Editorial Notes

[Editorial Notes] Issues revolving around faulty Grain Management in India

Keeping in mind the slowdown in the economy, inflation and the need to supply food grains to the people, the loopholes in grain management in India must be rectified.
By IASToppers
January 20, 2020

Content

  • Introduction
  • Problems mentioned by the author with respect to Grain Management
  • Other problems mentioned by the author
  • Way Forward
  • Conclusion

Issues revolving around faulty Grain Management in India

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Introduction:

  • The GDP growth rate of the country has shrunk to 4.5 % in the second quarter of the fiscal year 2019-20 and the agriculture GDP (GDPA) growth is at 2.1 %, giving a clear indication that the Indian economy is facing a real slowdown.

the agriculture GDP (GDPA) growth is at 2.1 %,

  • The biggest challenge for the government is to drive the Indian economy back on the 7-8 % growth trajectory and steer agri-GDP grow at least 4 %.
  • Reform of grain management system could free up resources for the government.

Problems mentioned by the author with respect to Grain Management:

Problems mentioned by the author with respect to Grain Management

Other problems mentioned by the author:

  1. Low demand in the economy:
  • Low demand in the economy is one of the main reasons behind India’s great slowdown today.
  • Agriculture in India still engages about 44 % of the country’s workforce. If the masses do not gain from the growth process, they will not have money in their hand. As a result, the demand for manufactured goods, housing and other goods will remain low.
  1. Inflation:
  • The long period of slowdown has caused a surge in inflation as compared to earlier times.
  • The government has the challenge to control inflation beyond the threshold level of 6 % as maintained by the RBI.
  1. Fiscal Deficit:
  • The government may probably miss the fiscal deficit target of 3.3%.
  • Moreover, the Comptroller and Auditor General of India (CAG) has already indicated that the real fiscal deficit of the country is much more if one accounts for the loans taken by many public sector undertakings (PSUs).
  1. Infrastructure Spending:
  • The government has announced an investment package for the infrastructure of about Rs 102 lakh crore over the next five years, which implies more than doubling the growth in infra-investments from its current levels.
  • The announcement does not unveil any clear strategy on the resource mobilization or how will the government manage the hefty amount.

Way Forward

  • Implementing some of the recommendations of Shanta Kumar panel like:
    • Fixing the issue price, other than the poor under the Antyodaya category, at 50 % of the procurement price.
    • Limiting subsidized grain distribution under National Food Security Act to 40 % of the population rather than the current 67 %.
    • Limiting the procurement of rice particularly in the north-western states of Punjab and Haryana where the groundwater table is depleting fast.
  • Inviting private sector to participate in grain management.

Reform of grain management system Issues revolving around faulty Grain Management in India

  • End-to-End Computerization of FCI operations.
  • The Government has not given any number for poverty since 2011 — it was 21 % as per the Tendulkar poverty line. It is the need of the hour to update the real numbers of people living in extreme poverty and then devise the limit in subsidized food grain distribution.
  • Liquidating excessive stocks (beyond the buffer norm).
  • Implementing the above can reduce fiscal deficit and contain inflation.

Conclusion:

Food Corporation of India has exceeded its limit of food grain procurement. Keeping in mind the slowdown in the economy, inflation and the need to supply food grains to the people, the loopholes in grain management in India must be rectified.

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