The Hindu Business Line : Foodgrains offtake surges by 55 per cent

THERE is some good news at last for the Government on its bloated foodgrain inventories front. Offtake of grains from the Food Corporation of India's (FCI) godowns has surged by over 55 per cent during the first eight months of the current fiscal.

A total quantity of 161.34 lakh tonnes (lt) of rice and wheat have been lifted from the Central pool during April-November 2001, compared to a mere 103.79 lt over the corresponding period of the previous year. True, this spectacular 55.4 per cent growth has a lot to do with the dip in offtake levels last year, resulting in a depressed base. But even seen against the offtake figure of 134.98 lt for April-November 1999, the growth rate during this fiscal comes to a respectable 19.5 per cent.

The fact that at least some tangible movement of grains from FCI's bursting warehouses is taking place is also reflected in the latter's stocks position. Between July 2000 and November 2000_ a period when stocks usually deplete in the absence of any official wheat procurement and kharif rice purchases would just about have taken off -- there was actually an increase in FCI's grain inventories from 422.47 lt to 455.10 lt.

In contrast, a semblance of normalcy appears to have been restored this year. Foodgrain stocks, which as on July 1, 2001 stood at 619.58 lt, fell marginally to 591.50 lt on December 1, 2001. In other words, there has been a stock de-accumulation of 28 lt over this period, as compared to an inventory build-up of almost 33 lt during the same time last year.

But the Centre's problems are far from over. For one, the aggregate foodgrain stocks of 591.50 lt as on December 1, 2001 (comprising 340.06 lt of wheat and 250.97 lt of rice) were much higher than the corresponding figure of 455.10 lt for December 1, 2000 (259.77 lt of wheat and 195.25 lt rice).

Secondly, even though overall foodgrain offtake from the Central pool has registered a 55 per cent growth during April-November 2001, the corresponding lifting under the Targeted Public Distribution System (TPDS) has gone up by less than six per cent, with rice offtake, in fact, declining by 1.6 per cent (see Table). Moreover, the total TPDS offtake of 83.76 lt for April-November 2001 has been way below the corresponding figure of 113.58 lt for April-November 1999.

The poor lifting of grains from the TPDS, i.e the regular fair price shop (FPS) channels, is largely attributable to the 2000-01 Budget decision to drastically hike issue prices, especially for the above poverty line (APL) segment. The move led to the closure of several ration outlets that were overnight rendered unviable, following the large-scale desertion of consumers to the open market.

That TPDS offtake levels have not recovered even after the slashing of APL prices in July this year is perhaps indicative of the `shock effect' of last year's move. Indeed, it would take quite some time to rebuild the country's entire FPS network. The TPDS has accounted for less than 52 per cent of the total foodgrain offtake of 161.34 lt during April-November 2001 (as against 76 per cent and 84 per cent for the same period of 2000 and 1999, respectively).

And within this, BPL (below poverty line) offtake amounted to 61.97 lt and APL lifting a paltry 14.03 lt.

In the absence of sufficient TPDS offtake, FCI has resorted to unconventional routes of stock disposal, such as exports and `open sale' of grains to roller flour millers.

During April-November 2001, 16.92 lt of wheat and 9.19 lt of rice have

been offloaded to exporters, with open sale of wheat amounting to 18.57 lt. Besides, FCI has also succeeded in disposing of 16.38 lt of rice and 13.37 lt of wheat under special welfare schemes (food-for-work, mid-day meals programme, etc).

If current trends hold, total offtake of grains from the central pool is likely to touch around 25 million tonnes (m.t) this year, compared to less than 18 m.t in 2000-01.

The 25 m.t would include about 4.5 m.t from exports (three m.t wheat and 1.5 m.t rice) and another 3.5-4 m.t through open sale.

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