Superstition Or Superscience?
Amid accusations of having saffronised higher education of the country, the Centre approves the teaching of astrology in universities.
Is the Government promoting a
science or a sham?

Science Or Sham?
Even as stargazers claim their knowledge has an empirical basis, scientists debunk it as mumbo-jumbo.

PM's Point Man
Sidelined two years ago, he has bounced back to become one of the most powerful ministers in the NDA.

Diverging Tracks
The Gormu-Lhasa railway line will significantly improve China's military logistics capability and exert strategic pressure on India.

Plane Pique
The Gujarat Government resents the CAG indictment for the purchase of an aircraft.

VIEWPOINT: KAUTILYA

Taking Stock Of Stocks

By Jairam Ramesh

In the 1970s, procurement of foodgrains by the Food Corporation of India (FCI) averaged about 10 million tonnes annually. In the 1980s, it averaged around 18 million tonnes per year. Between 1990-91 and 1998-99, procurement averaged about 23-24 million tonnes annually. But in the past two years procurement has zoomed: 31 million tonnes in 1999-2000 and 36 million tonnes in 2000-1.

Punjab, Andhra Pradesh and Haryana account for over 80 per cent of rice procurement. Andhra Pradesh's performance has been particularly striking: a half of the rice output is being procured now as compared to just one thirds five years back. Punjab, Haryana and Uttar Pradesh account for 90 per cent of the wheat procurement. Procurement is Punjab's lifeline; here, over half of the wheat and three-fourths of the rice output is purchased by the FCI. The Central government pushes the procured foodgrains through the Public Distribution System (PDS), a network of about 4.6 lakh ration shops across the country. On an average, in the 1970s about 11 million tonnes and in the 1980s around 16 million tonnes were pushed through the PDS annually. Thus, the balance between procurement and PDS supply was more or less maintained. This balance continued pretty much in the 1990s also. But in 2000-1, PDS supply fell sharply to 11.7 million tonnes.

Thus, foodgrain stocks are overflowing because procurement has increased very sharply and the supply to the PDS has plummeted. The increase in procurement clearly has had a far greater impact. This raises further questions. Why has procurement skyrocketed and why is the PDS selling vastly lower quantities of foodgrains?

The NDA allies in Andhra Pradesh, Punjab and Haryana are pressurising the Vajpayee regime to procure more foodgrains and to relax quality norms. The 1990s has also seen very liberal increases in the minimum support price (MSP) taking them higher than in the 1980s and what would be justified on considerations of inflation. For instance, the Commission on Agricultural Costs and Prices (CACP) had recommended an MSP of Rs 465 per quintal of paddy in the 1999-2000 crop year. But the actual price was Rs 490 a quintal. For wheat, as against the CACP recommendation of Rs 490 a quintal, the actual procurement was at Rs 550 a quintal. Such a support price policy has also priced Indian rice and wheat out of international markets.

On PDS, the H.D. Deve Gowda government in February 1997 introduced the Targeted PDS (TPDS) that distinguishes two categories of consumers to be identified by the states: below poverty line (BPL) and above poverty line (APL). This was done to introduce a pro-poor bias into a PDS that had hitherto been universal in coverage and had been benefitting mainly the better-off peninsular India and West Bengal. In the TPDS, Uttar Pradesh and Bihar have received significantly higher allocations of foodgrain as they must. But the BPL/APL distinction has proved to be unworkable, specially since it is the same retail outlet that sells to both categories. In any case, dual pricing always leads to leakages. The Vajpayee Government worsened the situation by introducing new schemes and by increasing APL prices to a level where they are now higher than even the market prices. As a result, PDS consumers are now buying better quality foodgrain from the market.

A massive food-for-work programme is certainly needed in the ecologically vulnerable regions to provide both employment guarantee and food security. But this will absorb at most five million tonnes of foodgrains. The problem of mounting stocks can be addressed only when we muster up the courage to (i) diversify Punjab's agriculture out of the wheat-paddy cycle; (ii) introduce a more realistic MSP policy; (iii) reform the entire foodgrain marketing system presently built around a high-cost and inefficient FCI; (iv) remove policy-induced inefficiencies in private-sector storage, milling, marketing and transport operations; and (v) simplify the PDS by doing away with dual pricing but keeping the pro-poor state bias in allocations. If this is not done, we will continue to confront a crisis of plenty while our mindset is still tuned to managing a crisis of shortages.

(The author is with the Congress party. These are his personal views.)

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