Feeding the problem

The Supreme Court ordered the government of India to distribute foodgrain (that would otherwise rot) to the poor, free of cost. The Food Corporation of India (FCI) has run out of storage space and so has to store grain without adequate cover from rain and pests.

For all its faults, however, the FCI is the fall guy here. It has no say in determining how much grain is procured and how much of it is distributed. The difference is the amount stored and it varies substantially across seasons and across years. With these constraints, even the smartest MBA in the private sector would get it wrong most of the time: either too little storage or too much of it.

Better supply chain management would help. Yet, the deep problem is not the FCI. It is our longstanding food policy that lets stocks accumulate without good reason. Today, the government sits on a stockpile of nearly 60 million tonnes of grain. This has happened before. In August of 2001, the government stashed away 65 million tonnes in warehouses, school buildings or simply under tarpaulins in open fields. We can be sure that if this policy continues, as before, the problem will recur.

In the immediate situation, the mountain of grain is about to get larger. The coming paddy procurement will add another 25 million tonnes or so. The usual demand from the public distribution system (PDS) will help, but even by the end of the fiscal year, stocks are likely to be close to current levels.

The government can therefore afford to get rid of at least 25 million tonnes of grain right away. Supplies of wheat and rice per man, woman and child would be up by 15 per cent or more from existing levels. In fact, the consumption by the poor would increase by even more as the non-poor have their fill anyway.

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