05 April 2025 : Daily Answer Writing

Q1) Discuss the role of the Food Corporation of India (FCI) in the Public Distribution System (PDS) to ensure food security in India. Suggest necessary reforms in the functioning of FCI to enhance its efficiency and effectiveness. (15 marks, 250 words)

ANSWER

The Food Corporation of India (FCI), established in 1965, is an important component of India’s food security framework. The Public Distribution System (PDS) in India aims to distribute essential food items to the country’s economically vulnerable populations at subsidized rates. FCI’s primary responsibilities include the procurement, storage, transportation, and distribution of food grains across the country.

ABOUT THE FCI AND PDS

• The FCI is a statutory body, operating under the Ministry of Consumer Affairs, formed by the enactment of the Food Corporation Act, 1964 by the Parliament.
• Objectives of FCI:

○ To provide the remuneration prices to farmers,

○ Distribution of food grains throughout the country for Public Distribution System (PDS),

○ Maintaining satisfactory level of operational and buffer stocks of food grains to ensure Nation’s Food Security.

• PDS is operated under the joint responsibility of the Central and State government. It is focused on distribution of food grains in urban scarcity areas
• Objectives of PDS:

○ To supply the certain minimum quantities of food grains to the lower income people at the affordable price.

○ Ensure an equitable distribution among the people.

○ To control the price rise of the essential commodities in the open market.

ROLE OF FCI IN PDS

1. Procurement: FCI procures food grains from farmers at Minimum Support Prices (MSP), thereby guaranteeing a stable minimum income for farmers and securing food grains for the PDS. The decentralized system of procurement was introduced to enhance the efficiency of procurement for PDS and to encourage procurement in non-traditional States as well as to save on transit losses and costs.
2. Storage: FCI maintains an extensive network of warehouses and granaries to store procured food grains, ensuring buffer stocks to meet any emergencies and stabilize market prices.
3. Transportation: FCI transports food grains from surplus to deficit regions, addressing regional disparities in food availability and ensuring equitable distribution.
4. Distribution:

○ FCI meets the requirements of TPDS (targeted PDS) through grains procured which are issued at Central Issue Price fixed by the Government to fulfill the objective of helping the economically vulnerable sections of society.

○ FCI delivers food grains to State Govt./ State Agencies from its base depots for distribution by the latter through Fair Price Shops.

○ The role of FCI becomes even more important in the backdrop of the National Food Security Act, 2013, that commits to distribute grains through TPDS and other welfare schemes, at highly subsidized prices.

○ Revamped Public Distribution System: The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote and inaccessible areas where a substantial section of the poor live. FCI undertakes the distribution of RPDS too.

CHALLENGES FACED BY FCI

1. Increased Economic Cost: The economic cost of procuring, transporting, storing, and distributing food grains is rising. The estimated economic cost per kilogram for wheat and rice for 2021-22 has increased compared to previous years. This rise is significant given the vast

number of beneficiaries under the PDS.

2. Rising Stocks: Increased stock holdings necessitate more warehouse space and elevate storage costs. In reply to an RTI in 2020, the Ministry of Consumer Affairs, Food and Public Distribution revealed that more than 38,000 metric tonnes (MTs) of food grains were damaged in the last five years.
3. Push to Procure: Despite efforts to release extra grains in the market, the stock holdings of FCI have increased due to government push to procure, political pressures, and farmers’ protests. This has also led to a massive debt burden as the government has not fully paid the difference between procurement and Central Issue Price.

NECESSARY REFORMS TO IMPROVE ITS EFFICIENCY AND EFFECTIVENESS:

1. Modernization of Storage Facilities: Upgrading storage infrastructure with modern technology like silos and cold storage warehouses can reduce post-harvest losses and ensure better diversification of crops being stored.
2. Efficient Supply Chain Management: Implementing advanced supply chain management techniques can streamline operations, reduce transit losses, and enhance timely delivery.
3. Transparency and Accountability: Adopting digital platforms for procurement, storage, and distribution can improve transparency and accountability, reducing corruption and leakages.
4. Decentralization: Empowering state agencies through decentralization can lead to region-specific solutions and reduce FCI’s operational burden.
5. Public-Private Partnerships (PPP): Encouraging PPP in storage and logistics can bring investment, expertise, and efficiency from the private sector.
6. Financial Management: Improving financial management practices, including better budget allocation and expenditure monitoring, can enhance FCI’s financial health.
7. Policy Reforms: Revisiting MSP policies and procurement norms to align with market dynamics and ensure better price realization for farmers.
8. Training and Capacity Building: Regular training programs for FCI staff to enhance their skills and knowledge can lead to more effective operations.
9. Implementation of Shanta Kumar Committee’s Recommendations:
10. Beneficiary Reduction: Reduce the number of beneficiaries under the Food Security Act from 67% to 40%.
11. FCI should involve itself in full-fledged grain procurement only in those states which are poor in procurement. In the case of those states which are performing well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the states should do the procurement.
12. Abolishing levy rice: Under levy rice policy, the government buys a certain percentage of rice (varies from 25 to 75 per cent in states) from the mills compulsorily, which is called levy rice.
13. Outsource of stocking of grains: The committee calls for setting up of negotiable warehouse receipt (NWR) systems. In the new system, farmers can deposit their produce in these registered warehouses and get 80 per cent of the advance from the bank against their produce on the basis of MSP.
14. Clear Liquidation Policy: FCI should offload surplus stock in the open market or export as needed. 10. Economic Survey 2020-21 suggested revision of prices to reduce the Food Subsidy Burden. The current price of Rs 2 and Rs 3 per kg was fixed in 2013 for 3 years but has not been increased till now. Central Issue Price should be raised.

The Food Corporation of India is vital for ensuring food security in India through its extensive role in the PDS. However, to enhance its efficiency and effectiveness, comprehensive reforms focusing on modernization, transparency, decentralization, and financial management are essential. These reforms will not only strengthen FCI’s operations but also contribute to the broader goal of achieving sustainable food security in India.

Read More – 04 April 2025 : Daily Answer Writing