FCI has just half the storage capacity it needs
While the political class debates on whether it wants to pass the Food Security Bill in its current form and whether putting in more food through a leaky public distribution system is preferable to direct cash transfers through the Aadhaar-system, a recent CAG report throws up some more uncomfortable questions, questions that the government has steadfastly refused to address so far. To the usual set of questions over whether India can afford to be subsidising such a large chunk of its population and whether the PDS’s 40-50% leakages need to be addressed first, the CAG asks a more basic question about where the grain procured is to be stored.
Over the 5-year period from 2007 to 2012, the CAG points out, the stock of foodgrain in the central pool on June 1 has ballooned from 259 lakh tonnes to 824 lakh tonnes. Even if you remove the grain that is procured by various state governments, stocks have more than trebled over this period—since the Food Corporation of India (FCI) has no storage, it delays taking over the grain from these agencies and, in FY12, had to pay an additional R1,635 crore to them for carrying the grain on its behalf. But even if you look at the storage capacity that the FCI hires from other government agencies and private firms—it owns 130 lakh tonnes of storage capacity and hires another 172 lakh tonnes—this capacity is around half of what it needs. In 2012, FCI and its hired godowns had a capacity of just 336 lakh tonnes of foodgrain while the total stock with it was 668 lakh tonnes.
While the CAG reports much lower loss of foodgrains—it reports what the states declare as rotten—it is apparent the losses due to this are very high. Normally, last-in-first-out is the principle of good warehousing but the way the grain is stored in the open, with one bag on top of another, what you have is last-in-last-out, a recipe for dramatic storage losses. This is the issue that the Centre has not really addressed so far—how is the storage capacity to be augmented, what will it cost to do this and, most important, how long will it take to create this capacity? The losses due to this, it has to be kept in mind, are on top of the losses in the grain distributed—while the PDS system, for instance, says it distributed 100 units of grain to 100 families, say, the National Sample Survey data shows just around 55-60% of the families are getting the stated grain.