2.1. Procurement and Distribution of Foodgrains

The national objective of growth with social justice and progressive improvements in the living standards of the population make it imperative to ensure that foodgrain is made available at reasonable prices.

Under the existing procurement policy of the Government of India (GOI, foodgrains for the Central Pool are procured by various agencies such as FCI, State Government Agencies (SGAs) and private rice millers. Procurement of wheat and paddy for the Central Pool is carried out on open ended basis (i.e., accepting all the grains that are sold to it by farmers) at the declared Minimum Support Price (MSP) fixed by the GOI. In addition, Sates / Union Territories (UTs), which are presently under Decentralised Procurement (DCP) scheme also procure foodgrains for the Central Pool, but directly store and distribute them under Targeted Public Distribution System [TPDS] and Other Welfare Schemes (OWS) based on the allocation made by the GOI. Any surplus stock over their requirement is taken over by FCI and in case of any shortfall in procurement against allocation made by the GOI, FCI meets the deficit out of the Central Pool.

The procured food grains are taken over from State Government Agencies (SGAs) and private rice millers into the Central Pool by FCI and are moved from the procuring states to the consuming states for distribution to the consumers and for creation of buffer stock in various states. Food grains of the Central Pool are stored by FCI in both its own godowns and at hired godowns in different parts of the country. FCI, if so required, may use warehouse receipts as collateral for financing its operations. It is to be noted that

♤ Public Distribution of foodgrains has always been an integral part of India’s overall food policy. It has been evolved to reach the urban as well as the rural population in order to protect the consumers from the fluctuating and escalating price syndrome.

♤ Continuous availability of foodgrain is ensured through about 4.5 lakhs fair price shops spread throughout the country.

♤ A steady availability of foodgrains at fixed prices is assured which is lower than actual costs due to Govt. policy of providing subsidy that absorbs a part of the economic cost (about 45%).