Lok Sabha Question No. 651 (UNSTARRED), answered on 2018-02-06
Subject: Restructuring of FCI
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: ANTO  ANTONY

## GOVERNMENT OF INDIA

## MINISTRY OF CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION

## LOK SABHA UNSTARRED QUESTION NO.651

## TO BE ANSWERED ON 06 TH  FEBRUARY, 2018

## RESTRUCTURING OF FCI

## 651. SHRI ANTO ANTONY:

Will the Minister of CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION miHkksDrk ekeys] [kk| vkSj lkoZtfud forj.k ea=h be pleased to state:

- (a) whether the Government is planning to implement the recommendations set forth by the highlevel committee on restructuring the Food Corporation of India (FCI);
- (b) if so, the details thereof including the major steps being taken by the Government to restructure the FCI;
- (c) whether the Government proposes to dissolve or dilute the responsibilities  of  the  FCI  including  that  of  procuring  food  grains  from  the farmers and if so, the details thereof;
- (d) whether the Government has received any complaints regarding the dissolution or reducing the responsibilities of the FCI; and
- (e)
- if so, the reaction of the Government thereto?

## A N S W E R

MINISTER OF STATE FOR  CONSUMER AFFAIRS, FOOD & PUBLIC DISTRIBUTION (SHRI C. R. CHAUDHARY)

- (a) & (b): Several  recommendations  of  the  High  Level  Committee  (HLC) have been accepted, with minor modifications wherever deemed appropriate.

The  latest  position  on  Action  Plan  for  implementation  of  important recommendations  of  the  High  Level  Committee  (HLC)  concerning  Food

Corporation of India (FCI) is enclosed as Annexure.

- (c): Government  of  India  has  introduced  Decentralized  Procurement Scheme (DCP) in 1997-98 to increase participation of States in procurement and  distribution.  Under  DCP  system,  the  State  Government/its  agencies procure, store and distribute rice/wheat within the state under National Food Security Act (NFSA) and Other Welfare Scheme (OWS).

The excess stocks (rice & wheat) procured by the State /its agencies are  handed  over  to  FCI  in  Central  Pool.  These  foodgrains  are  stored  and always needed to move to deficit states by FCI.

- (d)&(e): No such complaint has been received in this regard.

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## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) & (b) OF THE UNSTARRED QUESTION NO. 651 DUE FOR ANSWER ON 06.02.2018 IN THE LOK SABHA.

## Major Recommendations of High Level Committee and Action Taken thereon

|   Sl. No . | Recommendations                                                                                                                                                                                                                                                                             | Action Taken                                                                                                                                                                                                                                                                                                                     |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          1 | FCI to hand over all procurement operations of wheat, paddy and rice to states that have gained sufficient experience in this regard and have created reasonable infrastructure for procurement. These States are Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Odisha and Punjab. | FCI has already handed over procurement operation to State Governments in Andhra Pradesh, Chhattisgarh, Odisha and Madhya Pradesh fully. FCI is also participating in procurement operations in Punjab and Haryana on the request of concerned State Governments.                                                                |
|          2 | FCI will accept only the surplus (after deducting the needs of the states under NFSA) from these state govts. (not millers) to be moved to deficit states.                                                                                                                                  | For Decentralized Procurement (DCP) States only surplus food grains are accepted by FCI.                                                                                                                                                                                                                                         |
|          3 | FCI should move on to help those states where farmers suffer from distress sales at prices much below MSP, and which are dominated by small holdings, like Eastern Uttar Pradesh, Bihar, West Bengal, Assam etc.                                                                            | In, KMS 2016-17, 65.98 LMT of rice was procured in Eastern States. During ongoing KMS 2017-18, as on 29.01.2018, 28.30 LMT rice has been procured in Eastern States against 16.16 LMT rice in same period of last year.                                                                                                          |
|          4 | DFPD/ FCI at the Centre should enter into an agreement with states before every procurement season regarding costing norms and basic rules for procurement.                                                                                                                                 | GOI has finalized the tripartite MOU between FCI, Non-DCP States and Government of India for procurement of Paddy/Rice.                                                                                                                                                                                                          |
|          5 | In case of any bonus being given by State on top of MSP, Centre will not accept grains under the central pool beyond the quantity needed by the state for its own PDS/ OWS.                                                                                                                 | This has been implemented.                                                                                                                                                                                                                                                                                                       |
|          6 | Quality checks in procurement have to be adhered to, with the help of mechanized processes of quality checking.                                                                                                                                                                             | The Computerized Rice Analyzers (CRA) have been installed at 17 locations and rice acceptance through CRA has commenced at these centers.                                                                                                                                                                                        |
|          7 | Levy on rice millers be done away with.                                                                                                                                                                                                                                                     | This has been implemented.                                                                                                                                                                                                                                                                                                       |
|          8 | Negotiable warehouse receipt system (NWRs) should be taken up on priority and scaled up quickly through the Warehousing Development and Regulatory Authority                                                                                                                                | Government has approved a transformation plan for Warehousing Development and Regulatory Authority (WDRA) to streamline its functions and to increase the use of NWRs. As part of the transformation plan, the rules for registration of warehouses has been amended and notified in order to simplify the registration process. |

|   9. | Currently, MSPs are announced for 23 commodities, HLC recommends that pulses and oilseeds deserve priority and GoI must provide better price support operations for them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | In KMS 2016-17, FCI has procured 64737.25MT of Moong, 18234.68 MT of Urad and 175299.03 MT of Tur.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   10 | FCI should outsource its stocking operations to various agencies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Instructions to hire CWC/SWC godowns as per existing procedures and to hire godowns through tendering process wherever there is shortfall have been issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   11 | Covered and plinth (CAP) storage should be gradually phased out with no grain stocks remaining in CAP for more than 3 months. Silo bag technology and conventional storages where ever possible should replace CAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | As per the recommendations of HLC, the hired CAP capacity of 1.94 LMT was de-hired. No stock has been stored in CAP in consuming Regions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   12 | Each State, especially the deficit ones in difficult terrain (like hilly areas of North- East, Jammu and Kashmir etc), must have storage of grains for at least three months of their consumption requirement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Existing storage capacity in NE Zone and J&K are adequate to store 3 months requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   13 | HLC observed huge disparity in wages of various kind of labour force engaged by FCI. This happens because of the incentive system in notified depots, and widely used proxy labour. This must be fixed, either by de-notifying these depots, or handing them over to states or private sector on service contracts, and by fixing a maximum limit on the incentives per person that will not allow him to work for more than say 1.25 times the work agreed with him. These depots should be put on priority for mechanization so that reliance on departmental labour reduces. HLC recommends that the condition of contract labour, which works the hardest and are the largest in number, should be improved by giving them better facilities. | • Ministry of Labour & Employment however issued notification dated 06.07.2016 exempting 226 FCI depots/railheads/godowns from the applicability of earlier notification for a period of 2 years • Consequent upon Exemption Notification, FCI pooled/ repositioned of 9462 Labourers, out of which 9193 labourers have already repositioned. • The recommendation of capping incentive could not be accepted on grounds that it would lead to delay in unloading at the railheads. • However in pursuance to the award passed by CGIT, Karkardooma, Delhi on 05.07.2016, the datum of departmental labour has been revised from 105 Bags per worker per day to 135 Bags per worker per day which has resulted in reduction of incentive to about 30%. • As such there is likely saving of approx. Rs. 200 Crs. per annum after implementation of revised datum. • 30 no's of prototype set of Machines (Bag stacker) comprising of flat belt conveyor and MS stacker were set up at 27 depots across the country on pilot basis. Trial found not successful. • Bulk storage & movement of Food grains has been included in the action plan which indirectly emphasizes the mechanical handling of food grains and will thus reduce the labour dependency and requirement. • Nodal Officers have also been nominated to ensure better facilities and adequate welfare provisions like EPF, Minimum Wages, ESI, Workmen Compensation etc. and facilities like canteen/restrooms, urinals, and drinking water facilities. |

|   14. | To liquidate stocks in OMSS or in export markets, whenever stocks go beyond the buffer stock norms.                                               | Excess stock is disposed through e-auction under OMSS (D).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    15 | End to end computerization of TPDS                                                                                                                | Depot Online System is currently operational at 529 FCI depots . The NFSA beneficiary database has been completely digitized in all the States/UTs and is available on the PDS portal. All the States/UTs have also set up the facility for online grievance redressal/toll free labour helpline numbers. Supply chain has been automated in 20 States/UTs. Government is also automating fair price shops through installation of electronic Point of Sale devices for biometric authentication of beneficiaries and electronic capturing of transactions. So far about 1.78 lakh FPS, have been automated. |
|    16 | Targeted beneficiaries under NFSA or TPDS are given 6 months ration immediately after the procurement season ends.                                | Instructions allowing the state to lift 6 months allotment at a time have been issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    17 | Gradual introduction of cash transfer.                                                                                                            | Direct Benefit Transfer (DBT) for foodgrains has been implemented in three UT i.e. Chandigarh, Puducherry and Dadra &Nagar Haveli (in Urban areas).                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|    18 | India needs more bulk handling facilities a Silo capacity of about 100 LMT (together for wheat and rice) should be created in the next 3-5 years. | Government of India has approved action plan for construction of steel silos in the country for a capacity of 100 LMT in 3 phases. Tenders have been awarded for 38.50 LMT and a capacity of 6.25 LMT silos has been added under the above action plan.                                                                                                                                                                                                                                                                                                                                                      |

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