Price (MSP). 

In such cases, the Central agencies will limit the procurement and states will have to bear the financial burden for surplus grain and its storage costs.

This is considered as a big move by the government to tackle the rising food prices by keeping the surplus quantity of grain in the market.

A letter by the Ministry of Consumer Affairs, Food & Public Distribution, accessed by Express, revealed that state governments are announcing bonus over and above the MSP which is recommended by the Commission for Agriculture Costs and Practices (CACP).

“Such declaration of bonus by the state government distorts the market of commodity conerned and keeps private buyers out of the market in the state. This also generates possibilities of malpractice,” Consumer Affairs Ministry letter on ‘change in policy’ dated June 12, 2014, said.The Ministry said the Central agency will limit the procurement from the states which falls under Decentralised procurement system (DCP), but providing bonus above an over MSP.

Under the DCP system, the state governments undertake procurement and distribution of food grain by themselves. The excess quantity is taken into the Central pool to distribute elsewhere while shortfall is met from the Central pool. However, the states found to be flouting norms will not get Centre’s support and it will limit the procurement for Central pool to extent of requirement of food grain for Targeted Public Distribution System (TPDS) only and will provide acquisition and distribution subsidy to the state accordingly.

“The Food Corporation of India (FCI) may acquire any additional quantity of food grain from the state government/its agencies for augmenting its stocks elsewhere, but it would not be under any compulsion to do so. The state government will be solely responsible for the disposal of any surplus quantity procured in the state over and above this quantity and bear the financial burden in that regard,” the letter added. In case of non-DCP states, which announces bonus over and above the MSP, the FCI will not take part in MSP operations in the state concerned and state agencies will have to mobilise resources and take care of entire MSP on their own including the arrangements to be made for storage of procured food grain.

The FCI, in consultation with the Department of Food and Public Distribution, will decide as to how much stock of wheat or rice it should acquire from the concerned state in a particular season.


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