The government is mulling division of the 46-year-old Food Corporation of India into three entities to divide responsibilities of procurement, storage and distribution, respectively, a senior government official said on Thursday.
“The proposal, which is before government, has already been sounded out to state governments,” said the official on the condition of anonymity.
The aim is to better manage resources, with one entity looking after procurement, the other storage and the last distribution, the official said.
“FCI has grown into a big monolith,” said the official. He said it will be prudent to split FCI to improve efficiency.
The entity handling storage can also tie up with private sector.
“Private companies can be called to build huge silos to stock grains, freeing government of the responsibility to invest in storage facility,” the official said.
His comments come amid opposition parties targeting FCI for failing to store food grains properly, with reports saying several million tonne grains were badly damaged and unfit for human consumption.
The idea behind splitting FCI is to let private sector build silos and other forms of storage facilities even government focuses on efficient procurement and distribution of food grain.
FCI has played a catalytic role in distribution of grains at subsidised rates to India’s poor, partly ensuring smooth supply of grains in open market by drawing down on its stocks during high inflation, shortages and price volatility. It has also played a role in preventing grain prices from falling below the government-set minimum support price by buying grains from farmers, subject to quality specifications.
FCI’s major role can be gauged from the fact it bought some 22.53 million tonne wheat from farmers either directly or through state government and other state-owned food agencies so far in 2010-11 (April-March) wheat marketing season. That level of procurement is roughly 90% of total wheat arrival in mandis.
Similarly, FCI bought 30 million tonne rice in the 2009-10 (October-September) marketing season.
“The proposal, which is before government, has already been sounded out to state governments,” said the official on the condition of anonymity.
The aim is to better manage resources, with one entity looking after procurement, the other storage and the last distribution, the official said.
“FCI has grown into a big monolith,” said the official. He said it will be prudent to split FCI to improve efficiency.
The entity handling storage can also tie up with private sector.
“Private companies can be called to build huge silos to stock grains, freeing government of the responsibility to invest in storage facility,” the official said.
His comments come amid opposition parties targeting FCI for failing to store food grains properly, with reports saying several million tonne grains were badly damaged and unfit for human consumption.
The idea behind splitting FCI is to let private sector build silos and other forms of storage facilities even government focuses on efficient procurement and distribution of food grain.
FCI has played a catalytic role in distribution of grains at subsidised rates to India’s poor, partly ensuring smooth supply of grains in open market by drawing down on its stocks during high inflation, shortages and price volatility. It has also played a role in preventing grain prices from falling below the government-set minimum support price by buying grains from farmers, subject to quality specifications.
FCI’s major role can be gauged from the fact it bought some 22.53 million tonne wheat from farmers either directly or through state government and other state-owned food agencies so far in 2010-11 (April-March) wheat marketing season. That level of procurement is roughly 90% of total wheat arrival in mandis.
Similarly, FCI bought 30 million tonne rice in the 2009-10 (October-September) marketing season.