From UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 3-Issues related to direct and indirect farm subsidies and minimum support prices, Public Distribution System- Objectives, functioning, limitations,revamping, issues of buffer stocks, and food security, Technology missions, economics of animal rearing.
There is a large scope for the improvement in the efficiency of grain management system under the National Food Security Act (NFSA).
Declining Agri-sector growth rate
- India’s growth rate plummeted to 4.5 per cent in the second quarter of this fiscal.
- The quarterly growth in GDPA (agri-GDP) is hovering at around 2 percent, it is a cause for great concern.
- Agriculture still engages about 44 per cent of India’s workforce, which has serious consequences for the overall economy of the country.
The bleak picture of the economy
- Recently inflation has started to surge after a long time.
- Inflation is led by the different components of the food segment- cereals, pulses, and vegetables.
- There is a challenge of containing inflation and increasing the demand at the same time.
- At the same time, there is also the challenge of maintaining the fiscal deficit by 3.3 %.
- Recently Finance minister has launched an investment package of 102 lakh crores.
- So, there is a need to take a look at the inefficiencies in food grain management.
Inefficiencies in NFSA
- It supplies a certain quantity of wheat and rice to 67 percent population.
- It gives wheat at Rs. 2/kg and rice at Rs. 3/kg.
- While the cost of these grains to FCI is at Rs. 25/kg and Rs. 35/kg respectively.
- This led to the provision of Rs 1.84 lakh crores for food subsidy.
- The buffer stocks with the FCI is far more than double the buffer stock norms as on January 1 every year.
- This excess stock is the result of an inefficient strategy for food management.
- The strategy where the procurement of these grains is open-ended while the disbursement is restricted.
- The money locked in these excess stock is about 1 lakh crores.
- If the rabi season procurement is good FCI may run out of storage space to accommodate.
Suggestions for improvement
- The open market operation should be increased.
- Even if the government liquidate half of the excess stock it would fetch Rs.50,000 crores.
- The Shanta Kumar panel had submitted the blueprint for the improvement in the grain management system.
- Only three reiterations are needed.
- First-while the Antyodaya category should keep getting the maximum food subsidy, the issue price should be fixed at 50% of the procurement for the rest.
- Second- restrict the percentage of population covered under the scheme to 40 % from the present 67%
- Third-stop the procurement of rice in the north-western states of Punjab and Haryana where the water table is depleting.
- If the government implements these three points it can save the country another Rs. 50,000 crores annually. On top of this, it will help the government to reduce its fiscal deficit.