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4Q> It is often argued that the Food Corporation of India (FCI)

is a highly
inefficient organisation. Do you agree? Substantiate and
reforms. (200 Words)
FCI was established to provide price support to farmers, distribute food grains,
provide storage facilities to ensure food security and price stability.
FCI, an inefficient Organization?
Arguments for
1. Increased food grains procurement prices.
2. Rotting of grains in unscientific FCI godowns.
3. Failure in procurement since large number of farmers uncovered.
4. Leakages in distribution system.
1. Procurement prices are divided into Acquisition, responsibility of Central
State Governments and account for 80% of the prices and Distributive prices
under FCI control. These distributive
prices have fallen due to the FCIs efforts.
2. State Governments increase MSPs to gain votes and these extra grains are
channelized to FCI. Moreover the decision of quantity to be stored and sold is of
State and Central Government.
3. FCI via PPP has constructed scientific godowns reducing the crop damage.
4. Departmental labour salaries have a huge drag on finances. The Central
Government has to solve this problem.
The FCI has shown a lot of improvement so tagging it inefficient would be
Reforms needed to streamline the Organization -
1. More autonomy to sell crops above the buffer stock and to refuse collection
these stocks.
2. PDS tracking should be computerized.
3. GPS tracking of vehicles transporting food grains.
4. More scientific godowns on PPP lines.
5. Labour reforms.
6. States well equipped to run their own PDS should be allowed and FCI should
on States in East and NE.
Concerted efforts by the Government, its agencies and the private players would
needed to
provide food security to India which will make Indian agriculture a lucrative
6Q. A task force on agriculture, set up by the National
Institution for
Transforming India Aayog or NITI Aayog, has suggested a
number of
measures intended to raise agricultural productivity and make
lucrative. What are these suggestions? Critically comment on
them. (200
The task force on agriculture set up by the NITI Aayog has suggested the
following to reform the agriculture
1.Careful use of GM technology to produce varieties of pulses and oil seeds.
2.Replacing MSP mechanism with a deficiency payment system.
3.Easy land leasing to allow farmer with non viable land holdings to exit the
sector and consolidating these non viable land holdings to make them viable.
4.Encouraging ' contract farming'.
5.Adopting a cooperative model for fruits and vegetables similar to that adopted
case of milk.
6.Deregulating the urea subsidies and providing direct subsidies to the farmers.
7.Enabling farmers to frequently upgrade their seeds.
8.Judicious use of Essential Commodities Act so that investment in storage
is not deterred.
9.Making food processing industry a major export industry.
10.Encouraging agriculture research with the help of private investment.
1.Reservations about the GM technology still exist and their impact on ecology
still not been fully brought out.
2.Deficiency Payment system may act as a disincentive for farmers to work hard
its impact on tribals and casual labourers will be limited.
3.Providing cash subsidies to the farmers will not be viable unless each one of
has a bank account.
4.Leasing land from small farmers without proper rehabilitation will make his
survival difficult as agriculture is a livelihood issue in India.
5.Contract farming may lead to exploitation of the illiterate farmers if the
are made to the disadvantage of farmers.

Q. FCI is a lynch pin in the food security program of India, yet

failure of successive governments to reform the organization
has resulted in huge losses to the exchequer. Highlight the
deficiencies in the running of Food Corporation of India and
suggest measures to revamp it. (200 Words)
Business Standard
Ans: Food Corporation of India, a nodal agency for procurement of food grain and
its distribution through public distribution, has not performed to it's expectations.
Deficiencies -Regional Disparity-FCI storage canters have been concentrated only in
green revolution zone.Large part of the eastern India is devoid of FCI storage cneters
and weakens the forward and backward linkages
-Lack of Infrastructure-FCI procures more than what it can store.Extra food grain
rot in the open because of lack of storage capacities.
-Lack of Monitoring mechanisms-Inefficeint and ineffective monitoring mechanisms
have encouraged corruption,pilferage, inefficiency to creep into the administration
-Functional Autonomy-Over centralization curtails the autonomy of FCI and reduces
it's efficiency
-Decentralization in East- Expanding the network of FCI in remote areas of the east
-Institutional reforms-Coupling FCI storage centers with food processing centers,
better transport facilities can help it reach big and small farmers alike
-Capacity building-Training it's professionals, corporatizing the FCI management
can bring in more efficiency
-Storage only to a predetermined level beyond that food grains should be released in
the market thereby helping in taming food inflation

Q) Recently the recommendations of the High Level Committee

(HLC) to restructure, reorient and reform the Food Corporation
of India (FCI) was made public. Critically comment on its
recommendations. (200 Words)
The Hindu
Ans- As an initial step to secure the four pillars of food security viz. availability,
affordability, accessebility and stability the FCI was setup in 1964 . However the
shortfalls of FCI in its 3 major objectives of procurement,storage and distribution,
lead to formation of the shanta kumar committee for FCI restructuring.
Some of the progressive recommendations include:
1. Procurement Payment reforms: Popularise NWRs
2. Buffer stock reforms: Whenever FCI has grains above buffer norms, it should
automatically sell excess stock in open market Pro-Active Liquidation Policy.
3. Storage reforms: End to End computerization and Online tracking of entire
system from procurement to retail distribution.
4. Transport reforms : Improved night security at rail-points, because >85% of PDS
Grain is transported through railways and maximum siphoning off occurs here. Use
of inland waterways where possible
Though some of its recommendations appear progressive,most of its reforms have
been debated and criticised on various grounds:
Survey : Committee report says only 6% farmers benefited from MSP procurement
regime and nearly 50% of the foodgrains are siphoned off from PDS system But
experts dispute the NSSO-survey methodology used in deriving these numbers.
Cutting down NFSA : Many poor families will be deprived of their basic right to
food. recommends FCI to hire contractual staff, close regional offices and give VRS
to employees. Trade union leaders are in opposition to this.
Privatisation : though many farmers have not benefited from public procurement,
but FCI has not opened branches outside selected regions.
Outsourcing procurement to some states :it recommends not to do open ended
procurement from all states, above buffer stock limits. This will catalyze distress
sells and farmer suicides.
Direct cash transfer has its own shortfalls
Hence to achieve the target of food security, what is needed is better targetting and
proper use of technology which is pro-poor

Recently Shanta Kumar panel, constituted to restructure FCI,

recommended reducing the number of public distribution
system beneficiaries for subsidised foodgrains under PDS. What
is the rationale behind such recommendation and what are its
likely implications if implemented? Critically comment. (200
The Hindu
The Hindu
Ans- The recommendations of the Shanta Kumar panel were as follows: 1. Reforms
in FCI, like handling over of procurement to states which had a developed
procurement system and instead focusing on building infrastructure in eastern
states. 2. Food security Act: Reduction in coverage from the current 67% to 40%, and
raising of prices of grains in TDPS to 50% of MSP. 3. Gradual introduction of cash
transfer and end to end computerization of the entire food management system.
The reason for these changes were as follows:
1. Corruption in the FCI, which caused diversion of food grains
2. The recent NSSO survey pointed to the fact that only 6% of the farmers benefit
from the MSP scheme. Mostly because of lack of awareness and non availability of
procurement infrastructure.
3. Reduction of coverage of food security act, to reduce its fiscal strain, comply with
WTO norms which was a cause of contention in the Doha round of talks, and reduce
wastage of food grains due to the inefficient storage system of FCI.
1. In a county with the most poor and malnourished, curtailing the food security act
might cause more harm than good if the system of identification, and delivery are
still prone to the present day maladies.
2. While resources might be raised in the short term to invest on infrastructure, the
long term benefits take time to accrue, and thus translate into political gains. So,
such a move can be construed as anti poor and create a trust deficit for any further
3. Also, reducing the storage requirement can be dangerous in a country still very
dependent on seasonality and prone to droughts.
Thus, even though the recommendations may be well intentioned, without ramping
up the associate infrastructure, better targeting and delivery, such reforms will be
difficult to implement and may be prone to the same mistake as earlier