States get freight waiver for lifting grain

Foodgrain allocated under open market supply scheme to be available in subsidised rates

An Empowered Group of Ministers (EGoM), chaired by Finance Minister Pranab Mukherjee, has decided to waive the freight charges for moving foodgrain under the ‘Open Market Supply Scheme (OMSS)’. This decision taken on Tuesday is likely to help the states.

While the Centre in the current fiscal (2012-13) has decided to allocate three million tonnes (MT) of foodgrain under ‘OMSS’ scheme, the states will have to pay less because of the EGoM decision. The EGoM has ministers of home,  agriculture, defence and commerce.

The ‘value of the foodgrain’ allocated under ‘OMSS’ usually includes the Centre’s Minimum Support Price (MSP) plus bonus, state taxes and in addition 50 per cent of the freight charges for moving the allocated foodgrain from Ludhiana to the concerned states, Union Minister of State for Consumer Affairs, Food and Public Distribution, Prof K V Thomas said.

This year to enable a better offtake of foodgrains under ‘OMSS’, “the 50 per cent freight charge has been waived and it will help the Southern states in particular,” Thomas told reporters in Chennai after inaugurating a national seminar on Wednesday on ‘Food Safety-Role of Standards’, an initiative of the Bureau of Indian Standards (BIS) to focus on food safety and health.

Thomas said while India’s wheat production was expected to be 902.30 lakh tonnes (LT), rice production was to touch 1034.10 LT. Of these 370 LT of wheat and 353.15 LT of rice have already been procured from farmers by the Centrer, he added.

The Food Corporation of India (FCI)’s procurement from farmers was not coming down, he asserted, adding, wheat production was going up in states like Madhya Pradesh and West Bengal, outside the traditional bread-basket of Punjab and Haryana. 

The EGoM also decided to allocate an additional five MT of foodgrain for BPL beneficiaries in all the states. 

Disclosing that the “latest estimates” of the Central government’s storage of foodgrain was to the tune of 82 million tonnes (MT), Thomas said this was three times of the buffer. The food stocks on hand was still ‘very high’ even after exports of 50 LT of rice and 10 LT of wheat was allowed, he said, adding, “our storage capacity at FCI godowns is 64 MT of foodgrain”. The Centre had also enhanced the allocation of foodgrain for distribution to ‘below poverty line (BPL)’ and ‘above poverty line (APL)’ families by the states, beyond the normal allocation for the PDS system which at current levels required 55 MT to 58 MT of foodgrain, he said.

Yet, with the excess stock of foodgrain still being high, the minister urged the state governments to build ‘intermediate godowns’ so that at least six months of PDS stocks could be stored in advance. These could be built with funds under the ‘Rural Infrastructure Development Fund (RIDF).

Giving details of Central food subsidies, he said it was a huge Rs 88,000 crore this fiscal, of which Tamil Nadu’s share was over Rs 7,111 crore. For every kg of rice given under the BPL scheme, the ‘economic cost’ to the Centre was Rs 21.10, while the Centre gave it to the states at a mere Rs 5.65 per kg, Thomas said. The states in turn subsidized this price further under PDS, he added.

Despite the constraints in storage space of FCI including scientific open storage, the minister said the overall storage loss and damage of foodgrain has sharply dropped from 2.5 per cent five years ago to 0.006 per cent now.