Revised Strategy Paper

All Changes made are in font 16

Arial black, in bold, and at page
numbers 4, 18, 27,37 and 39 to 41.
(Original is in font 14 Times New
Roman)
of

Department of Food and Public Distribution

(Government of India)

(for 2010-11 to 2015-16)

Phase V training of IAS Officers

HKS, Boston and LBSNAA, Mussoorie

By

Dr. J.N.Chamber and Dr. Pramod Kumar Anand

1
Part Topic Page
no.
Introduction 1

Section 1 Vision, Mission, Objectives and Functions 4

Section 2 Assessment of the situation 6

Section 3 Strategy 9

Core Component 1 A Clear statement of the purpose of 9

strategy and the strategy document
Core Component 2 A Clear statement of the Vision 10

Core Component 3 Defining long-term outcome goals 10

and results that are required to
achieve the Vision
Core Component 4 SWOT Analysis 16

Core Component 5 Summary of proposed solutions 17

and policy options
Core Component 6 Prioritization of proposed solutions 23
and policy options

Core Component 7 Proposed Implementation 43

Framework
Section 4 Implementation Plan 43

Section 5 Linkage between Strategic Plan and RFD 43

Section 6 Cross departmental and cross functional issues 44

Section 7 Monitoring and Reviewing arrangements 46

Power of Big Push Required for Success 47

Interaction

2
Introduction:

India, that was relatively a developed country in early 18th century slipped
along the slope, and rebounded to acquire the status of developing and now an
emerging economy. Notably, India has only world’s 2.5% of land surface area1 but
over 17% population2. The country has had a post World War II history of severe
food shortages and (the US) PL (Public Law) 480 was a household symbol of its
food dependence in 1960s. Some other factors that compound the problem are only
about 4% of world water and over 20% livestock population. Green Revolution
certainly catapulted India from a net importer to a net exporter (of around 4% of its
cereal production) by 2001-02. This could be possible due to use of HYVs,
increase in irrigated area from hardly 23% in 1965 to 50%, and in yield per hectare
from 7.70 qtl to 19.46 quintal. The production of cereals rose from 72.1 million
tonnes (mt) in 1964-65 to 186.4 mt in 2003-04 and further to wheat production of
80.58 mt and rice production of 69.45mt in 2009-10 (down from 99.15 rice
production in 2008-09 due to drought). Some major problems still remain on the
food front as the per capita net output of cereals that grew rapidly from 110.4 kg
in 1951 to 166.1 kg in 1984, has stagnated; green revolution needs to be made
evergreen and to encompass all regions and seasons of the country.
Under this background a Strategy Paper for the department of Food and
Public Distribution is chalked out keeping in view Annual Report, RFD, Outcome
budget etc., as follows.

1
Ranks 7th after Russia, Canada, the US, China, Brazil and Australia in that order.
2
Ranks 2nd after China.

3
DEFINING THE ASPIRATIONS

Section 1: Vision, Mission, Objectives and Functions:

Vision:

To ensure food security and nutrition to all the citizens of India at

affordable prices
Mission:
i. Management of food economy and nutritional needs of the country
through efficient procurement, foreign trade, storage and distribution of
foodgrains including pulses

ii. Ensuring availability of foodgrains, sugar and edible oils through

appropriate policy instruments

iii. Making foodgrains accessible at reasonable prices, especially to the

weaker and vulnerable sections of society

iv. To create and nurture institutions, as Moore states, “I recognize that one can
view managerial performance as a dependent variable and institutional
structures as the independent variable.3”

Portions added by the authors to Ministry’s

Vision and Mission are underlined above.

Objectives:
1. To utilize FRP (Fair and Remunerative Price) Policy, in consultation
with concerned, to boost agricultural production to meet aims of Food
Security Act on its enactment and export cereals and sugar

3
Moore, Mark H., “Creating Public Value- Strategic Management in Government”, Harvard University Press,
Cambridge, Massachusetts, pp 3,

4
 2. To ensure Procurement of wheat, rice /paddy and coarse grains for
Central Pool, and by assisting decentralized procurement under Price
Support operations

3. Ensure availability of wheat, rice, pulses and edible oil to meet

requirement of TPDS and other welfare schemes and of sugar for BPL
families
4. Ensure food security and nutritional standards in the country
especially for the weaker and vulnerable sections of society through
TPDS
5. To endogenize ‘ratoon’ nature of sugarcane in sugar policies making
these long-term and become an assured exporter of sugar

6. Timely creation of required storage capacity for foodgrains

Functions:

Major functions of the department are as follows:

1. Procurement of foodgrains
2. To ensure adequate availability of wheat, rice, pulses and sugar to
meet requirement of TPDS and other welfare schemes

3. Ensure food security and nutritional requirements in the country

especially for the weaker and vulnerable sections of society through
TPDS

4. Export, Import and release sugar sector and review of sugar policy

5. To ensure proper storage and transportation for foodgrains, with co-

operation of States and private sector

5
 Section 2: Assessment of the situation

2 A. What external factors will impact us:

a. Political
i. The Department has a strong political commitment to enact Food
Security Act

ii. Commitment to achieve goals and open mindedness on foreign trade

iii. Usually, the Opposition Parties too do not oppose these policies,
nature of these policies being welfare, lest the Opposition Parties
might face the wrath of the people and thereby the voters

iv. Since food distribution depends on the production, the Department

has a strength in having a common Cabinet Minister with the
Ministry of Agriculture

v. Declaration of MSP and Sugarcane prices

b. Economic
i. Full commitment of Finance Ministry

ii. Mounting food subsidy bill

iii. Adverse impact of global subsidies against exports

iv. Inflation, exchange rates, global slowdown

c. Socio-Cultural
i. Male household head dominated society (but for some areas)

ii. Food wastage on community free feast on death etc.

iii. A rich culture to help a family out of starvation

iv. Food and cooking habits

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 d. Technological
i. India a big IT player

ii. Introduction of UID

iii. Wherewithal to implement Multi-application Smart Card Scheme,

GPS etc.

iv. e-governance like introduction of computerized PDS shops

e. Environmental
i. Over use of fertilizers

ii. Depleting water table

iii. ‘Ussar’ (saline and alkaline) formation

iv. Climate change, global farming and opportunity to earn carbon credits

v. Ever increasing SPS standards by developed world

f. Legal
i. Prior to enactment of Food Security Act, adequate machinery not in
place

ii. Transparency due to RTI

iii. Improvement of natural resources like rainwater and surface water

harvesting through MGNREGA

iv. Consumer laws, labour laws, low taxation

2 B . Who are our stakeholders?

i. Farmers

ii. Beneficiaries

iii. States and UTs

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 iv. Other Ministries, PSUs and institutions, RBI, Railways, planning
Commission

v. Sugar mills

vi. FPS shops owners and operators

vii. Entrepreneurs and Private Investors and other players

2 C. What are our strengths and weaknesses?

Some major strengths are:

i. High public attention for good work and political support

ii. Generally self-sufficient in wheat and rice and frequently in sugar

(though not at present)

iii. Vast Infrastructure – FCI and CWC, PSUs. Network of Godowns and
Distribution Outlets spread across the country for reaching out to
beneficiaries
iv. Services rendered are essential services

v. Budget allocation available for subsidy operations

Some major weaknesses are:

i. Decision making – More time spent on fire fighting than formulation

and implementation of policy
ii. Ghost cards, poor targeting, and leakages of food grains in PDS
iii. Lack of a comprehensive database to ensure transparency and
accountability of TPDS operations
iv. Inadequate storage facilities
v. Financial weakness: High subsidy outgo, little generation of revenues
by the department except collection of issue price and a sick unit
named HVOC for which a decision is pending

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 vi. Till date inadequate use of IT at field level and related inadequate
skills

2D. What do we need to learn?

i. Advance scientific knowledge of domestic sowing, global

sowing, likely glut or shortages
ii. How to make multi seasonal FRP announcements by CACP
possible
iii. Pockets in country devoid of food stocks
iv. Monitoring of stocks, storage and distribution
v. How to timely dispose of old grains in time
vi. Skill requirements and development of innovative tools and gap
analysis

Section 3: Core Strategy

This section is the heart of the paper and intra alia encompasses at length
potential strategies, engagement of stakeholders, building of our knowledge and
capabilities and setting out priorities out of various options crystallized:

1. Core Component 1:
A Clear statement of the purpose of strategy and the strategy document

For a central department like the Department of Food and Public

Distribution, the word 'Strategy' means to chalk out priorities and plans to achieve
goals in an efficient manner i.e. in time and maintaining a high degree of quality.
Credibility of the department needs to be built further in the eyes of the last man in
a remote corner of the country to assure him that in time of need; help would come,

9
ensuring his food security. The planks of this strategy are to generate an
environment for high levels of production and imports if need be, to make it
physically reach across the vast country and to provide it to the beneficiaries
maintaining quality, and to export surpluses. Timely investments are key to any
viable strategy and investment in sustainable development is the touch stone of it.

2. Core Component 2
A Clear statement of the Vision: Already covered in Section 1.

Core Component 3:
Defining long-term outcome goals and
results that are required to achieve the Vision:

The department has a wide range of outcome goals of which major ones
are as follows:

i. Enactment of the National Food Security Act:

This goal aims to guarantee through an Act, a provision to provide

wheat and rice at affordable prices to BPL households. The bill could not be
placed in the parliament during the winter session. It is aimed to place it
during Budget Session and put an Act in place, with the help of concerned,
by end of May 2011.

The annual cost of implementing the Act is difficult to estimate as full

facts would be known only once it is enacted, still some broad estimates are
between Rs 76,720 crore (US $ 16.5 billion) and Rs 1,07,000 lakh crore (US

10
 $ 23 billion). This compares with the Rs. 55, 578 cr budget target for food
subsidies in fiscal year 2010-11, which is likely to be significantly exceeded.
The range of food grain quantities doing rounds is 25 kg or 35 kg of
grains each month to poor households.
It is foreseen that the Act will protect over 400 million poor in India
from near starvation, but a rise in subsidies could hit India's plan to cut down
its fiscal deficit to 4.1% of GDP by 2012-13 from the 5.5% expected this
fiscal year.
It is aimed to get the bill enacted, keeping reasonable levels of food
subsidy outgo.

ii. Better Nutrition for masses:

To focus on better nutrition for masses, especially people Below
Poverty Line by spreading awareness for consumption of food items giving
proteins and vitamins besides carbohydrates. Besides, for lactating mothers
and children their need for calcium is also proposed to be included that could
be met through consumption of milk/ safe powder milk in coordination with
the Department of Women & Child Development. One may recall that
Acharya had said to include in food assistance, “…supplementary nutrition
dispersion (including micro-nutrients) to infants and expectant/nursing
mothers…”.4
The results to be achieved in 5 years are to make at least 90% BPL
families aware about these vital food ingredients.

4
Acharya, S.S., “National Food Policies Impacting on Food Security- The Experience of India, a Large Populated
Country”, World Institute for Development Economics Research, UN University, Research Paper No. 2006/70, July
2006.

11
 To achieve this goal proposed solutions suggested are:
a. Intensive media campaigns
b. Through involvement of health, ICDS and MDM machinery
c. Through education department by appropriate inclusion in
syllabus right from elementary education
iii. Efficient Procurement of wheat, Paddy/ rice, coarse grains and
pulses for Central Pool under price support operations;
As due to vagaries of nature it is not possible to set targets in
advance, it is expected to increase food production by 3% per annum
over its secular trend. However, enactment of Food Security Act
would entail a much larger volume of procurement, though its actual
volume would be known once the level of foodgrains per household5
and coverage of items is finalized by the parliament.
Inclusion of pulses is also proposed in this goal as it aims at to
meet the goal of better nutrition. Tie up should be made with the
Department of Animal Husbandry to enhance availability of milk/
safe milk powder at reasonable prices. These can be distributed at
subsidized rates to BPL families in remote areas, as identified by the
States, sharing costs with States.

iv. Ensure availability of wheat, rice and pulses to meet requirement

of TPDS and other welfare schemes and of Sugar for BPL
families:
To meet this goal, besides procurement of Wheat and Rice,
certain imports of pulses are proposed to be tied up. Hopefully, sugar

5
Figures of 25 and 25 kg per household are doing rounds among policy makers and media, but the decision would
be taken by the Parliament.

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 production would bounce back in the coming season6. It is also aimed
to increase sugar production by 3% per annum, in the secular trend.
v. To implement TPDS jointly with States and UTs:
It is aimed to achieve this goal by efficient distribution of foodgrains
etc. procured. First in First Out (FIFO) policy should be strictly
implemented for each warehouse and not more than 10% of stocks
older than end of last season/ year (whichever is more) and none older
than 21 months would be kept by ensuring timely releases.
vi. Review of sugar sector Policies with a view to Reforms:
Keeping in view wide fluctuations in cane production led
domestic sugar production fluctuations, it is aimed that in consultation
with Ministry of Agriculture, the FRP would be announced for next 2
seasons by 30th June 2011 (at least 3 months before commencement of
cane season), and similarly each year for next 3 years. In the last year
it would be announced for next 3 seasons to reduce price benchmark
uncertainty from the market, commensurate with the ‘ratoon’ nature
of crop, giving comparable though diminishing yield after the first
season.
An analysis7 of sugar production compared to sugar
consumption reveals that, while the production has a mean of 20.640
million tonnes the mean consumption achieved was a slightly higher
quantity of 21.086 million tonnes. The production was relatively
fluctuating with a standard deviation of 5.222 million tonnes. Against
it government operations clubbed with market forces stabilized

6
Landes, Maurice R, “Indian Sugar Sector Cycles Down, Poised to Rebound”, USDA, Economic Research Service,
April 2010 pp 1.
7
Computed by Authors for 10-year period ending 2009-10.

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consumption and so its standard deviation was notably lower at 2.048
million tonnes. Accordingly, while coefficient of variation of
production was a higher 0.253, the coefficient of variation of
consumption was well managed at a lowly 0.097.

Accordingly, fluctuations in availability of sugar for consumption

(Table I) would be reduced compared to in sugar production. The
Coefficient of Variation (CV) of sugar consumption would be ensured
to be below 40% of the CV of sugar production for 10-year rolling
sugar season periods.

Table 1
India- Sugar Consumption Stabilization
Sugar Sugar
Production Consumption
(mt) (mt)
2000-01 20.480 17.845
2001-02 20.475 19.760
2002-03 22.140 20.260
2003-04 15.150 19.115
2004-05 14.170 20.385
2005-06 21.140 19.870
2006-07 30.780 22.425
2007-08 28.630 23.500
2008-09 16.130 24.200
2009-10 17.300 23.500

Mean 20.640 21.086

Standard Deviation 5.222 2.048
Coefficient of Variation 0.253 0.097

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 A comprehensive study would also be conducted on various
issues within one year. This would also encompass the crucial issue of
modernization of sugar industry. It is aimed that in next 5 years all
sugar mills older than 25 years would be offered softer credit to
modernize to optimum capacities and increase sugar recovery norms
by at least 1%.

vii. Development of Warehousing Sector:

Public and private efforts would be synergized to give a big
push to enhance foodgrains, pulses, sugar and edible warehousing
capacities by 50% in next 5 years. This is critical to ensure smooth
implementation of upcoming Food Security Act.

viii. Boost to Edible Oil Sector:

In consultation with Ministry of Agriculture, FRP would be
announced for any season at least 15 months in advance to facilitate
farmers to take allocative decisions. Softer credit would be made
available for importers of capital goods for oil extraction.

ix. Decide on the future of Hindustan Vegetable Oils Corporation

Limited (HVOC):
A final decision should be made to sell to bidder who
undertakes to run it or to liquidate it.

x. Creation of a Sevottam complaint system to implement, monitor

and review Citizen’s Charter and to redress and monitor public
Grievances:

15
 All grievances should be acknowledged within a maximum
period of 10 days of receipt, with an average time of 7 days. Replies
should be sent within a maximum period of 4 months with an average
of 2 months.

Core Component 4:
A SWOT (Strengths, Weaknesses, Opportunities and Threat)
analysis:
The strengths and weaknesses are covered at length in
Section 2C. Opportunities and Threats could be existing or come
suddenly time and system should recognize within little response
time.
Some of the major Opportunities are as follows:
i. To inculcate ethical behavior, IT back up and RTI available
ii. Focus on Food Security
iii. UID linkage
iv. Information boom
v. Economy growing fast
vi. Foreign Exchange reserves enough to modernize systems

Some of the major Threats are as follows:

i. Inadequate budgetary releases leading to carry over of
liabilities obstructing Supply Chain Management
ii. Continuous droughts
iii. Fall in soil fertility due to salinity etc.

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 iv. Continuation of large global subsidies due to Doha Round
impasse
v. Continued leakages and ghost cards
vi. Inadequate private warehouse capacity development

Core Component 5:
Summary of proposed solutions and policy options

Proposed solutions for some of the major challenges are

analyzed below:

Challenge I:
Maximization of benefits to a representative consumer household for a
given level of subsidy

Literature is surfeit with analysis of consumer choices and welfare

maximization of benefits, for a given level of subsidy. The theory can be extended
from an individual consumer to household, and separately analyzing intra-
household food allocations.

It is debated world over how to provide food at cheaper/ economical prices

to vulnerable sections of the society. Various existing available solutions can be
broadly categorized into one or another of the following:
i. PDS (through FPS): Poor households be given a quantity entitlement
to buy foodgrains from a designated point at subsidized rates, like in India
from a PDS shop. Usually it is allowed to approach just one point. It is also
called direct relief plan.

17
ii. Food coupons: these coupons (also called as food stamps) be issued
to the eligible households entitling to buy stipulated quantity of foodgrains
from anyone of the designated grocery shops/ sellers. This is not a very
novice idea, in fact, it was operational during the second World War in the
US as ‘Food Stamps Plan’.

iii. Cash subsidy: Thirdly, cash subsidy equivalent to entitlement be

paid in cash or directly credited to bank account of the head of beneficiary
household. Thereafter the household adds it to its income and takes a
decision about its apportionment on the basket of goods and services that in

its opinion are the most welfare maximizing. In fact Brazil is

already doing so.

This raises the fundamental issue as to given the three options what
makes a household the most well off?

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 Non-Food (N)

1,100 C

1,050 P’

1,000 B Budget Constraint without

Q P’’ food coupon
P

R’
Budget Constraint with food
coupon
R

Food (F)

O 100 B’ 1,000 C’ 1,100

(Not to scale)

Figure 1: PDS or Food Coupons or Cash Food Subsidy –

Welfare solutions for a representative Household

Let us take an example of a 5-member rural household that has a monthly

income of say, Rs. 1,000, and is therefore below poverty line8. As depicted in
Figure 1, the budget constraint of the household allows it to choose any point
within the triangle OBB’ under budget line BB’, in the 2-goods world, food and
non-food where the latter numeraire encompasses all non-food goods (and can be
built in to subsume services too). Being a rational consumer household, it
maximizes its welfare by reaching a point on line BB’, the exact point being where
this line is tangential to the highest possible indifference curve 9 i.e. say, at point P

8
At Rs. 368 per head per month for rural areas, as per 2005-06 estimates of Planning Commission.
9
Marginal rate of substitution being equal to price ratio of food to non-food.

19
or point R depending upon whether the concerned household was consuming at
least Rs. 100 worth of food or not.

Options I PDS or Option II Food Coupons:

Let us take the case of the household originally at point P of food

consumption F < Rs 100. Now let it be given food worth Rs. 100 (or Food coupons
worth Rs. 100 per month, raising its budget line to BQC’ as shown in thick. Now
we make a strong assumption that arbitrage of exchanging PDS foodgrains or
the food coupons is not possible. So it should settle for either point Q (in lieu of
P’ which is no more possible), i.e. the kinked point of F = Rs. 100, or a second
household type at point P’’ of F > Rs. 100, depending upon which point gives it a
higher utility.

Option III Cash Subsidy:

Alternatively, let the household be given a cash food subsidy of Rs. 100 per
month raising its budget line to CC’. It should now opt for point P’ (over Q), as it
is the highest possible indifference curve for first type household, or at P’’ for the
second type household. Thus his final food consumption (F) could be < Rs. 100 or
> Rs. 100 (or as a coincidence exactly Rs. 100 at Q). The actual position would
vary households. But given the choice to buy any good utilizing cash subsidy,
surely it would not be on an indifference curve below the one that passes
through point Q.

Alternatively, had it been a third household type, originally at a point R

that ensured F > 100, the additional income would catapult it to enhance its
consumption of both F and Non-F (both assumed to be Normal goods) and opting
for point R’ to maximize its welfare. Now in all the 3 options the third

20
household type should catapult to point R’ to maximize its welfare, therefore,
the outcomes under all the three options would have been identical for R.

So one can summarize:

i. In case the original food consumption was below the eventual food
worth amount of subsidy (Rs. 100), the final consumption on food could still
be lesser than Rs. 100 in case of cash subsidy, but surely higher than Rs. 100
in cases of PDS or food coupon.
ii. But under the option of cash subsidy the household would be invariably
at the highest possible indifference curve, maximizing its utility.
iii. In case the original food consumption itself was above the eventual food
worth amount of subsidy (Rs. 100), the final consumption on food would
remain higher and identical under all the three options.
Therefore, though it makes economic sense to grant a cash subsidy
instead of distributing food under PDS or giving a food coupon, the three
solutions would be further analyzed and prioritized in Core Component 6.

A related issue is intra-household food allocation, as female and elderly opt

for lower intake, and such a persistent situation leads to their malnutrition reducing
resistance to diseases.

Challenge II:
Ever Increasing level of food subsidies to carry out procurement
operations? And how to bear this enormous cost especially in the light of
upcoming Food Security Act?
Food Subsidy is computed as the difference between the Economic Cost and
Central Issue Price (CIP) on TPDS, OMSS, welfare schemes and carrying costs.
Economic Cost includes MSP, distribution cost and incidentals. An ever rising

21
MSP, higher quantities handled and unchanged CIP since 2002 have ballooned the
subsidy bill, and if additional costs of implementing food security Act and higher
poverty count is accepted it may cross 1.1% of GDP10.

The policy options to keep the food subsidies within 1 to 1.1% of GDP
are outlined here, as reduction in absolute amounts is not feasible:
i. Increase in CIP for APL
ii. Increase in CIP for APL and BPL (excluding AAY, as that is meant
for the most vulnerable section)
iii. Coverage of larger populations under cash subsidy, saving on
portions of storage, transportation and incidentals
iv. Indian farmer be allowed to export any foodgrains if remunerative
prices are available, to push sowings and yields

Challenge III:
Calibration of policies for simultaneously stable and sustainable
(obviously steadily increasing and not constant) levels of availability of
cereals, pulses, sugar and edible oils to address nutritional needs
With limited scope in increase in overall area, except through ease ion
in gross areas through irrigation coverage, for which Ministry of Agriculture
is already making intense efforts alongwith Ministries of Water Resources,
Power etc.; trend in reduction of area under coarse grains can be expected
over next 5 years. The following feasible policy options are accordingly
outlined here:
i. Higher area under a crop be encouraged if prices go up

10
Economic times 2 May 2010.

22
 ii. Focus should be simultaneously on all major crops for medium
and long-term periods to ensure food security and nutritional
needs
iii. Till enormous subsidies across the globe continue in agriculture
sector, India should take advantage of lower international prices
and focus on foodgrains and sugar exports

iv. For crops like oilseeds in which India is a perpetual importer

long term imports be the policy

Challenge IV:
Handling of ever increasing levels of storage and transportation of
foodgrains
The following policy options are outlined
i. Government should make massive investments in storage sector
and railway wagons sector
ii. Govt. funds and bank credit be leveraged to push storage capacity
iii. Private sector be given softer credit to add storage capacity
iv. PPP be focused upon taking help of private funding and bank
credit

Core Component 6:
Prioritization of proposed solutions and policy options:

Suggested solutions on Challenge I:

Some of the arguments advanced regarding options of PDS or food coupons

or cash subsidy are:

23
i. Cash subsidy would not be spent on food, as also shown in figure 1 in the
case of one type of household (opting P’), though in another household type
(opting P’’) it could be higher as shown in the diagram. Against it the household
can maximize its welfare through cash subsidy.
ii. In all cases adequate availability of foodgrains and an efficient food
marketing system need to be in place even in remote rural areas. The retailer with a
very low turnover may hesitate to accept food coupons. However, if he can claim
on real time basis or even if there is a power failure the moment power is restored,
it may work.
iii. Husbands may grab cash subsidy and blow it up on boozing, adversely
affecting health of the family, besides their own. A counter argument is that though
this outcome can’t be ruled out, this argument could be equally advanced against a
wage hike or employment under MGNREGA. Moreover, no one can guarantee that
food (cheaper) under PDS/ Coupons would not be sold by such a husband to
arbitrage for cash. All the more, to reduce such probability the cash subsidy can be
credited to the account of an adult female member of the family, if there is one.
iv. Option of Cash subsidy would surely cut down on huge storage and
transportation costs, if the consumer is allowed to buy from designated local
grocer/grain shop. As a further step if entitlement can be transferred electronically,
say by a smart card or mobile phone he can even buy from any farmer, making the
system even more efficient.
v. It would also cut down on poor quality and sometimes even rotten grains
available under PDS, as household would exercise its choice. Under PDS a
consumer is left to suffer whims and fancies of the concerned outlet and the system
refuses to compensate him genuine costs and forces to internalize swindling. This
can be averted by cash subsidy.

24
vi. In order to insure worth of food coupons against inflation, these can be for a
fixed food grain quantity and the on-line linkage can be periodically modified so
that the outlet approached gets a higher amount covering inflation. In the case of
cash subsidy this problem is easier to overcome as enhanced inflation adjusted
amounts can be released.
vii. Cutting down on PDS operations would also reduce the chances of selling to
FCI etc. and buying cheaper under the PDS, repetitively called ‘revolving door
policy’ by some bad elements.
viii. Cash subsidy can also avert the cases of fake coupons, though under it
electronic frauds would need to be kept at bay.
ix. Some States have already started implementing a project titled
'Implementation of Pilot scheme on Introduction of Smart Card based delivery of
essential commodities under TPDS’, through NIC on the initiative of the ministry.
Under this pilot project, finger prints are stored on the smart cards. In due course
mapping of iris can also be introduced, for better security against leakage.
Awareness can be further improved so that stocks with an FPS can be monitored
by a back-end server on real time basis. Thus stock position can be gauged though
process itself saving on the time, cost and drudgery of data feeding.
x. Notably, in India certain States have introduced direct credit of State cash
subsidy to bank accounts of consumers. For instance, UP has recently identified
around 25 lac such families, which though eligible for inclusion in BPL lists, were
left out because of the cap on number of BPL families i.e. 106.75 lac. Thus, in
order to give relief to these families, a pension of Rs. 300 per month per family is
now being paid though bank accounts. The prime objective of the scheme known
as ‘Mukhya Mantri Garib Aarthic Madad Yojana’ is to cater to the food
requirements of the vulnerable families.

25
 In the light of above in the long-term cash subsidy appears to be the best
option. However, it needs to be tested on pilot basis in a number of districts. To
ensure that no vulnerable family suffers due to such a switchover, it would be
desirable to keep 2 to 5 bags of wheat in such villages and local revenue
official entrusted the task to take care of any family unable to access it, till
Gramin Grain banks are in place. Recent results of biometric identification in
RSBY (Rashtriya Swasthaya Bima Yojana) and pilot in Mahatma Gandhi
NREGA are encouraging trends in this direction.
A one-size-fits all approach to food and nutrition management is not
practical. Different areas of the countries would be at different levels of electronic
coverage, and undue haste may prove counterproductive.
Simultaneously introduction of Smart Cards should be encouraged, with
iris identification included and option to approach any outlet including FPS.
Coverage under cash subsidy should be increased slowly and steadily in
consultation with States and other stakeholders. Simultaneously, it should be
linked to UID numbers. As a person can’t have more than one UID number, the
first field in such a linkage should be the UID numbers of family members and
second field their names followed by age, entitlement etc., to facilitate amount
transfer to bank accounts, without any duplication.
Suggested solutions on Challenge II:

i. Increase in CIP for APL:

The policy of non-universal coverage of APL households should be
continued to check unabated rise of subsidies. But as a corollary it has further
thinned margins, if any of FPS. A game changer can be to allow FPS to sell non-
PDS items like any normal shop. It would facilitate to cover overheads and
generate positive impact on additional business piggybacking on PDS related

26
customer visits. Tie up of reputed FMCG and FPS system

can be harnessed to materialize this FPS can

become viable and MCG get widespread coverage for

their products. Role of PRI and awareness campaigns is also need of the
hour.

ii. Increase in CIP for APL and BPL (excluding AAY, as that is
meant for the most vulnerable section):

India’s definition of poverty in itself is very poor, as it is below the

international yardstick of $ 1 or $ 1.25 or $ 2 a day. Even if discounted for PPP, the
number of hungry among countries being highest in India, it needs special efforts.
Similarly, Unicef states that “… 47% of young children in India are malnourished,
and up to a third of the world's undernourished children are Indian. 11”
It is also said in literature that, “Less than 15% of India’s national income
comes from agriculture and close to 60% of India’s labor force lives off
agriculture. There is little surprise in the fact that India’s rural population leads
impoverished lives.12”
Under these circumstances though there is scope of increase of CIP for APL
it is not much so for BPL (including AAY). Therefore, there is need to keep CIP
for APL fixed in real price terms, but not in nominal prices. At the same time
people erroneously excluded from BPL and AAY should be included at the
earliest.

11
Website of UNICEF India http://www.unicef.org/india.
12
Basu, Kaushik, Chief Economic Adviser, “The Economics of Foodgrain Management in India”, September 1,
2010.

27
 iii. Coverage of larger populations under cash subsidy, saving on
portions of storage, transportation and incidentals

To cut down on food subsidies long term goal of cash subsidy should be
launched, as already discussed at length. Government of Delhi seems to be
agreeable. Electronic back-end linkages as well as synergy with UID need to be
inbuilt in the system.

iv. Indian farmer be allowed to export any foodgrains if remunerative

prices are available, to push sowings and yields

As per OECD, “Total support to the agricultural sector, combining producer

support (the PSE), support for general services to agriculture such as research,
infrastructure, inspection, marketing and promotion, as well as subsidies to
consumers, was estimated at USD 368 billion (EUR 271 billion) in 2006-0813…”.
The level of such humongous subsidies is a big wall of protection, especially
in the cases of blue and amber boxes of subsidies. There is utmost need to
complete Doha round and reduce or eliminate these subsidies, so that India farmer
can compete globally.
The priority among these options is to increase CIP for APL, WTO platform
led elimination of subsidies, alignment of CIP with real prices and cash subsidies
at a large scale though a pilot should be launched at the earliest. These policies
would keep subsidy bill within manageable limits without compromising with food
security.

Suggested solution on Challenge III:

13
OECD, “Agricultural Policies in OECD- Monitoring and Evaluation”, 2009.

28
 i. Higher area under a crop be encouraged if its prices go up
It would be a short run policy if aim is to tide over price rise of one
crop, taking advantage of market forces in the case of one crop. However, it
is likely to lead to cyclic pattern of gluts and shortages of such a crop and
benefit middlemen more than an average famer who has little holding
power. It may also lead to distortions amongst crops, and therefore not
advisable as a long term policy.

ii. Focus should be simultaneously on all major crops for medium

and long-term periods to ensure sustainable food security and
nutritional needs:
To ensure nutrition security under TPDS, pulses and edible oil should be
included. Besides, in coarse grain growing regions these should also be included
with matching reduction in wheat entitlement. This would also give a shot in the
arm of producers of these commodities in dry areas, saving avoidable
environmental degradation.
In India supply side variations in production of cereals are due to vagaries of
nature and even more so in the case of pulses as these are not largely grown in
irrigated areas. Moreover, competing change in areas allocated by farmers to
sugarcane, cotton and jute also play a vital role. In the short run as pressure of
imports of sugar and edible oils have started pinching, there is likely to be an
appropriate hike in MSP (or in FRP) of these crops leading to area diversions
putting pressure on both cereals and pulses production. A silver lining is that as per
existing secular trend some area is likely to be released from coarse grains due to
advent of irrigation facilities, and this may be available for foodgrains. But it is of
utmost importance that procurement of coarse grains should be an important policy
plank and the striking variations in levels of procurement (11.50 and 13.75 lakh
tonnes in 2005-06 and 2008-09 respectively against 0.002 and 2.03 in 2006-07 and

29
2007-08 respectively14) should be avoided in future to help the most vulnerable
producer section of foodgrains.
Demand for Maize is likely to go up rapidly due to its diversion to bio-fuel,
which hopefully would be kept in check in India by resorting to molasses.
It is relevant to point out here that while for cereals, sugar, edible oils, cotton
etc. large scale imports are economically quite possible (unless stalled politically
by exporting countries), it is not so for pulses. These can be largely imported from
Australia, where these are largely grown in vast unirrigated areas. Importance of
pulses is further enhanced as these are source of proteins for a large segment of
Indian population. Good news is that area under pulses has increased to 22 million
ha in 2008-09 from under 11.5 million ha in 2000-0115.
Food Security:
For a large nation like India having a sizeable vulnerable section of
consumers, the need for food security need not be over emphasized. To accord
impetus to these efforts National Food Security Mission (NFSM) was launched in
2007-08. It was targeted to enhance production of wheat, rice and pulses by 10, 8
and 2 million tonnes respectively. Sometimes increasing levels of procurement of
wheat is attributed to its higher MSP, but if that were so, procurement of rice
would have increased in tandem commensurate with increase in its MSP.

No doubt MSP is an important factor, but weather, attack of diseases and

pests, MSP of competing crops, cost of inputs, advent of HYVs, technological
advancements, movement of international prices etc. play a vital role in production
of foodgrains in India.

14
Economic Survey 2009-10 pp 200.
15
Economic Survey, 2009-10 pp 184.

30
 Open Market Sales Scheme has helped in checking inflationary trends in
food economy16. Accordingly, the policy of allocations to States & UTs, bulk
consumers alongwith open tender sales should be continued to stabilize food
prices.

Notably, a representative farmer is either a subsistence farmer who is not

able to contribute to public procurement or a supplier-cum-consumer who disposes
of his surplus to the market. In fact both subcategories have a demand as a
customer to reach back the market, but little financial wherewithal to convert it
into effective demand. The food security should also focus on enhancing
production and thereby incomes of all segments of farmers to increase availability
and effective demand to avert starvation and malnutrition. And earlier a sizeable
population of farmers is brought above BPL the better it is, as in any case they are
burdened with the task of giving some employment to agricultural labourers.
India should continue to pursue the policy of creating buffer stocks
exceeding food security norms set to take care of TPDS and demand for welfare
schemes to ensure nutrition.
Emphasis on sustainable agriculture should be inbuilt in the policy, like
certified organic cereals can also be procured and sold under OMSS.
iii. Till enormous subsidies across the globe continue in agriculture
sector, India should take advantage of lower international prices
and focus on foodgrains and sugar exports:

Presently, FCI is paid on cost plus basis, which needs to be relooked to push
production of crops in which India has a comparative advantage. This can be
harnessed in case of wheat, rice and (after current shortages are over sugar), as
international prices are lower. Though one component of payment could be cost

16
Economic Survey 2009-10 pp 204.

31
based (MSP – Issue price, and some indexed costs like rail freight, diesel price
etc.) another component linked to efficiencies needs to be introduced. The second
component should facilitate to harness economies of scales in years of larger
procurements and can be evolved between the Ministry and FCI and an MOU dully
signed. An incentive should also be given to employees for exceeding the norms
set. This can have two components first a uniform one for each employee and a
second one linked to efficiency say, in the related FCI district. Exports in
calibrated quantities out of FCI stocks in periods of glut, can make it a vibrant
institution. Exports out of some lots of OMSS should also be permitted in case of a
glut, of course after duly adding so in the advertisements published by it.
Therefore, the policy of long-term focus on all major crops needs to be
pursued. Accordingly, FRP for these crops should be announced in one go for
more than a year, and in case of sugar cane for say, 3 year
This policy is further elaborated below by taking case of sugar.

The very nature of long term (3-4 years) annual yields of sugarcane crop
after one sowing, diminishes flexibility of growers to take any advantage of
demand fluctuations. This pushes the crop to a unique position leading to cyclic
glut and shortages, which are passed on to sugar production. For instance in the
aftermath of current sugar shortages in India, more area may be put under it (of
course by diverting from other crops), still the existing ‘ratoon’ crops sown over 1,
2 and 3 years ago would rule out possibility of a glut17, though the shortages may
be overcome for a while. Moreover so, because yields from ratoon crops are on the
lower side compared to the currently sown crop.

17
Though better market prices of sugar and cane prices announced by Government, that are accounted into by
sugar mills in increasing their cane prices, would most likely bring the country out of shortage situation.

32
 The very cyclic nature of sugar also deters to make a long-term import or
export arrangement in the world sugar trade, for India now a large player, that had
11% of global exports during glut of 2007-08 and 12% global imports during
shortages in 2009-10 and even more likely during the current sugar year. For
instance, while in 2006-07 and 2007-0818 India looked graduated to be an assured
exporter (25 and 58 lakh ton respectively19), it turned into an importer in 2008-09
(10.8 lact ton20) and continued manifold so in 2009-10. The problem is
compounded by the very size of Indian demand/ supply, which brackets India in
the category of non- price takers.

It is also a fact that Indian sugar consumption has continued to expand due
to rising per capita incomes and government interventions to adjust stocks,
facilitate trade, 10% levy on sugar mills at lower prices, and assure adequate
monthly availability21. In the backdrop of above if the country wants to overcome
these factors a long-term trade policy could be still planned on the following lines:

i. Keeping in view the nature of existing cycle, broad estimates of sugar

availability in next season should be made. Sugar mills would need to
be involved in this exercise to furnish:
a. Area of standing crop
b. Its broad classification by the number of years sowing of the
standing crop
c. Any perceptible change in the likely yield due to weather and
improvement in productivity

18
Years in the context of sugar refer to seasons October-September.
19
Annual Report 2009-10 p 92)
20
Ibid.
21
Landes, Maurice R, “Indian Sugar Sector Cycles Down, Poised to Rebound”, USDA, Economic Research Service,
April 2010 pp 2.

33
 This task is made a bit easier by the very fact that cane crop is
reasonably (say, compared to cotton) lesser prone to attack of
bacteria, pests etc.

ii The pricing in the proposed 2-year export/ import contracts be

linked to exogenous sources like prices in future markets. A counterpoint
could be that once India decides to enter the sugar market, world price is
influenced by the sheer size of a deal, as it is a significant share of world
sugar trade. However, it can’t be overlooked as agents in future markets
internalize details of standing crops world over.

v. The future trade deals should be made in the range of quantities as

discussed above, so that both sides have some flexibility to negotiate exact
levels as the time comes. Such arrangements, if made for imports should be
made with at least two countries, one in SAARC (say, Pakistan) or ASEAN
(say, Indonesia) and another with global suppliers (say, Cuba or Brazil or the
USA). Similarly, exports arrangement by India, if surplus is predicted could
be with say two large importers in EU.
vi. In the short run, the policy of zero duty imports needs to be extended.
Moreover, continued efforts should be made to import raw sugar (under
OGL), instead of refined sugar and do value addition in the domestic mills
most of which are underutilized. Besides, need to export an equal quantity in
good years also helps in crowding out frivolous importers.
In a nutshell the policy should not be a prisoner to cyclic variations,
but the very nature of cane and sugar cycles need to be closely studied 22 and
duly internalized in the policy. It needs to be underscored that, India has a
comparative advantage in production of sugarcane, which is why its farmers

22
For instance a study can be entrusted through National Sugar Institute, Lucknow.

34
 make it world’s number one or two producer of cane. Therefore, rightful mix
of policies is the need of the hour to turn it into net exporter of sugar from
net importer and restoration of future trading23 for long term price
stabilization. Harmony between interests of sugarcane growers, mills and
consumers is of essence, as a very low price deeply hurts producers a very
high price hurts consumers and can delay payment of cane arrears to
growers by mills.

iv. For crops like oilseeds in which India is a perpetual importer

long term imports be the policy:

India has a history of over 2 decades of import of edible oils. So a

fundamental question arises whether India should try for self sufficiency in this
sector or be reconciled that it does not have comparative advantage in this sector.
But the sector has as many as 9 major oilseeds of which in most it does possess
comparative advantage in pockets where requisite irrigation is available and
appropriate inputs and other policies are in place. Primarily in the long run, if
productivity in these pockets can be replicated self sufficiency can be achieved or
at least imports can be reduced to minimal levels. The alternative approach of
giving relatively very high price to divert area from foodgrains, sugarcane etc. may
prove counterproductive as that would lead to higher imports in those sectors.
Still with increasing population, per capita demand and better purchasing
power in the hands of poorer deciles (who have a higher propensity to consume)
higher productivity seems to the only viable mantra. Therefore, sizeable funds need
to be invested in R & D of 9 major oilseeds, especially the 3 top among these
namely, soybean, rapeseed/mustard seed and groundnut.

23
Suspended in May 2009.

35
 As import of edible oils can’t be avoided in the short run, there is dire need
to enter into long-term import contracts at exogenously determined prices (like
average of futures prices of more than one commodity exchange). Minimum
quantities that the country is sure to import need to be computed based on recent
import trends, sowing etc. Simultaneously, MSP of oilseeds should also be
announced for next 1-2 years, to give Indian farmer a chance to raise production so
that level of imports beyond the contracted quantity is minimal. When the actual
crop seasons arrive, suitable bonus can be added to the MSP announced.
On the front of direction of import trade ASEAN countries like Indonesia,
Malaysia and Thailand can help in cutting down import burden due to lower
transport costs and better productivity in some countries. Import of edible oils
apart, this would also help in promoting trade under these Regional Trade
Arrangements, compared to imports from Colombia, Ecuador etc. unless price
differential including transport costs turn out to be significantly in favour of latter.
In any planning regarding edible oil imports one can’t overlook that China is
an equally large import market having imported 6.2 (all figures in million metric
tons in 2009-10), compared to a higher 6.550 by India and comparable 6.150 by
EU-27 besides 1.840 by Pakistan, 0.985 by the US, 0.850 by Bangladesh etc. 24
Vanaspati oil import Nepal would surely continue to alleviate Indian import
demand.
An important development is diversion of edible oils as bio-fuels, which
needs to be tackled by pushing molasses based bio-fuels in India.

Suggested solution on Challenge IV:

i. Government should make massive investments in storage and
Railway wagons sector

24
World Bank, “Development Prospects Group”, November 2009.

36
Recent observations of Hon’ble Supreme

court on some foodgrains rotting for want of

storage space were quite embarrassing for

the department as well as nation. Even if

0.001 percent rots, it becomes sizable and

newsworthy. Some timely conversion to

fortified flour in time and FIFO clubbed with

no holdings beyond 21 months is suggested.

Scientific management, use of Silos and

Auto Stackers can help in timely disposal

averting rotting. Open Market Sales

Operations need to be encourages too. More

investment is needed in this sector.

Government on its part should enhance

allocation to meet Food Security Bill related

requirements and take massive help of

NCDC in this sector. However, would it get

much funds beyond subsidy bill is not

feasible.

37
 Anyhow, better security, inspections, scientific practices and
quality control of warehouses should be focused.
Simultaneously, the Village Bank Scheme can do wonders as:
i. It would avert any cases of starvation and check against migration
ii. Cut down on transport costs as contributions can be made by
surplus farmers
iii. Push smart card scheme to access foodgrains from an alternative
outlet in case of need
iv. Ensure better quality as grains can be collected locally and
transported minimal distance

Still investment in railway wagons must be pushed to reduce

transportation costs and by signing long-term MOUs.
ii. Govt. funds and bank credit be leveraged to push storage capacity
Clubbing it with bank credit would definitely help to add more
capacity. CWC and State Warehousing corporations should be
provided more and softer credit.
iii. Private sector be given softer credit to add storage capacity
Keeping in view subsidy burden, involvement of private sector
should be encouraged.
iv. PPP be focused upon taking help of private funding and bank
credit:
PPP on BOT model should be focused upon taking help of private
funding and softer bank credit. On the part of Govt., system of warehousing
receipts being negotiable and thereby bankable, as introduced during the XI
plan has not yet taken off well. Steps need to be taken to enthuse trust of all

38
stakeholders. Farmers can be allowed to use part of

their land for warehouse purposes.

Transportation loans for GPS tracked, radio frequency tagged vehicles
should be encouraged to private sector.
Keeping in view enormous requirements all the 4 options need to
be exercised simultaneously.

Engagement of Stakeholders: It is already

covered at pages 7 and 8 as to who our

stakeholders are.

Interaction with them to convert proposed

strategy into a reality is spelt as follows:

An integrated strategy to involve all

stakeholders would harness use of IT to make
payments electronically to farmers immediately
on procurement, as a key to involve them in a
big way to produce more and sell surplus for
procurement. For this GOI would have to ensure
timely releases to States for decentralized
procurement so that such States & UTs, very
important stakeholders, that have walked out of
such procurement can join back. The
39
involvement of beneficiaries for nutritious items
and launching of cash subsidy on pilot basis and
wherever some reluctance is seen launching of
food coupons would prove very useful.

Sugar mills should be allowed softer credit

for modernization to energy efficient ones,
covering all that are older than say, 25 years.
Opportunity of foreign exchange reserves to
import modern machinery can be synergized too.

FPSs should get SMS on release of food

grains to them. Electronically linked Points of
Sale (POSs) should be launched too.

Railway should be given long run plan of

wagons and rake requirements and committed
levels of haulage.

Warehouses on PPP model are covered at

page 38.

Synergy with other ministries and PSUs is

vital; as opportunity for Agriculture to enhance
maize production for use as bio-diesel is also an
opportunity for New and Renewable Energy
Ministry but a threat to food security. So focus

40
on molasses as a bio-fuel and much higher maize
production should be discussed and planned.

Reduction in subsidies through linkage of

issue price for APL families to real prices (as no
increase of nominal prices has taken place since
2002), reduction in cost of transportation and
storage by FCI, through pilots on cash subsidy
and where not acceptable, food coupons,
corporate governance of FCI for procurement,
storage and distribution (as MSP and central
issue Prices are not in its hands) can be helpful.

In consultation with CACP slightly

conservative 2-year MSP for other than cane and
4 year for cane (to be fine tuned latter by bonus)
should be put in place.

Some cross departmental and intra

departmental issues are also covered at pages

44 and 45.
Overall prioritization of policies, and as evident, most of them
differing from the current ones, are different is as in Table 2.

41
Table 2: Prioritization of Policies for Sustainable supply of Foodgrains,
Sugar and Edible Oils
Priority Influence Sequencing
Demand Side policies
1. Enactment of Food High High Short Run
Security Act
2. Cash Subsidy High High Medium Run
3. Food Coupons High High Short Run
4. Increase in CIP for High High Short Run
APL
5. Edible oils- long- term Medium Medium Medium
contracts

Supply Side Policies

6. Reduction of global High High Medium Run

Agricultural Subsidies
7. FRP Announcement Medium Medium Long Run
for a no. of seasons
8. Sugar export long- Medium Medium Medium Run
term contracts
9. Restoration of Future Medium Medium Long Run
trade in sugar
10. Inclusion of milk High High Medium
powder in PDS
11. PPPs for warehouses Medium High Medium –
Term
12. Sustainable cropping High Low Medium
like certified organic
be sold under OMSS

42
 Core Component 7:
Proposed Implementation Framework

This is covered in the ensuing section at length.

Section 4: Implementation Plan

i. As nutrition security is being suggested, implementation plan would

have to create wherewithal to endogenize it. Till date milk powder has
not been taken on board, therefore sourcing of it across the country
through open tenders and after checking its quality are backbone of
this plan. Inclusion of coarse cereals out of procurement would be
implemented by involving producer and consumer States.
ii. Implementation of provision of pulses and edible oil, latter by open
global bids would be part of the plan.
iii. Projects to operate smart cards, food coupons, cash subsidy would be
implemented making full use of technology.
iv. Implementation of Citizen Charter, and Sevottam compliance would
be through a special monitoring cell in liaison with all wings and
PSUs
v. Stakeholders would be involved at all stages of implementation.

Section 5: Linkage between Strategic Plan and RFD

The Department is institutionally not in a position to estimate ever

increasing availability of foodgrains, sugar, edible oils etc. inspite of its and
Ministry of Agriculture’s best efforts due to vagaries of nature. It may or may not
be possible to break the records of previous best production, say, in case of rice.

43
 But a bigger problem is that keeping this fact in mind the RFDs may include
annual targets far below potential of the department.
Secondly, targets under RFD for coming years, especially once Food
Security Act is put in place, would need a mid-year revision to meet the bigger
challenges.
It is also opined that for the Department besides large numbers, aversion of
any starvation deaths needs to be included in the RFD. Successful distribution of
million of tonnes of foodgrains can be tarnished by a single starvation death, so to
avert these should be included in RFD. This would give requisite boost to reach of
foodgrains, pulses, nutrition etc. and especially establishment and working of
Gramin Grain banks, besides the suggestion made in this paper to keep some
foodgrains available in each village. Otherwise RFD would not be in sync with
MDGs and reduction of malnutrition.
Annual indicators under RFD should be placed on website and monthly
updated. Reviews at the level of Minister and Secretary in field, inviting
stakeholders, especially beneficiaries, would be required too.

Section 6: Cross departmental and cross functional issues

6 A. Identification and management of cross departmental issues

i. A major issue is amount of FRP (MSP), and as to how much in advance can
it be announced. This policy can imbibe vision to boost production and tie up
global trade. It can be managed through periodic meetings.
ii. Information on likely production of crops as per satellite imagery and
through Ministry of Agriculture is equally vital. FAO reports can prove useful
too besides deliberations and publications by International Grains council,
agencies like UNICEF, USDA etc.

44
 iii. Role of the department of Consumer Affairs in identifying grievances is
equally crucial.
iv. On Nutritional matters issue of assessment of situation with the help of
Department of Health, ICDS and MDM is also vital.
v. Environmental issue of arresting degradation with the help of MOEF and its
restoration through schemes of MRD is an issue to help sustenance.
vi. The Department would need to address the issue of high subsidies in a more
responsible manner and share it with MoFinance.
vii. Better rakes from railways needs to be taken up as a very important long-
term view, and quality retention should be part of this interaction.
6B. Cross functional linkages within department/ offices
i. Development of a regime of transparency and accountability also
leads to making officials play very safe. Creation of room for fresh
ideas needs to be encouraged to benefit from combined wisdom.
ii. Storage of edible oils cuts across two wings of the department and so
also export of sugar. These issues need co-operation and discussions
at the level of the Secretary.
iii. FCI, CWC related policy needs a lot of interaction, giving of studies
and discussions with all stakeholders.
iv. Effectiveness of offices and to enhance it through use of IT and
incentives is an equally important issue.
6 C. Organizational Review and Role of agencies and wider public
i. Role of the Department as an efficient and ever vigilant organization
needs to be built. Interactions in the field with academicians, growers,
consumers, FPS owners etc. can be of immense use.
ii. An ongoing review of FCI is vital and its efficiencies need to be made
measurable as suggested in this Paper.
45
iii. Revamp of CWC to give room to Private Sector, though its competitor
would go a long way. CWC funds can be leveraged for increase in
storage capacity in Public sector as well as in Private or Joint sector.
PPP models are also likely to be useful.
iv. As already covered, a final decision about HVOC should be taken,
trying to benefit from its infrastructure and knowledge, even if parted
to private hands.

Section 7: Monitoring and Reviewing Arrangements:

Monitoring Arrangements:

i. With the advent of RFD, it should be used as an effective tool to

monitor rather as a new layer of work. However, it is imperative that
RFD be prepared to make the Department as a vibrant, efficient and
credible organization.
ii. Periodic monitoring, including regional meetings by the Hon’ble
Minister/ MOS and officials would be made.
In addition the following can be arranged in consultation with
States, NIC, C-DAC, UIDAI and private agencies:
iii. On-line monitoring of releases by FPS to the consumer may seem to
be a cherished goal. Surely, it needs to be introduced in as many cases
as possible.
iv. Review through introduction of Smart cards and Food coupons to
facilitate better coverage of these instruments.
v. Monitoring of GPS tracked trucks, Radio frequency tagged vehicles
on un-manned barriers to cut down on leakages

46
vi. Detection of ghost ration cards using biometric and UID wherever
possible
vii. Assessment of benefits accrued to public viv-a-vis amount released/
spent by the govt. on random basis, by engaging third party monitors.
viii. Toll free numbers, Records of SMSs received, responses and feedback
on the website to be monitored for logical conclusion.
Reviewing Arrangements:

i. Studies should be assigned to reputed institutions on important issues

and developments to review the critical policy issues and tasks.
ii. Issue specific brainstorming sessions should be held to review
policies.
iii. Functioning of the Department and State Governments would be
reviewed on periodic basis in the Department and field.
iv. Steps to reduce response time to monitoring feed-back from public.
v. Review of whether adequate information is being placed in public
domain as per preamble and spirit of RTI ct.

Power of Interaction- Big Push Required for Success:

A big push across the departments and all stakeholders is a must to
remain afloat around 10% GDP growth level. In fact the strategic changes
proposed in this paper, like inclusion of nutrition, cash subsidy and smart
cards linked to UID, costlier PDS for APL, transforming FCI into an
efficient corporate entity, PPP in storage, announcement of FRP (or MSP)
for longer period, long-term export-import contracts can’t succeed in
isolation, for instance threat of use of maize as biofuel is another ministry’s
opportunity.

47
 Advent of Food Security Act as a big game changer like RTI and
MGNREGA needs open minded changes in policies. Interaction term
against various variables is vital to the success aspired for.
*****

48