Govt panel against breaking up Food Corp monopoly

Prime Minister Narendra Modi's idea of unbundling the Food Corporation of India (FCI) into three separate entities has not been endorsed by a high-level committee appointed by his government to look into this issue.

Instead, the six-member committee headed by BJP leader and former food minister Shanta Kumar has recommended a reorientation in the role of the FCI to enable the central food procurement agency to focus more on the eastern states, even while suggesting a larger role for the private sector.

The committee submitted its report to Modi on Wednesday.

While acknowledging that the FCI operations are in "the phase of dis-economies of scale for quite some time, and its restructuring / unbundling should have been done perhaps long back", the committee has not recommended unbundling of its operations.

Instead, the report has recommended streamlining the procurement operations where the FCI should virtually step out of procurement operations in Punjab, Haryana, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Odisha and hand it over to the state governments.

It also advocated the FCI to step into procurement operations into potential second green revolution areas of eastern Uttar Pradesh, Bihar, West Bengal, and Assam.

On the storage and movement of procured food grains, the committee has recommended "outsourcing" its operations to the Central Warehousing Corp (CWC), the state warehousing corporations (SWCs), and the private sector.

"HLC (high level committee) is of the view that outsourcing storage and movement through public-private partnerships (PPPs) on a competitive bidding basis would provide the required investments and managerial competence for effectively managing the supply chain. Where required, existing land/facilities can be provided to the PPPs," the report recommends, adding that "FCI will not require its expanded organizational structure" and "the effort should be to make FCI much leaner and nimble".

This is in the face of Modi's electoral promises. "I suggest that the FCI be divided into three parts: one that will focus on procurement of grains, second on its storage and the third on the distribution of grains," the PM had said at a public rally in Punjab last February.

Even the BJP manifesto for the 2014 Lok Sabha elections had promised to "radically transform the Food Corporation of India (FCI)".

The HLC was constituted by the food ministry in consultation with the Prime Minister's Office last August.