BUFFER STOCK

India has a policy of maintaing a minimum reserve of foodgrains (only for wheat and rice) so that food is available throughout the country at affordable prices round the year. The main supply from here goes to the TPDS (the PDS was restructured as the Targeted PDS in 1997) and at times goes for Open Market Sale to check the rising prices, if needed.

The Buffer Stocking norms (of 2005) was revised 28 by the government (by mid-2014) in the backdrop of increased requirement of foodgrains to run the TPDS in the last few years and with the coming into force of the National Food Security Act (NFSA). The new norms are as given in the table below:

Revised Buffer Stock

As income levels of the BPL segment grows, in future, the buffer norms for the foodgrains are supposed to be revised downward. But the logic of maintaining such stocks will remain for the purpose of market intervention by the government.

Decentralised Procurement Scheme

The decentralised procurement (DCP) scheme was operationalised by the government in 1997 (together with the Centre and some of the states also procure foodgrains from the farmers, locally). Under this scheme, the designated states procure, store and also issue foodgrains under the TPDS. The difference between the economic cost of the states and the central issue price (CIP) is passed on to the states by the Government of India as subsidy. The decentralised system of procurement, helps to cover more farmers under the MSP operations, improves efficiency of the PDS, provides varieties of foodgrains more suited to local taste, and reduces the transportation costs of the FCI.29

The Government of India urged all states to adopt the DCP scheme so that costs of distribution can be saved and outreach of price support mechanism to the farmers in hitherto weaker areas can be improved. To overcome the problem of gaps in the flow of information about procurement operations on day-to-day basis, an Online Procurement Monitoring System (OPMS) has been evolved for reporting and monitoring on a daily basis, procurement operations for wheat, paddy and coarse grains in the country.

Two decisions30 of the Government of India that will impact procurement and stocks of rice and wheat from are:

(i) To limit procurement from states that are declaring bonus over and above

the MSP to the extent of targeted TPDS and other welfare schemes (OWS) requirements. In the case of non-DCP states declaring bonus, the FCI will not take part in MSP operations in those states.

(ii) To cap the percentage of levy on rice at 25 per cent.