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Food Corporation of India

The Food Corporation of India was established in 1965 to implement price support operations for wheat and rice. It procures 15-20% of India's wheat and 12-15% of rice. FCI stores and transports grain, establishes purchase centers, and works to preserve stocks. However, the public distribution system has been inefficient, with food not reaching the poor, low quality grains, and surplus stocks being improperly managed. Reforms are needed, including restricting subsidies to the poor, phasing out kerosene subsidies, and replacing PDS with food stamps or credit cards.

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Viswas Jaiswal
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80 views

Food Corporation of India

The Food Corporation of India was established in 1965 to implement price support operations for wheat and rice. It procures 15-20% of India's wheat and 12-15% of rice. FCI stores and transports grain, establishes purchase centers, and works to preserve stocks. However, the public distribution system has been inefficient, with food not reaching the poor, low quality grains, and surplus stocks being improperly managed. Reforms are needed, including restricting subsidies to the poor, phasing out kerosene subsidies, and replacing PDS with food stamps or credit cards.

Uploaded by

Viswas Jaiswal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Food corporation of India

Introduction
Food Corporation of India was setup on 14th January 1965 under Food Corporation
Act1964 with authorized capital of almost $600 million to implement the national policy
for price support operations. It operates through 5 zonal offices and 26 regional offices.
The Food Corporation purchases roughly 15-20 per cent of India's wheat output and 12-
15 per cent of its rice output

Function of FCI
Procurement: Procurement is the acquisition of goods and/or services at the best
possible total cost of ownership, in the right quality and quantity, at the right time, in the
right place and from the right source for the direct benefit or use of corporations,
individuals, or even governments, generally via a contract, or it can be the same way
selection for human resource. Simple procurement may involve nothing more than
repeat purchasing. Complex procurement could involve finding long term partners – or
even 'co-destiny' suppliers that might fundamentally commit one organization to
another.

Stock: To nurture the Green Revolution, the Government of India introduced the
scheme of minimum assured price of food grains which are announced well before the
commencement of the crop seasons, after taking into account the cost of production
inter-crop price parity, market prices and other relevant factors.

Transportation: Proper transportation of the product so that food and grain can reach
easily to the end distribution center. Thief in transportations reduce cost of inventory
proper record to the grain, it will help to reach the product at the right time, in right
place, for the right purpose so that FCI can easily accomplish the goal.

Preservation: preservation of the product proper management of the product where


and which type of the product, and where we can segregate that product so that product
wastage can reduce easily. It will helps to maintain the stock of the n required grains.

 The Food Corporation of India along with other Government agencies provides
effective price assurance for wheat, paddy and coarse grains.
 FCI and the State Govt. agencies in consultation with the concerned State
Governments.
 establish large number of purchase centers throughout the state to facilitate
purchase of food grains
 Centers are selected in such a manner that the farmers are not required to
cover more than 10 kms. To bring their produce to the nearest purchase centers
of major procuring states.
 Price support purchases are organized in more than 12,000 centers for wheat
and also more than12,000 centers for paddy every year in the immediate post-
harvest season.

Flaws in the system


 To provide the farmers remunerative prices
 Low quality of food grains
 Changes in Food Consumption Pattern. Dramatic changes in food consumption
patterns have taken place in India in the post Green Revolution period.
 For APL there was low difference between the open market prices and PDS
prices.
 The benefit of food subsidy was not accruing to the rural masses but more to the
farmers.
 High procurement prices led to high PDS prices making it unaffordable to poor,
so this increased the cost of maintenance of inventory.
 The stocks were damaged by rodents which contributed to the rotting way of
stocks and a large volume was also wasted during transportation through
mishandling.
 Corruption at all levels ensured that a fair amount of food grains did not reach the
desired segment of the population.
 Dealers sell their quota of grains to the rice dealers, because they got a higher
price for the rice than they earned as commission by selling it to ration card
holder.

Public Distribution System responsible for in efficiency


• Supply of food grain to the poor not at subsidiary price
• They don’t introducing innovative idea such as smart card , food debit /credit
card ,food stamps and decentralized procurement
• They are not proper managing the surplus
• PDS do not managing godown stock of grain.
• Items other than rice and wheat need to be excluded from the purview of TPDS.
Attempts to include more commodities under food subsidy cover should
be resisted.
• Sugar supply through PDS draws well-to-do families to the system.

• Coarse grains are basic commodities purchased by the poor. These grains in
any case are available to the poor at low prices. There seems no additional need
to supply them through PDS and bring them under the cover of food subsidy.

• Kerosene oil is also a commodity supplied through PDS and is intended for the
poor. But there occurs large scale illicit diversion of this item and benefits meant
for the poor are cornered by others. Subsidies kerosene is used for adulteration.
• With diesel. Subsidy on kerosene should be gradually phased out and alternate
avenues of marketing it needs to be explored

Recommendation
•  Items other than rice and wheat need to be excluded from the purview of TPDS.
Attempts to include more commodities under food subsidy cover should
be resisted.
• Sugar supply through PDS draws well-to-do families to the system.

• Coarse grains are basic commodities purchased by the poor . These grains in
any case are available to the poor at low prices. There seems no additional need
to supply them through PDS and bring them under the cover of food subsidy.

• Kerosene oil is also a commodity supplied through PDS and is intended for the
poor. But there occurs large scale illicit diversion of this item and benefits meant
for the poor are cornered by others. Subsidized kerosene is used for adulteration

• With diesel. Subsidy on kerosene should be gradually phased out and alternate
avenues of marketing it needs to be explored
• The coverage of TPDS and food subsidy should be restricted to the population
below poverty line. For others who have the purchasing power, it would do
merely to ensure availability of grains at stable. price in the market – no need for
food subsidy to this population
• Ration cards have tended to be used as ID card to establish people’s identity.
Many get ration cards issued only for this purpose.
Conclusion
• Despite the huge stock of food grains available in FCI godowns stray case
hunger death are still being reported. The food distribution system need to be
reformed and made more efficient. The present system could be replaced by a
system of food stamp and eventfully by a food credit card system. The excess
stock of food grains that have accumulated with the government is partly a result
of high MSP which often exceeded the level recommended the CACP There fore
a need to adhere to the recommendation of the CACP in the regard the MSP
should encourage diversification of agricultural production.

Submitted By:
Viswas Jaiswal
Krishna Tiwari
Akash Singh

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