NITI Aayog moots cap on states’ rice purchases to check excess stock

Thursday, Jul 23, 2020


By Sampad Nandy


NEW DELHI – NITI Aayog has recommended that the government consider state-wise quotas for rice procurement to check rising stockpiles, senior government officials said.


The food ministry had sought suggestions from NITI Aayog in view of the rising stocks and stagnant sales from the central pool. Rice is procured during both kharif and rabi seasons.


NITI Aayog had earlier suggested that the government change the "open ending" procurement policy and limit rice purchases at the level needed for distribution under social welfare schemes and maintenance of buffer, the government officials said. This would act as a permanent solution to the rising stocks in the central pool.


"The proposal of state-wise caps is important as it will allow deficient states to continue procuring and only limit purchases in surplus states," one of the officials said. A deficit state is one which does not grow or procure the quantity of food grains it needs for distribution under different social welfare schemes.


Currently, there is no quantitative limit on procurement of rice anywhere in the country. The government buys everything that is offered by farmers during the procurement period, provided it meets certain quality parameters.


This policy, along with the steady increase in minimum support price of the staple food grain, has led to a sharp rise in the government's rice stock over the last couple of years.


At the start of this month, the government had 26.6 mln tn of rice in the central pool, almost double the mandated buffer requirement of 13.5 mln tn as on Jul 1.


"The Centre will also have to work out a mechanism whereby states that currently have surplus procurement, keep buying the extra bit to make up for the requirement in other deficit states," another official said.


The food ministry is hopeful of a sharp decline in its rice inventories due to additional allocations under the Pradhan Mantri Garib Kalyan Anna Yojana. Since April, it has distributed over 10 mln tn of rice from the central pool under this plan. It expects to offload another 11.0 mln tn rice under the plan, which has been extended till November.


The plan was launched to support weaker sections of the society during the lockdown, which was imposed on Mar 25 to check the spread of COVID-19.


The plan provides 5 kg of wheat or rice every month to over 800 mln poor people for free. This is in addition to the 5 kg of subsidised rice or wheat that each beneficiary gets under the National Food Security Act.


However, robust rice procurement has kept the government from liquidating the desired quantity of stock from the central pool. The government has so far bought nearly 50.4 mln tn of rice, up over 16% on year.


The proposals to tackle the surplus procurement are still on the drawing board, and other options are being looked at as the food ministry wants to adopt a thoughtful approach without risking food security, one of the officials pointed out.  End


Edited by Ashish Shirke


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