Context

The government had set up a 6 member committee to suggest restructuring or unbundling of FCI to improve its financial management and operational efficiency in procurement, storage and distribution of food grains.

About

• Primacy will be given to ensuring that the functioning of FCI is streamlined and fast paced as per recommendations of the Shanta Kumar Committee.
• The high level committee was set up to look into the restructuring of Food Corporation of India to improve its financial management and operational efficiency in procurement, storage and distribution of food grains.

Objectives of this step

• Food and Public Distribution asserted that the main objective of the Union Ministry of Consumer Affairs is to ensure that not a single grain of food being produced by the hard work and labour of farmers gets wasted and all of it is procured by the government at Minimum Support Price while ensuring that corruption is completely removed.
• The objective of plan is to create 100 lakh ton silo storage capacity in the country.
• Now RITES has been assigned the task of changing the silo model and they will give their recommendations in 90 days to FCI. The target for completion of remaining silos is 2021.

RITES Limited is an engineering consultancy company, specializing in the field of transport infrastructure. Established in 1974 by the Government of India, the company's initial charter was to provide consultancy services in rail transport management to operators in India and abroad.

• The committee calls for setting up of negotiable warehouse receipt (NWR) system for outsourcing of stocking of grains.
• In the new system, farmers can deposit their produce in these registered warehouses and get 80 per cent of the advance from bank against their produce on the basis of MSP.
• It has recommended measures to ease entry of private players in the business of procurement of grains. This would be done by putting an end to the practice of states giving bonuses on crop MSP to farmers, and restricting taxes and statutory levies on food grains at uniform to 3 per cent of MSP.
• Direct recruitment process of FCI is being made more transparent through online examination which is being done in two phases.
• This step will bring all workers of FCI under a single, uniform system which will bring stability of tenure and secured wages for all.
• In order to improve the usage of Information Technology in FCI, a Human Resource Management System (HRMS) will be implemented, the work for which will begin in August, 2019 and will be completed by August 2020.
• The committee has recommended that FCI should involve itself in full-fledged grains procurement only in those states which are poor in procurement. In the case of those states which are performing well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the states should do the procurement.

Way Ahead

Integration work for depot online of FCI and CWC will be done in consultation with State governments and meetings will be held with the Food Ministers and Secretaries of State government to set the targets for integration.

Food Corporation of India (FCI)  FCI is a government organization that implements effective price support systems, distribution of food-grains, maintaining buffer stocks etc. But there are some loopholes in its functioning: There is an inadequate storage facility, which leads to lot of food-grains, get rotten due to less silo capacity. Irregular opening of PDS shops, Adulteration of food, subsidies etc. Malpractices have been practiced like diverting the quality procured food to the market. There are lot of procurement issues and transportation problems. There is lack of food processing facilities. Leakage through Public Distribution System.  Reforms that can be taken to address the issues: Increasing the number of silos and the storing capacity. Make procurement more transparent through online process. Rationalising subsidies. Security of tenure and secure wages to employees of FCI, HRMS (Human Resource Management System) can be introduced for their welfare. Leakages have to be controlled; administration has to be made accountable. Shanta Kumar Committee recommendations can be implemented which talks about reducing the no. of beneficiaries, allowing entry of private players, Direct Benefit transfer in subsidy.