1. food and public distribution

8/7/2019 1. Food and Public Distribution

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Revised Strategy Paper

Al l Changes m ade are in font 16

Ar ia l b lac k , in bo ld , and a t page

num bers 4, 18, 27,37 and 39 t o 41.

(Or ig ina l is in font 14 Tim es New

Roman)

of

Department of Food and Public Distribution

(Government of India)

(for 2010-11 to 2015-16)

Phase V training of IAS OfficersHKS, Boston and LBSNAA, Mussoorie

By

Dr. J.N.Chamber and Dr. Pramod Kumar Anand



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Part Topic Page

no.

Introduction 1

Section 1 Vision, Mission, Objectives and Functions 4

Section 2 Assessment of the situation 6

Section 3 Strategy 9

Core Component 1 A Clear statement of the purpose of strategy and the strategy document

9

Core Component 2 A Clear statement of the Vision 10

Core Component 3 Defining long-term outcome goalsand results that are required toachieve the Vision

10

Core Component 4 SWOT Analysis 16

Core Component 5 Summary of proposed solutionsand policy options

17

Core Component 6 Prioritization of proposed solutions

and policy options

23

Core Component 7 Proposed ImplementationFramework

43

Section 4 Implementation Plan 43

Section 5 Linkage between Strategic Plan and RFD 43

Section 6 Cross departmental and cross functional issues 44

Section 7 Monitoring and Reviewing arrangements 46

Power of

Interaction

Big Push Required for Success 47



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Introduction:

India, that was relatively a developed country in early 18 th century slipped

along the slope, and rebounded to acquire the status of developing and now an

emerging economy. Notably, India has only world’s 2.5% of land surface area1 but

over 17% population2. The country has had a post World War II history of severe

food shortages and (the US) PL (Public Law) 480 was a household symbol of its

food dependence in 1960s. Some other factors that compound the problem are only

about 4% of world water and over 20% livestock population. Green Revolution

certainly catapulted India from a net importer to a net exporter (of around 4% of its

cereal production) by 2001-02. This could be possible due to use of HYVs,

increase in irrigated area from hardly 23% in 1965 to 50%, and in yield per hectare

from 7.70 qtl to 19.46 quintal. The production of cereals rose from 72.1 million

tonnes (mt) in 1964-65 to 186.4 mt in 2003-04 and further to wheat production of

80.58 mt and rice production of 69.45mt in 2009-10 (down from 99.15 rice

production in 2008-09 due to drought). Some major problems still remain on the

food front as the per capita net output of cereals that grew rapidly from 110.4 kg

in 1951 to 166.1 kg in 1984, has stagnated; green revolution needs to be made

evergreen and to encompass all regions and seasons of the country.

Under this background a Strategy Paper for the department of Food and

Public Distribution is chalked out keeping in view Annual Report, RFD, Outcome

budget etc., as follows.

1Ranks 7

thafter Russia, Canada, the US, China, Brazil and Australia in that order.

2Ranks 2

ndafter China.



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DEFINING THE ASPIRATIONS

Section 1: Vision, Mission, Objectives and Functions:

Vision:

To ensure food security and nutrition to all the citizens of India at

affordable prices

Mission:

i. Management of food economy and nutritional needs of the country

through efficient procurement, foreign trade, storage and distribution of

foodgrains including pulses

ii. Ensuring availability of foodgrains, sugar and edible oils through

appropriate policy instruments

iii. Making foodgrains accessible at reasonable prices, especially to the

weaker and vulnerable sections of society

iv. To create and nurture institutions, as Moore states, “I recognize that one can

view managerial performance as a dependent variable and institutional

structures as the independent variable.3”

Por t ions added by the authors to Min is t ry ’s

Vis ion and Miss ion are under l ined above.

Objectives:

1. To utilize FRP (Fair and Remunerative Price) Policy, in consultation

with concerned, to boost agricultural production to meet aims of Food

Security Act on its enactment and export cereals and sugar

3Moore, Mark H., “Creating Public Value- Strategic Management in Government”, Harvard University Press,

Cambridge, Massachusetts, pp 3,



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2. To ensure Procurement of wheat, rice /paddy and coarse grains for

Central Pool, and by assisting decentralized procurement under Price

Support operations

3. Ensure availability of wheat, rice, pulses and edible oil to meet

requirement of TPDS and other welfare schemes and of sugar for BPL

families

4. Ensure food security and nutritional standards in the country

especially for the weaker and vulnerable sections of society through

TPDS

5. To endogenize ‘ratoon’ nature of sugarcane in sugar policies making

these long-term and become an assured exporter of sugar

6. Timely creation of required storage capacity for foodgrains

Functions:

Major functions of the department are as follows:

1. Procurement of foodgrains

2. To ensure adequate availability of wheat, rice, pulses and sugar tomeet requirement of TPDS and other welfare schemes

3. Ensure food security and nutritional requirements in the countryespecially for the weaker and vulnerable sections of society throughTPDS

4. Export, Import and release sugar sector and review of sugar policy

5. To ensure proper storage and transportation for foodgrains, with co-

operation of States and private sector



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Section 2: Assessment of the situation

2 A. What external factors will impact us:

a. Political

i. The Department has a strong political commitment to enact Food

Security Act

ii. Commitment to achieve goals and open mindedness on foreign trade

iii. Usually, the Opposition Parties too do not oppose these policies,

nature of these policies being welfare, lest the Opposition Parties

might face the wrath of the people and thereby the voters

iv. Since food distribution depends on the production, the Departmenthas a strength in having a common Cabinet Minister with the

Ministry of Agriculture

v. Declaration of MSP and Sugarcane prices

b. Economic

i. Full commitment of Finance Ministry

ii. Mounting food subsidy bill

iii. Adverse impact of global subsidies against exports

iv. Inflation, exchange rates, global slowdown

c. Socio-Cultural

i. Male household head dominated society (but for some areas)

ii. Food wastage on community free feast on death etc.

iii. A rich culture to help a family out of starvation

iv. Food and cooking habits



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d. Technological

i. India a big IT player

ii. Introduction of UID

iii. Wherewithal to implement Multi-application Smart Card Scheme,

GPS etc.

iv. e-governance like introduction of computerized PDS shops

e. Environmental

i. Over use of fertilizers

ii. Depleting water table

iii. ‘Ussar’ (saline and alkaline) formation

iv. Climate change, global farming and opportunity to earn carbon credits

v. Ever increasing SPS standards by developed world

f. Legal

i. Prior to enactment of Food Security Act, adequate machinery not in

place

ii. Transparency due to RTI

iii. Improvement of natural resources like rainwater and surface water

harvesting through MGNREGA

iv. Consumer laws, labour laws, low taxation

2 B . Who are our stakeholders?

i. Farmers

ii. Beneficiaries

iii. States and UTs



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iv. Other Ministries, PSUs and institutions, RBI, Railways, planning

Commission

v. Sugar mills

vi. FPS shops owners and operators

vii. Entrepreneurs and Private Investors and other players

2 C. What are our strengths and weaknesses?

Some major strengths are:

i. High public attention for good work and political support

ii.

Generally self-sufficient in wheat and rice and frequently in sugar(though not at present)

iii. Vast Infrastructure – FCI and CWC, PSUs. Network of Godowns and

Distribution Outlets spread across the country for reaching out to

beneficiaries

iv. Services rendered are essential services

v. Budget allocation available for subsidy operations

Some major weaknesses are:

i. Decision making – More time spent on fire fighting than formulation

and implementation of policy

ii. Ghost cards, poor targeting, and leakages of food grains in PDS

iii. Lack of a comprehensive database to ensure transparency and

accountability of TPDS operations

iv. Inadequate storage facilities

v. Financial weakness: High subsidy outgo, little generation of revenues

by the department except collection of issue price and a sick unit

named HVOC for which a decision is pending



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vi. Till date inadequate use of IT at field level and related inadequate

skills

2D. What do we need to learn?

i. Advance scientific knowledge of domestic sowing, global

sowing, likely glut or shortages

ii. How to make multi seasonal FRP announcements by CACPpossible

iii. Pockets in country devoid of food stocks

iv. Monitoring of stocks, storage and distribution

v. How to timely dispose of old grains in time

vi. Skill requirements and development of innovative tools and gapanalysis

Section 3: Core Strategy

This section is the heart of the paper and intra alia encompasses at length

potential strategies, engagement of stakeholders, building of our knowledge and

capabilities and setting out priorities out of various options crystallized:

1. Core Component 1:

A Clear statement of the purpose of strategy and the strategy document

For a central department like the Department of Food and PublicDistribution, the word 'Strategy' means to chalk out priorities and plans to achieve

goals in an efficient manner i.e. in time and maintaining a high degree of quality.

Credibility of the department needs to be built further in the eyes of the last man in

a remote corner of the country to assure him that in time of need; help would come,



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ensuring his food security. The planks of this strategy are to generate an

environment for high levels of production and imports if need be, to make it

physically reach across the vast country and to provide it to the beneficiaries

maintaining quality, and to export surpluses. Timely investments are key to any

viable strategy and investment in sustainable development is the touch stone of it.

2. Core Component 2

A Clear statement of the Vision: Already covered in Section 1.

Core Component 3:

Defining long-term outcome goals and

results that are required to achieve the Vision:

The department has a wide range of outcome goals of which major ones

are as follows:

i. Enactment of the National Food Security Act:

This goal aims to guarantee through an Act, a provision to provide

wheat and rice at affordable prices to BPL households. The bill could not be

placed in the parliament during the winter session. It is aimed to place it

during Budget Session and put an Act in place, with the help of concerned,

by end of May 2011.

The annual cost of implementing the Act is difficult to estimate as full

facts would be known only once it is enacted, still some broad estimates are

between Rs 76,720 crore (US $ 16.5 billion) and Rs 1,07,000 lakh crore (US



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$ 23 billion). This compares with the Rs. 55, 578 cr budget target for food

subsidies in fiscal year 2010-11, which is likely to be significantly exceeded.

The range of food grain quantities doing rounds is 25 kg or 35 kg of

grains each month to poor households.

It is foreseen that the Act will protect over 400 million poor in India

from near starvation, but a rise in subsidies could hit India's plan to cut down

its fiscal deficit to 4.1% of GDP by 2012-13 from the 5.5% expected this

fiscal year.

It is aimed to get the bill enacted, keeping reasonable levels of food

subsidy outgo.

ii. Better Nutrition for masses:

To focus on better nutrition for masses, especially people Below

Poverty Line by spreading awareness for consumption of food items giving

proteins and vitamins besides carbohydrates. Besides, for lactating mothers

and children their need for calcium is also proposed to be included that could

be met through consumption of milk/ safe powder milk in coordination with

the Department of Women & Child Development. One may recall that

Acharya had said to include in food assistance, “…supplementary nutrition

dispersion (including micro-nutrients) to infants and expectant/nursing

mothers…”.4

The results to be achieved in 5 years are to make at least 90% BPL

families aware about these vital food ingredients.

4 Acharya, S.S., “National Food Policies Impacting on Food Security- The Experience of India, a Large PopulatedCountry”, World Institute for Development Economics Research, UN University, Research Paper No. 2006/70, July2006.



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To achieve this goal proposed solutions suggested are:

a. Intensive media campaigns

b. Through involvement of health, ICDS and MDM machinery

c. Through education department by appropriate inclusion in

syllabus right from elementary education

iii. Efficient Procurement of wheat, Paddy/ rice, coarse grains and

pulses for Central Pool under price support operations;

As due to vagaries of nature it is not possible to set targets in

advance, it is expected to increase food production by 3% per annum

over its secular trend. However, enactment of Food Security Act

would entail a much larger volume of procurement, though its actual

volume would be known once the level of foodgrains per household5

and coverage of items is finalized by the parliament.

Inclusion of pulses is also proposed in this goal as it aims at to

meet the goal of better nutrition. Tie up should be made with the

Department of Animal Husbandry to enhance availability of milk/

safe milk powder at reasonable prices. These can be distributed at

subsidized rates to BPL families in remote areas, as identified by the

States, sharing costs with States.

iv. Ensure availability of wheat, rice and pulses to meet requirement

of TPDS and other welfare schemes and of Sugar for BPL

families:

To meet this goal, besides procurement of Wheat and Rice,

certain imports of pulses are proposed to be tied up. Hopefully, sugar

5 Figures of 25 and 25 kg per household are doing rounds among policy makers and media, but the decision wouldbe taken by the Parliament.



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production would bounce back in the coming season6. It is also aimed

to increase sugar production by 3% per annum, in the secular trend.

v. To implement TPDS jointly with States and UTs:

It is aimed to achieve this goal by efficient distribution of foodgrains

etc. procured. First in First Out (FIFO) policy should be strictly

implemented for each warehouse and not more than 10% of stocks

older than end of last season/ year (whichever is more) and none older

than 21 months would be kept by ensuring timely releases.

vi. Review of sugar sector Policies with a view to Reforms:

Keeping in view wide fluctuations in cane production led

domestic sugar production fluctuations, it is aimed that in consultation

with Ministry of Agriculture, the FRP would be announced for next 2

seasons by 30th June 2011 (at least 3 months before commencement of

cane season), and similarly each year for next 3 years. In the last year

it would be announced for next 3 seasons to reduce price benchmark

uncertainty from the market, commensurate with the ‘ratoon’ nature

of crop, giving comparable though diminishing yield after the first

season.

An analysis7 of sugar production compared to sugar

consumption reveals that, while the production has a mean of 20.640

million tonnes the mean consumption achieved was a slightly higher

quantity of 21.086 million tonnes. The production was relatively

fluctuating with a standard deviation of 5.222 million tonnes. Against

it government operations clubbed with market forces stabilized

6Landes, Maurice R, “Indian Sugar Sector Cycles Down, Poised to Rebound”, USDA, Economic Research Service,

April 2010 pp 1.7

Computed by Authors for 10-year period ending 2009-10.



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consumption and so its standard deviation was notably lower at 2.048

million tonnes. Accordingly, while coefficient of variation of

production was a higher 0.253, the coefficient of variation of

consumption was well managed at a lowly 0.097.

Accordingly, fluctuations in availability of sugar for consumption

(Table I) would be reduced compared to in sugar production. The

Coefficient of Variation (CV) of sugar consumption would be ensured

to be below 40% of the CV of sugar production for 10-year rolling

sugar season periods.

Table 1

India- Sugar Consumption Stabilization

Sugar

Production

(mt)

Sugar

Consumption

(mt)

2000-01 20.480 17.845

2001-02 20.475 19.760

2002-03 22.140 20.260

2003-04 15.150 19.115

2004-05 14.170 20.385

2005-06 21.140 19.870

2006-07 30.780 22.425

2007-08 28.630 23.500

2008-09 16.130 24.200

2009-10 17.300 23.500

Mean 20.640 21.086

Standard Deviation 5.222 2.048

Coefficient of Variation 0.253 0.097



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A comprehensive study would also be conducted on various

issues within one year. This would also encompass the crucial issue of

modernization of sugar industry. It is aimed that in next 5 years all

sugar mills older than 25 years would be offered softer credit to

modernize to optimum capacities and increase sugar recovery norms

by at least 1%.

vii. Development of Warehousing Sector:

Public and private efforts would be synergized to give a big

push to enhance foodgrains, pulses, sugar and edible warehousing

capacities by 50% in next 5 years. This is critical to ensure smooth

implementation of upcoming Food Security Act.

viii. Boost to Edible Oil Sector:

In consultation with Ministry of Agriculture, FRP would be

announced for any season at least 15 months in advance to facilitate

farmers to take allocative decisions. Softer credit would be made

available for importers of capital goods for oil extraction.

ix. Decide on the future of Hindustan Vegetable Oils Corporation

Limited (HVOC):

A final decision should be made to sell to bidder who

undertakes to run it or to liquidate it.

x. Creation of a Sevottam complaint system to implement, monitor

and review Citizen’s Charter and to redress and monitor public

Grievances:



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All grievances should be acknowledged within a maximum

period of 10 days of receipt, with an average time of 7 days. Replies

should be sent within a maximum period of 4 months with an average

of 2 months.

Core Component 4:

A SWOT (Strengths, Weaknesses, Opportunities and Threat)

analysis:

The strengths and weaknesses are covered at length in

Section 2C. Opportunities and Threats could be existing or come

suddenly time and system should recognize within little response

time.

Some of the major Opportunities are as follows:

i. To inculcate ethical behavior, IT back up and RTI available

ii. Focus on Food Security

iii. UID linkage

iv. Information boom

v. Economy growing fast

vi. Foreign Exchange reserves enough to modernize systems

Some of the major Threats are as follows:

i. Inadequate budgetary releases leading to carry over of

liabilities obstructing Supply Chain Management

ii. Continuous droughts

iii. Fall in soil fertility due to salinity etc.



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iv. Continuation of large global subsidies due to Doha Round

impasse

v. Continued leakages and ghost cards

vi. Inadequate private warehouse capacity development

Core Component 5:

Summary of proposed solutions and policy options

Proposed solutions for some of the major challenges are

analyzed below:

Challenge I:

Maximization of benefits to a representative consumer household for a

given level of subsidy

Literature is surfeit with analysis of consumer choices and welfare

maximization of benefits, for a given level of subsidy. The theory can be extended

from an individual consumer to household, and separately analyzing intra-

household food allocations.

It is debated world over how to provide food at cheaper/ economical prices

to vulnerable sections of the society. Various existing available solutions can be

broadly categorized into one or another of the following:

i. PDS (through FPS): Poor households be given a quantity entitlement

to buy foodgrains from a designated point at subsidized rates, like in India

from a PDS shop. Usually it is allowed to approach just one point. It is also

called direct relief plan.



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ii. Food coupons: these coupons (also called as food stamps) be issued

to the eligible households entitling to buy stipulated quantity of foodgrains

from anyone of the designated grocery shops/ sellers. This is not a very

novice idea, in fact, it was operational during the second World War in the

US as ‘Food Stamps Plan’.

i i i . Cash subsidy: Thirdly, cash subsidy equivalent to entitlement be

paid in cash or directly credited to bank account of the head of beneficiary

household. Thereafter the household adds it to its income and takes a

decision about its apportionment on the basket of goods and services that in

its opinion are the most welfare maximizing. In fac t Braz i l i s

a l ready doing so.

This raises the fundamental issue as to given the three options what

makes a household the most well off?



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Figure 1: PDS or Food Coupons or Cash Food Subsidy –Welfare solutions for a representative Household

Let us take an example of a 5-member rural household that has a monthly

income of say, Rs. 1,000, and is therefore below poverty line 8. As depicted in

Figure 1, the budget constraint of the household allows it to choose any point

within the triangle OBB’ under budget line BB’, in the 2-goods world, food and

non-food where the latter numeraire encompasses all non-food goods (and can be

built in to subsume services too). Being a rational consumer household, it

maximizes its welfare by reaching a point on line BB’, the exact point being where

this line is tangential to the highest possible indifference curve9 i.e. say, at point P

8At Rs. 368 per head per month for rural areas, as per 2005-06 estimates of Planning Commission.

9Marginal rate of substitution being equal to price ratio of food to non-food.

P’’

R

P’

Q

P

R’

Non-Food (N)

Food (F)

1,100 C

1,050

1,000 B

100 B’ 1,000 C’ 1,100

Budget Constraint without

food coupon

Budget Constraint with food

coupon

O

(Not to scale)



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or point R depending upon whether the concerned household was consuming at

least Rs. 100 worth of food or not.

Options I PDS or Option II Food Coupons:

Let us take the case of the household originally at point P of food

consumption F < Rs 100. Now let it be given food worth Rs. 100 (or Food coupons

worth Rs. 100 per month, raising its budget line to BQC’ as shown in thick. Now

we make a strong assumption that arbitrage of exchanging PDS foodgrains or

the food coupons is not possible. So it should settle for either point Q (in lieu of

P’ which is no more possible), i.e. the kinked point of F = Rs. 100, or a second

household type at point P’’ of F > Rs. 100, depending upon which point gives it a

higher utility.

Option III Cash Subsidy:

Alternatively, let the household be given a cash food subsidy of Rs. 100 per

month raising its budget line to CC’. It should now opt for point P’ (over Q), as it

is the highest possible indifference curve for first type household, or at P’’ for the

second type household. Thus his final food consumption (F) could be < Rs. 100 or

> Rs. 100 (or as a coincidence exactly Rs. 100 at Q). The actual position would

vary households. But given the choice to buy any good utilizing cash subsidy,

surely it would not be on an indifference curve below the one that passes

through point Q.

Alternatively, had it been a third household type, originally at a point R

that ensured F > 100, the additional income would catapult it to enhance its

consumption of both F and Non-F (both assumed to be Normal goods) and opting

for point R’ to maximize its welfare. Now in all the 3 options the third



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household type should catapult to point R’ to maximize its welfare, therefore,

the outcomes under all the three options would have been identical for R.

So one can summarize:

i. In case the original food consumption was below the eventual food

worth amount of subsidy (Rs. 100), the final consumption on food could still

be lesser than Rs. 100 in case of cash subsidy, but surely higher than Rs. 100

in cases of PDS or food coupon.

ii. But under the option of cash subsidy the household would be invariably

at the highest possible indifference curve, maximizing its utility.

iii. In case the original food consumption itself was above the eventual food

worth amount of subsidy (Rs. 100), the final consumption on food would

remain higher and identical under all the three options.

Therefore, though it makes economic sense to grant a cash subsidy

instead of distributing food under PDS or giving a food coupon, the three

solutions would be further analyzed and prioritized in Core Component 6.

A related issue is intra-household food allocation, as female and elderly opt

for lower intake, and such a persistent situation leads to their malnutrition reducing

resistance to diseases.

Challenge II:

Ever Increasing level of food subsidies to carry out procurement

operations? And how to bear this enormous cost especially in the light of

upcoming Food Security Act?

Food Subsidy is computed as the difference between the Economic Cost and

Central Issue Price (CIP) on TPDS, OMSS, welfare schemes and carrying costs.

Economic Cost includes MSP, distribution cost and incidentals. An ever rising



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MSP, higher quantities handled and unchanged CIP since 2002 have ballooned the

subsidy bill, and if additional costs of implementing food security Act and higher

poverty count is accepted it may cross 1.1% of GDP10.

The policy options to keep the food subsidies within 1 to 1.1% of GDP

are outlined here, as reduction in absolute amounts is not feasible:

i. Increase in CIP for APL

ii. Increase in CIP for APL and BPL (excluding AAY, as that is meant

for the most vulnerable section)

iii. Coverage of larger populations under cash subsidy, saving on

portions of storage, transportation and incidentals

iv. Indian farmer be allowed to export any foodgrains if remunerative

prices are available, to push sowings and yields

Challenge III:

Calibration of policies for simultaneously stable and sustainable

(obviously steadily increasing and not constant) levels of availability of

cereals, pulses, sugar and edible oils to address nutritional needs

With limited scope in increase in overall area, except through ease ion

in gross areas through irrigation coverage, for which Ministry of Agriculture

is already making intense efforts alongwith Ministries of Water Resources,

Power etc.; trend in reduction of area under coarse grains can be expected

over next 5 years. The following feasible policy options are accordingly

outlined here:

i. Higher area under a crop be encouraged if prices go up

10Economic times 2 May 2010.



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ii. Focus should be simultaneously on all major crops for medium

and long-term periods to ensure food security and nutritional

needs

iii. Till enormous subsidies across the globe continue in agriculture

sector, India should take advantage of lower international prices

and focus on foodgrains and sugar exports

iv. For crops like oilseeds in which India is a perpetual importer

long term imports be the policy

Challenge IV:Handling of ever increasing levels of storage and transportation of

foodgrains

The following policy options are outlined

i. Government should make massive investments in storage sector

and railway wagons sector

ii. Govt. funds and bank credit be leveraged to push storage capacity

iii. Private sector be given softer credit to add storage capacity

iv. PPP be focused upon taking help of private funding and bank

credit

Core Component 6:

Prioritization of proposed solutions and policy options:

Suggested solutions on Challenge I:

Some of the arguments advanced regarding options of PDS or food coupons

or cash subsidy are:



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i. Cash subsidy would not be spent on food, as also shown in figure 1 in the

case of one type of household (opting P’), though in another household type

(opting P’’) it could be higher as shown in the diagram. Against it the household

can maximize its welfare through cash subsidy.

ii. In all cases adequate availability of foodgrains and an efficient food

marketing system need to be in place even in remote rural areas. The retailer with a

very low turnover may hesitate to accept food coupons. However, if he can claim

on real time basis or even if there is a power failure the moment power is restored,

it may work.

iii. Husbands may grab cash subsidy and blow it up on boozing, adversely

affecting health of the family, besides their own. A counter argument is that though

this outcome can’t be ruled out, this argument could be equally advanced against a

wage hike or employment under MGNREGA. Moreover, no one can guarantee that

food (cheaper) under PDS/ Coupons would not be sold by such a husband to

arbitrage for cash. All the more, to reduce such probability the cash subsidy can be

credited to the account of an adult female member of the family, if there is one.

iv. Option of Cash subsidy would surely cut down on huge storage and

transportation costs, if the consumer is allowed to buy from designated local

grocer/grain shop. As a further step if entitlement can be transferred electronically,

say by a smart card or mobile phone he can even buy from any farmer, making the

system even more efficient.

v. It would also cut down on poor quality and sometimes even rotten grains

available under PDS, as household would exercise its choice. Under PDS a

consumer is left to suffer whims and fancies of the concerned outlet and the system

refuses to compensate him genuine costs and forces to internalize swindling. This

can be averted by cash subsidy.



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vi. In order to insure worth of food coupons against inflation, these can be for a

fixed food grain quantity and the on-line linkage can be periodically modified so

that the outlet approached gets a higher amount covering inflation. In the case of

cash subsidy this problem is easier to overcome as enhanced inflation adjusted

amounts can be released.

vii. Cutting down on PDS operations would also reduce the chances of selling to

FCI etc. and buying cheaper under the PDS, repetitively called ‘revolving door

policy’ by some bad elements.

viii. Cash subsidy can also avert the cases of fake coupons, though under it

electronic frauds would need to be kept at bay.

ix. Some States have already started implementing a project titled

'Implementation of Pilot scheme on Introduction of Smart Card based delivery of

essential commodities under TPDS’, through NIC on the initiative of the ministry.

Under this pilot project, finger prints are stored on the smart cards. In due course

mapping of iris can also be introduced, for better security against leakage.

Awareness can be further improved so that stocks with an FPS can be monitored

by a back-end server on real time basis. Thus stock position can be gauged though

process itself saving on the time, cost and drudgery of data feeding.

x. Notably, in India certain States have introduced direct credit of State cash

subsidy to bank accounts of consumers. For instance, UP has recently identified

around 25 lac such families, which though eligible for inclusion in BPL lists, were

left out because of the cap on number of BPL families i.e. 106.75 lac. Thus, in

order to give relief to these families, a pension of Rs. 300 per month per family is

now being paid though bank accounts. The prime objective of the scheme known

as ‘Mukhya Mantri Garib Aarthic Madad Yojana’ is to cater to the food

requirements of the vulnerable families.



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In the light of above in the long-term cash subsidy appears to be the best

option. However, it needs to be tested on pilot basis in a number of districts. To

ensure that no vulnerable family suffers due to such a switchover, it would be

desirable to keep 2 to 5 bags of wheat in such villages and local revenue

official entrusted the task to take care of any family unable to access it, till

Gramin Grain banks are in place. Recent results of biometric identification in

RSBY (Rashtriya Swasthaya Bima Yojana) and pilot in Mahatma Gandhi

NREGA are encouraging trends in this direction.

A one-size-fits all approach to food and nutrition management is not

practical. Different areas of the countries would be at different levels of electronic

coverage, and undue haste may prove counterproductive.

Simultaneously introduction of Smart Cards should be encouraged, with

iris identification included and option to approach any outlet including FPS.

Coverage under cash subsidy should be increased slowly and steadily in

consultation with States and other stakeholders. Simultaneously, it should be

linked to UID numbers. As a person can’t have more than one UID number, the

first field in such a linkage should be the UID numbers of family members and

second field their names followed by age, entitlement etc., to facilitate amount

transfer to bank accounts, without any duplication.

Suggested solutions on Challenge II:

i. Increase in CIP for APL:The policy of non-universal coverage of APL households should be

continued to check unabated rise of subsidies. But as a corollary it has further

thinned margins, if any of FPS. A game changer can be to allow FPS to sell non-

PDS items like any normal shop. It would facilitate to cover overheads and

generate positive impact on additional business piggybacking on PDS related



27

customer visits. Tie up of reputed FMCG and FPS system

can be harnessed to mater ia l ize th is FPS can

bec ome v iable and MCG get w idespread coverage for

the i r p roducts . Role of PRI and awareness campaigns is also need of the

hour.

ii. Increase in CIP for APL and BPL (excluding AAY, as that is

meant for the most vulnerable section):

India’s definition of poverty in itself is very poor, as it is below the

international yardstick of $ 1 or $ 1.25 or $ 2 a day. Even if discounted for PPP, the

number of hungry among countries being highest in India, it needs special efforts.

Similarly, Unicef states that “… 47% of young children in India are malnourished,

and up to a third of the world's undernourished children are Indian. 11”

It is also said in literature that, “Less than 15% of India’s national income

comes from agriculture and close to 60% of India’s labor force lives off

agriculture. There is little surprise in the fact that India’s rural population leads

impoverished lives.12”

Under these circumstances though there is scope of increase of CIP for APL

it is not much so for BPL (including AAY). Therefore, there is need to keep CIP

for APL fixed in real price terms, but not in nominal prices. At the same time

people erroneously excluded from BPL and AAY should be included at the

earliest.

11Website of UNICEF India http://www.unicef.org/india.

12 Basu, Kaushik, Chief Economic Adviser, “The Economics of Foodgrain Management in India”, September 1,

2010.



29

i. Higher area under a crop be encouraged if its prices go upIt would be a short run policy if aim is to tide over price rise of one

crop, taking advantage of market forces in the case of one crop. However, it

is likely to lead to cyclic pattern of gluts and shortages of such a crop and

benefit middlemen more than an average famer who has little holding

power. It may also lead to distortions amongst crops, and therefore not

advisable as a long term policy.

ii. Focus should be simultaneously on all major crops for medium

and long-term periods to ensure sustainable food security and

nutritional needs:

To ensure nutrition security under TPDS, pulses and edible oil should be

included. Besides, in coarse grain growing regions these should also be included

with matching reduction in wheat entitlement. This would also give a shot in the

arm of producers of these commodities in dry areas, saving avoidable

environmental degradation.

In India supply side variations in production of cereals are due to vagaries of

nature and even more so in the case of pulses as these are not largely grown in

irrigated areas. Moreover, competing change in areas allocated by farmers to

sugarcane, cotton and jute also play a vital role. In the short run as pressure of

imports of sugar and edible oils have started pinching, there is likely to be an

appropriate hike in MSP (or in FRP) of these crops leading to area diversions

putting pressure on both cereals and pulses production. A silver lining is that as per

existing secular trend some area is likely to be released from coarse grains due to

advent of irrigation facilities, and this may be available for foodgrains. But it is of

utmost importance that procurement of coarse grains should be an important policy

plank and the striking variations in levels of procurement (11.50 and 13.75 lakh

tonnes in 2005-06 and 2008-09 respectively against 0.002 and 2.03 in 2006-07 and



30

2007-08 respectively14) should be avoided in future to help the most vulnerable

producer section of foodgrains.

Demand for Maize is likely to go up rapidly due to its diversion to bio-fuel,

which hopefully would be kept in check in India by resorting to molasses.

It is relevant to point out here that while for cereals, sugar, edible oils, cotton

etc. large scale imports are economically quite possible (unless stalled politically

by exporting countries), it is not so for pulses. These can be largely imported from

Australia, where these are largely grown in vast unirrigated areas. Importance of

pulses is further enhanced as these are source of proteins for a large segment of

Indian population. Good news is that area under pulses has increased to 22 million

ha in 2008-09 from under 11.5 million ha in 2000-0115.

Food Security:

For a large nation like India having a sizeable vulnerable section of

consumers, the need for food security need not be over emphasized. To accord

impetus to these efforts National Food Security Mission (NFSM) was launched in

2007-08. It was targeted to enhance production of wheat, rice and pulses by 10, 8

and 2 million tonnes respectively. Sometimes increasing levels of procurement of

wheat is attributed to its higher MSP, but if that were so, procurement of rice

would have increased in tandem commensurate with increase in its MSP.

No doubt MSP is an important factor, but weather, attack of diseases and

pests, MSP of competing crops, cost of inputs, advent of HYVs, technological

advancements, movement of international prices etc. play a vital role in production

of foodgrains in India.

14Economic Survey 2009-10 pp 200.

15Economic Survey, 2009-10 pp 184.



31

Open Market Sales Scheme has helped in checking inflationary trends in

food economy16. Accordingly, the policy of allocations to States & UTs, bulk

consumers alongwith open tender sales should be continued to stabilize food

prices.

Notably, a representative farmer is either a subsistence farmer who is not

able to contribute to public procurement or a supplier-cum-consumer who disposes

of his surplus to the market. In fact both subcategories have a demand as a

customer to reach back the market, but little financial wherewithal to convert it

into effective demand. The food security should also focus on enhancing

production and thereby incomes of all segments of farmers to increase availability

and effective demand to avert starvation and malnutrition. And earlier a sizeable

population of farmers is brought above BPL the better it is, as in any case they are

burdened with the task of giving some employment to agricultural labourers.

India should continue to pursue the policy of creating buffer stocks

exceeding food security norms set to take care of TPDS and demand for welfare

schemes to ensure nutrition.Emphasis on sustainable agriculture should be inbuilt in the policy, like

certified organic cereals can also be procured and sold under OMSS.

iii. Till enormous subsidies across the globe continue in agriculture

sector, India should take advantage of lower international prices

and focus on foodgrains and sugar exports:

Presently, FCI is paid on cost plus basis, which needs to be relooked to pushproduction of crops in which India has a comparative advantage. This can be

harnessed in case of wheat, rice and (after current shortages are over sugar), as

international prices are lower. Though one component of payment could be cost

16Economic Survey 2009-10 pp 204.



32

based (MSP – Issue price, and some indexed costs like rail freight, diesel price

etc.) another component linked to efficiencies needs to be introduced. The second

component should facilitate to harness economies of scales in years of larger

procurements and can be evolved between the Ministry and FCI and an MOU dully

signed. An incentive should also be given to employees for exceeding the norms

set. This can have two components first a uniform one for each employee and a

second one linked to efficiency say, in the related FCI district. Exports in

calibrated quantities out of FCI stocks in periods of glut, can make it a vibrant

institution. Exports out of some lots of OMSS should also be permitted in case of a

glut, of course after duly adding so in the advertisements published by it.

Therefore, the policy of long-term focus on all major crops needs to be

pursued. Accordingly, FRP for these crops should be announced in one go for

more than a year, and in case of sugar cane for say, 3 year

This policy is further elaborated below by taking case of sugar.

The very nature of long term (3-4 years) annual yields of sugarcane crop

after one sowing, diminishes flexibility of growers to take any advantage of

demand fluctuations. This pushes the crop to a unique position leading to cyclic

glut and shortages, which are passed on to sugar production. For instance in the

aftermath of current sugar shortages in India, more area may be put under it (of

course by diverting from other crops), still the existing ‘ratoon’ crops sown over 1,

2 and 3 years ago would rule out possibility of a glut17, though the shortages may

be overcome for a while. Moreover so, because yields from ratoon crops are on the

lower side compared to the currently sown crop.

17Though better market prices of sugar and cane prices announced by Government, that are accounted into by

sugar mills in increasing their cane prices, would most likely bring the country out of shortage situation.



33

The very cyclic nature of sugar also deters to make a long-term import or

export arrangement in the world sugar trade, for India now a large player, that had

11% of global exports during glut of 2007-08 and 12% global imports during

shortages in 2009-10 and even more likely during the current sugar year. For

instance, while in 2006-07 and 2007-0818 India looked graduated to be an assured

exporter (25 and 58 lakh ton respectively19), it turned into an importer in 2008-09

(10.8 lact ton20) and continued manifold so in 2009-10. The problem is

compounded by the very size of Indian demand/ supply, which brackets India in

the category of non- price takers.

It is also a fact that Indian sugar consumption has continued to expand due

to rising per capita incomes and government interventions to adjust stocks,

facilitate trade, 10% levy on sugar mills at lower prices, and assure adequate

monthly availability21. In the backdrop of above if the country wants to overcome

these factors a long-term trade policy could be still planned on the following lines:

i. Keeping in view the nature of existing cycle, broad estimates of sugar

availability in next season should be made. Sugar mills would need to

be involved in this exercise to furnish:

a. Area of standing crop

b. Its broad classification by the number of years sowing of the

standing crop

c. Any perceptible change in the likely yield due to weather and

improvement in productivity

18Years in the context of sugar refer to seasons October-September.

19Annual Report 2009-10 p 92)

20Ibid.

21Landes, Maurice R, “Indian Sugar Sector Cycles Down, Poised to Rebound”, USDA, Economic Research Service,

April 2010 pp 2.



34

This task is made a bit easier by the very fact that cane crop is

reasonably (say, compared to cotton) lesser prone to attack of

bacteria, pests etc.

ii The pricing in the proposed 2-year export/ import contracts be

linked to exogenous sources like prices in future markets. A counterpoint

could be that once India decides to enter the sugar market, world price is

influenced by the sheer size of a deal, as it is a significant share of world

sugar trade. However, it can’t be overlooked as agents in future markets

internalize details of standing crops world over.

v. The future trade deals should be made in the range of quantities as

discussed above, so that both sides have some flexibility to negotiate exact

levels as the time comes. Such arrangements, if made for imports should be

made with at least two countries, one in SAARC (say, Pakistan) or ASEAN

(say, Indonesia) and another with global suppliers (say, Cuba or Brazil or the

USA). Similarly, exports arrangement by India, if surplus is predicted could

be with say two large importers in EU.

vi. In the short run, the policy of zero duty imports needs to be extended.

Moreover, continued efforts should be made to import raw sugar (under

OGL), instead of refined sugar and do value addition in the domestic mills

most of which are underutilized. Besides, need to export an equal quantity in

good years also helps in crowding out frivolous importers.

In a nutshell the policy should not be a prisoner to cyclic variations,but the very nature of cane and sugar cycles need to be closely studied22 and

duly internalized in the policy. It needs to be underscored that, India has a

comparative advantage in production of sugarcane, which is why its farmers

22For instance a study can be entrusted through National Sugar Institute, Lucknow.



35

make it world’s number one or two producer of cane. Therefore, rightful mix

of policies is the need of the hour to turn it into net exporter of sugar from

net importer and restoration of future trading23 for long term price

stabilization. Harmony between interests of sugarcane growers, mills and

consumers is of essence, as a very low price deeply hurts producers a very

high price hurts consumers and can delay payment of cane arrears to

growers by mills.

iv. For crops like oilseeds in which India is a perpetual importer

long term imports be the policy:

India has a history of over 2 decades of import of edible oils. So a

fundamental question arises whether India should try for self sufficiency in this

sector or be reconciled that it does not have comparative advantage in this sector.

But the sector has as many as 9 major oilseeds of which in most it does possess

comparative advantage in pockets where requisite irrigation is available and

appropriate inputs and other policies are in place. Primarily in the long run, if

productivity in these pockets can be replicated self sufficiency can be achieved or

at least imports can be reduced to minimal levels. The alternative approach of

giving relatively very high price to divert area from foodgrains, sugarcane etc. may

prove counterproductive as that would lead to higher imports in those sectors.

Still with increasing population, per capita demand and better purchasing

power in the hands of poorer deciles (who have a higher propensity to consume)

higher productivity seems to the only viable mantra. Therefore, sizeable funds needto be invested in R & D of 9 major oilseeds, especially the 3 top among these

namely, soybean, rapeseed/mustard seed and groundnut.

23Suspended in May 2009.



36

As import of edible oils can’t be avoided in the short run, there is dire need

to enter into long-term import contracts at exogenously determined prices (like

average of futures prices of more than one commodity exchange). Minimum

quantities that the country is sure to import need to be computed based on recent

import trends, sowing etc. Simultaneously, MSP of oilseeds should also be

announced for next 1-2 years, to give Indian farmer a chance to raise production so

that level of imports beyond the contracted quantity is minimal. When the actual

crop seasons arrive, suitable bonus can be added to the MSP announced.

On the front of direction of import trade ASEAN countries like Indonesia,

Malaysia and Thailand can help in cutting down import burden due to lower

transport costs and better productivity in some countries. Import of edible oils

apart, this would also help in promoting trade under these Regional Trade

Arrangements, compared to imports from Colombia, Ecuador etc. unless price

differential including transport costs turn out to be significantly in favour of latter.

In any planning regarding edible oil imports one can’t overlook that China is

an equally large import market having imported 6.2 (all figures in million metric

tons in 2009-10), compared to a higher 6.550 by India and comparable 6.150 by

EU-27 besides 1.840 by Pakistan, 0.985 by the US, 0.850 by Bangladesh etc.24

Vanaspati oil import Nepal would surely continue to alleviate Indian import

demand.

An important development is diversion of edible oils as bio-fuels, which

needs to be tackled by pushing molasses based bio-fuels in India.

Suggested solution on Challenge IV:i. Government should make massive investments in storage and

Railway wagons sector

24World Bank, “Development Prospects Group”, November 2009.



37

Recent observat ions of Hon’b le Supreme

c our t on some foodgra ins ro t t ing for w ant o f

s torage space were qu i te embar rass ing for

the depar tment as wel l as nat ion . Even i f

0 .001 percent rots, i t becomes s izable and

newswor thy . Some t imely convers ion to

for t i f ied f lour in t im e and FIFO c lubbed w i th

no hold ings beyond 21 months is suggested.

Sc ient i f i c management , use o f S i los and

Auto Stackers can he lp in t imely d isposa l

aver t ing rot t ing. Open Market Sales

Operat ions need t o be encourages t oo. More

investment is needed in th is sector .

Government on i ts par t should enhance

a l locat ion to m eet Food Secur i t y B i l l re la ted

requ i rements and take mass ive he lp o f

NCDC in th is sector . However , would i t get

much funds beyond subsidy b i l l is not

feasib le.



38

Anyhow, better security, inspections, scientific practices and

quality control of warehouses should be focused.

Simultaneously, the Village Bank Scheme can do wonders as:

i. It would avert any cases of starvation and check against migration

ii. Cut down on transport costs as contributions can be made by

surplus farmers

iii. Push smart card scheme to access foodgrains from an alternative

outlet in case of need

iv. Ensure better quality as grains can be collected locally and

transported minimal distance

Still investment in railway wagons must be pushed to reduce

transportation costs and by signing long-term MOUs.

ii. Govt. funds and bank credit be leveraged to push storage capacity

Clubbing it with bank credit would definitely help to add more

capacity. CWC and State Warehousing corporations should be

provided more and softer credit.

iii. Private sector be given softer credit to add storage capacity

Keeping in view subsidy burden, involvement of private sector

should be encouraged.

iv. PPP be focused upon taking help of private funding and bank

credit:

PPP on BOT model should be focused upon taking help of private

funding and softer bank credit. On the part of Govt., system of warehousing

receipts being negotiable and thereby bankable, as introduced during the XI

plan has not yet taken off well. Steps need to be taken to enthuse trust of all



39

stakeholders. Farmers can be a l lowed to use par t o f

t he i r land for w arehouse purposes.

Transportation loans for GPS tracked, radio frequency tagged vehiclesshould be encouraged to private sector.

Keeping in view enormous requirements all the 4 options need to

be exercised simultaneously.

Engagement of Stakeholders: I t is a l ready

covered a t pages 7 and 8 as to who our

s t akeho lders are .

In te rac t ion w i th them to conver t p roposed

st ra tegy in to a real i ty is spe lt as fo l low s:

An in tegra ted s t ra tegy to invo lve a l l

s takeho lders would harness use o f IT to make

payments e lec t ron ica l ly to fa rmers immedia te ly

on procurement , as a key to invo lve them in a

b ig way to produce more and se l l surp lus fo r

procurement . For th is GOI would have to ensuret imely re leases to Sta tes for decent ra l ized

procurement so that such Sta tes & UTs, very

impor tant s takeho lders , tha t have walked out o f

such procurement can jo in back. The



40

invo lvement o f benef ic ia r ies fo r nut r i t ious i tems

and launch ing of c ash subs idy on p i lo t bas is and

wherever some re luc tance is seen launch ing o f

food coupons w ould prove very useful .

Sugar mi l ls shou ld be a l lowed sof ter c red i t

fo r modern iza t ion to energy e f f ic ien t ones,

cover ing a l l that are o lder than say, 25 years.

Oppor tuni ty of fore ign exchange reserves to

impor t modern mac h inery can be synerg ized too.

FPSs should get SMS on release of food

gra ins to them. E lec t ron ica l ly l inked Po in ts o f

Sale (POSs) should be lau nc hed t oo.

Rai lway should be g iven long run p lan of

wagons and rake requ i rements and commi t tedlevels of haulage.

Warehouses on PPP model are covered at

page 38.

Synergy wi th other min is t r ies and PSUs is

v i ta l ; as oppor tun i ty fo r Agr icu l tu re to enhance

m aize product ion for use as b io-d iesel is a lso an

oppor tuni ty for New and Renewable Energy

Min is t ry but a th reat to food secur i ty . So focus



41

on m olasses as a b io-fuel and m uc h h igher maize

product ion should be d iscussed and p lanned.

Reduct ion in subsid ies through l inkage of issue pr ic e for APL fami l ies t o real pr ices (as no

increase o f nomina l p r ices has tak en p lace s ince

2002) , reduct ion in cost o f t ranspor ta t ion and

storage by FCI , through p i lo ts on cash subsidy

and where not acceptab le , food coupons,

corpora te governance o f FCI fo r procurement ,s torage and d is t r ibut ion (as MSP and centra l

issue Pr ic es are not in i t s hands) c an be helpfu l .

In consu l ta t ion w i th CACP s l igh t ly

c onservat ive 2-year MSP for ot her t han c ane and

4 year for cane (t o be f ine tuned la t t er by bonus)

shou ld be put in p lace.

Some cross depar tmenta l and in t ra

depar tmenta l issues are a lso covered a t pages

44 and 45.

Overall prioritization of policies, and as evident, most of them

differing from the current ones, are different is as in Table 2.



42

Table 2: Prioritization of Policies for Sustainable supply of Foodgrains,

Sugar and Edible Oils

Priority Influence Sequencing

Demand Side policies

1. Enactment of Food

Security Act

High High Short Run

2. Cash Subsidy High High Medium Run

3. Food Coupons High High Short Run

4. Increase in CIP for

APL

High High Short Run

5. Edible oils- long- term

contracts

Medium Medium Medium

Supply Side Policies

6. Reduction of global

Agricultural Subsidies

High High Medium Run

7. FRP Announcement

for a no. of seasons

Medium Medium Long Run

8. Sugar export long-

term contracts

Medium Medium Medium Run

9. Restoration of Future

trade in sugar

Medium Medium Long Run

10. Inclusion of milk

powder in PDS

High High Medium

11. PPPs for warehouses Medium High Medium –

Term

12. Sustainable cropping

like certified organic

be sold under OMSS

High Low Medium



43

Core Component 7:

Proposed Implementation Framework

This is covered in the ensuing section at length.

Section 4: Implementation Plan

i. As nutrition security is being suggested, implementation plan would

have to create wherewithal to endogenize it. Till date milk powder has

not been taken on board, therefore sourcing of it across the country

through open tenders and after checking its quality are backbone of

this plan. Inclusion of coarse cereals out of procurement would be

implemented by involving producer and consumer States.

ii. Implementation of provision of pulses and edible oil, latter by open

global bids would be part of the plan.

iii. Projects to operate smart cards, food coupons, cash subsidy would be

implemented making full use of technology.

iv. Implementation of Citizen Charter, and Sevottam compliance wouldbe through a special monitoring cell in liaison with all wings and

PSUs

v. Stakeholders would be involved at all stages of implementation.

Section 5: Linkage between Strategic Plan and RFD

The Department is institutionally not in a position to estimate ever

increasing availability of foodgrains, sugar, edible oils etc. inspite of its and

Ministry of Agriculture’s best efforts due to vagaries of nature. It may or may not

be possible to break the records of previous best production, say, in case of rice.



44

But a bigger problem is that keeping this fact in mind the RFDs may include

annual targets far below potential of the department.

Secondly, targets under RFD for coming years, especially once Food

Security Act is put in place, would need a mid-year revision to meet the bigger

challenges.

It is also opined that for the Department besides large numbers, aversion of

any starvation deaths needs to be included in the RFD. Successful distribution of

million of tonnes of foodgrains can be tarnished by a single starvation death, so to

avert these should be included in RFD. This would give requisite boost to reach of

foodgrains, pulses, nutrition etc. and especially establishment and working of

Gramin Grain banks, besides the suggestion made in this paper to keep some

foodgrains available in each village. Otherwise RFD would not be in sync with

MDGs and reduction of malnutrition.

Annual indicators under RFD should be placed on website and monthly

updated. Reviews at the level of Minister and Secretary in field, inviting

stakeholders, especially beneficiaries, would be required too.

Section 6: Cross departmental and cross functional issues

6 A. Identification and management of cross departmental issues

i. A major issue is amount of FRP (MSP), and as to how much in advance can

it be announced. This policy can imbibe vision to boost production and tie up

global trade. It can be managed through periodic meetings.

ii. Information on likely production of crops as per satellite imagery and

through Ministry of Agriculture is equally vital. FAO reports can prove useful

too besides deliberations and publications by International Grains council,

agencies like UNICEF, USDA etc.



45

iii. Role of the department of Consumer Affairs in identifying grievances is

equally crucial.

iv. On Nutritional matters issue of assessment of situation with the help of

Department of Health, ICDS and MDM is also vital.

v. Environmental issue of arresting degradation with the help of MOEF and its

restoration through schemes of MRD is an issue to help sustenance.

vi. The Department would need to address the issue of high subsidies in a more

responsible manner and share it with MoFinance.

vii. Better rakes from railways needs to be taken up as a very important long-

term view, and quality retention should be part of this interaction.

6B. Cross functional linkages within department/ offices

i. Development of a regime of transparency and accountability also

leads to making officials play very safe. Creation of room for fresh

ideas needs to be encouraged to benefit from combined wisdom.

ii. Storage of edible oils cuts across two wings of the department and so

also export of sugar. These issues need co-operation and discussions

at the level of the Secretary.

iii. FCI, CWC related policy needs a lot of interaction, giving of studies

and discussions with all stakeholders.

iv. Effectiveness of offices and to enhance it through use of IT and

incentives is an equally important issue.

6 C. Organizational Review and Role of agencies and wider public

i. Role of the Department as an efficient and ever vigilant organization

needs to be built. Interactions in the field with academicians, growers,

consumers, FPS owners etc. can be of immense use.

ii. An ongoing review of FCI is vital and its efficiencies need to be made

measurable as suggested in this Paper.



46

iii. Revamp of CWC to give room to Private Sector, though its competitor

would go a long way. CWC funds can be leveraged for increase in

storage capacity in Public sector as well as in Private or Joint sector.

PPP models are also likely to be useful.

iv. As already covered, a final decision about HVOC should be taken,

trying to benefit from its infrastructure and knowledge, even if parted

to private hands.

Section 7: Monitoring and Reviewing Arrangements:

Monitoring Arrangements:

i. With the advent of RFD, it should be used as an effective tool to

monitor rather as a new layer of work. However, it is imperative that

RFD be prepared to make the Department as a vibrant, efficient and

credible organization.

ii. Periodic monitoring, including regional meetings by the Hon’ble

Minister/ MOS and officials would be made.In addition the following can be arranged in consultation with

States, NIC, C-DAC, UIDAI and private agencies:

iii. On-line monitoring of releases by FPS to the consumer may seem to

be a cherished goal. Surely, it needs to be introduced in as many cases

as possible.

iv. Review through introduction of Smart cards and Food coupons to

facilitate better coverage of these instruments.

v. Monitoring of GPS tracked trucks, Radio frequency tagged vehicles

on un-manned barriers to cut down on leakages



47

vi. Detection of ghost ration cards using biometric and UID wherever

possible

vii. Assessment of benefits accrued to public viv-a-vis amount released/

spent by the govt. on random basis, by engaging third party monitors.

viii. Toll free numbers, Records of SMSs received, responses and feedback

on the website to be monitored for logical conclusion.

Reviewing Arrangements:

i. Studies should be assigned to reputed institutions on important issues

and developments to review the critical policy issues and tasks.

ii. Issue specific brainstorming sessions should be held to review

policies.

iii. Functioning of the Department and State Governments would be

reviewed on periodic basis in the Department and field.

iv. Steps to reduce response time to monitoring feed-back from public.

v. Review of whether adequate information is being placed in public

domain as per preamble and spirit of RTI ct.

Power of Interaction- Big Push Required for Success:

A big push across the departments and all stakeholders is a must to

remain afloat around 10% GDP growth level. In fact the strategic changes

proposed in this paper, like inclusion of nutrition, cash subsidy and smart

cards linked to UID, costlier PDS for APL, transforming FCI into an

efficient corporate entity, PPP in storage, announcement of FRP (or MSP)

for longer period, long-term export-import contracts can’t succeed in

isolation, for instance threat of use of maize as biofuel is another ministry’s

opportunity.



Advent of Food Security Act as a big game changer like RTI and

MGNREGA needs open minded changes in policies. Interaction term

against various variables is vital to the success aspired for.

*****

1. food and public distribution

Documents