This is summary of Shanta Kumar Committee Report on FCI , The high Level Committee (HCL) on restructuring of Food Corporation of India (FCI),major issue before the Committee was how to make the entire food grain management system more efficient by reorienting the role of FCI in MSP operations, procurement, storage and distribution of grains under Targeted Public Distribution System (TPDS).
This post contains summary from Economic Survery Vol 2 . I also recommend heavily that you read this post Summary: Shanta Kumar Report FCI reform & Food security by Mrunal Bhai.
- The FCI should hand over all procurement operations of wheat, paddy, and rice to states that have gained sufficient experience in this regard and have created reasonable infrastructure for procurement. The FCI will accept only the surplus (after deducting the needs of the states under the NFSA) from these state governments (not millers) to be moved to deficit states. The FCI should move on helping those states where farmers suffer from distress sales at prices much below MSP, and which are dominated by small holdings.
- Centre should make it clear to states that in case of any bonus being given by them on top of MSP, it will not accept grains under the central pool beyond the quantity needed by the state for its own PDS and OWS.
- The statutory levies including commissions need to be brought down uniformly to 3 per cent, or at most 4 per cent of MSP, and this should be included in the MSP itself (states losing revenue due to this rationalization of levies can be compensated through a diversification package for the next three-five years);
- The Government of India must provide better price support operations for pulses and oilseeds and dovetail their MSP policy with trade policy so that their landed costs are not below their MSP.
- Cash transfers in PDS should be gradually introduced, starting with large cities with more than 1 million population; extending it to grain surplus states; and then giving deficit states for the option of cash or physical grain distribution.
- Given that leakages in the PDS range from 40 to 50 per cent, the GoI should defer implementation of the NFSA in states that have not done end to end computerization; have not put the list of beneficiaries online for anyone to verify; and have not set up vigilance committees to check pilferage from PDS.
- Coverage of population should be brought down to around 40 percent.
- BPL families and some even above that they be given 7kg/person.
- On central issue prices, while Antyodya households can be given grains at ` 3/2/1/kg for the time being, but pricing for priority households must be linked to MSP.
- FCI should outsource its stocking operations to various agencies.
- Covered and plinth (CAP) storage should be gradually phased out with no grain stocks remaining in CAP for more than 3 months.
- Silo bag technology and conventional storages wherever possible should replace CAP.
- DFPD/FCI have to work in tandem to liquidate stocks in OMSS or in export markets, whenever stocks go beyond the buffer stock norms. A transparent liquidation policy is the need of hour, which should automatically kick-in when FCI is faced with surplus stocks than buffer norms.
- Greater flexibility to FCI with business orientation to operate in OMSS and export markets is needed.
- Farmers be given direct cash subsidy (of about Rs 7000/ha) and fertilizer sector can then be deregulated.
The HLC recommends total end-to-end computerization of the entire food management system, starting from procurement from farmers, to stocking, movement, and finally distribution through the TPDS.
The new face of the FCI will be akin to an agency for innovations in the food management system with the primary focus of creating competition in every segment of the foodgrain supply chain, from procurement to stocking to movement and finally distribution under the TPDS, so that overall costs of the system are substantially reduced and leakages plugged and it serves a larger number of farmers and consumers.