Rama Krishna Vadlamudi, Hyderabad 05 July 2013 www.ramakrishnavadlamudi.blogspot.com
Page 2 of 3There is no doubt that unless the PDS is overhauled completely, all the loopholes areplugged and it is made more effective, providing food security to the millions of population will remain a mirage—despite the stated intentions of the government.However, some states seems to be more effective in providing food security through thePDS—notable examples being Chhatisgarh, Kerala and Tamil Nadu.
Problem of Buffer Stocks, Storage and Transportation:
To meet the annual requirement of food security bill, we need to keep 61.23 milliontonnes of food grains as operational stocks. In addition, we need to have strategicreserves for meeting any output shortfall—arising out of drought or floods or transportproblems. It may be recalled that in 2002-03, total output of rice and wheat dropped by28.5 mt (absolute change) due to drought. Such an output shortfall will lead to severeproblems in implementing food security.As per CACP, the strategic reserves have to be kept either in physical form or in the formof foreign exchange reserves. Foreign exchange reserves are necessary to import foodgrains during emergencies. So, we need to keep aside some portion of foreign exchangereserves exclusively to meet the import (if any) of food grains.The current buffer stock norm (for rice and wheat) is 31.9 mt as of 1
July each year. Ouractual stocks as on 1.7.12 were 80.2 mt. It is estimated that the actual stocks as on 1.7.13would be about 82.2 mt. This is against the available covered storage capacity with FCIand State agencies of 53.4 mt. This means that we have only 65 percent covered storagecapacity—53.4 mt storage capacity versus the required 82.2 mt. So the governments havecompletely failed in providing the required storage capacity.Indian Railways is unable to provide enough rakes to transport the food grains across thebreadth and length of the country. On this front also, the government’s failure is clear.
Distorting the Market Dynamics:
Large-scale public procurement will drive the private sector out of the market. The NFSBmay lead to some unintended consequences—such as higher support prices, rising foodprices, higher labour and input costs, etc. This means that the market prices of food grainswill be largely determined by the government procurement and PDS requirements.
Actual Cost of the Bill:
Moreover, the total subsidy cost for the NFSB will be Rs 2,00,000 crore per annum andnot Rs 1,25,000 crore as claimed by the government. This has been stated in a discussionpaper (No. 6 prepared by Ashok Gulati and Surbhi Jain) put out by the Commission forAgricultural Costs and Prices, or CACP, under the Ministry of Agriculture.