Government Procurement

 Government Procures farm produce at MSP through Food Cooperation of India.

FCI is mandated to procure any amount of  produce (notified by CACP), which meets the standard set by government, from the farmer.

Issues with procurement:

  1. Financial Burden on Government: They incur loss during buying and selling at less cost combined with financial expenses of storage and transportation.
  2.  Food wastage.
  3. Reduced supply in market due to procurement, causing increase in food inflation which in turn effect customers.
  4. Human resource required to man and provide services in FCI godowns.
  5. Leakages during transportation from FCI Godowns and PDS outlets.
How to deal with the losses when these government-procured stocks are unloaded in the market, as they will invariably incur losses. And if stocks keep piling up, as is the case with wheat and rice today, how do we correct this imbalance in demand and supply? 

  • In that case, either limit the size of procurement or go for price deficiency payments to those who buy “put options” at MSP for specified quantities at the time of sowing.
  • An expert committee will have to be set up to look into its operational guidelines.
  • A further positive step will be to announce a diversification package for the Punjab-Haryana belt 

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