The Food Corporation of India (FCI) can lower its foodgrain procurement for welfare schemes, following the Centre’s decision to expand the coverage of the National Rural Employment Guarantee Programme (NREGP) to an additional 130 districts from 1 April.
Since NREGP is a cash programme, as opposed to food-for-work programmes such as the Swarna Grameen Rozgar Yojana (SGRY), it would mean that FCI will be able scale down its procurement of foodgrains—critical at a time when it will have to compete with private traders to beef up depleted foodstocks. FCI is the nodal food-procurement agency in the country.NREGP is being expanded in place of SGRY, and will now cover 330 districts.
“With additional districts coming under NREGP, we expect that our foodgrain requirement in the next fiscal for SGRY would be around 0.8 to 1 million tonnes (mt), which should cost us around Rs700-800 crore,” a rural development ministry official, who did not wish to be identified, told Mint.
The rural development ministry, during the period April-January 2006-07, picked up 2.53mt of rice and wheat under SGRY from FCI.
The lower offtake comes at a time when the government has decided to revamp the payment system to FCI, whose outstanding dues owed by the rural development ministry are expected to be close to Rs14,000-15,000 crore.
Food ministry officials said that they had decided to wait until 31 March to freeze the dues of FCI. “We estimate that the total dues accruing to FCI until 31 March 2007 could be around Rs30,000 crore. Of this, the government has already issued bonds worth Rs16,200 crore to settle past outstanding dues. We will either seek issuance of more bonds to settle the remaining balance or payment through the Budget provision,” an official said.
The rural development ministry has, in the Budget for 2007-08, obtained a provision for settling the dues owed to FCI. An initial provision of Rs200 crore has been kept under the head.
The ministry has, starting 1 April 2007, also agreed to the food ministry’s suggestion to lift foodgrains for the social sector programmes on a ‘cash and carry basis’. “We will not pick up foodgrains on credit; we will pay upfront so that there are no more dues outstanding,” the official added.
Planning Commission officials defend the decision of the Centre to extend the coverage of a cash-based programme such as NREGP at a time when prices of foodgrains are ruling high. “The present inflation is expected to settle down once the wheat crop comes into the market. Also, the government has kept in mind that most of the new districts, which have been brought under NREGP, mainly consume rice, whose price has not gone up like that of wheat,” a Planning Commission official said.
Officials also pointed out that an assessment of the impact of welfare programmes carried out in backward districts had disclosed that rural families were better off with cash rather than foodgrains. “The assessment has shown that families were resorting to selling the foodgrains back in the market at extremely low prices,” the official said.