Sisir Mishra
The Centre’s policy to involve private players in foodgrain procurement in eastern states, one of the key recommendations in the Shanta Kumar report, has come a cropper. The policy, mooted by the Food Corporation of India (FCI) and since approved by the Ministry of Food Supplies and Consumer Welfare, has failed to trigger interest even among those players keeping whose interest in view the ministry had threshed the norms.
The FCI floated tenders for two clusters in Assam around three months back, but there was no response from private companies.
Instead of learning from its failure, FCI recalled the same tender thrice with the same terms and conditions but no private players showed interest. Sources said FCI is planning to call the same tender again for the fourth time.
The response was tepid in Jharkhand, UP and West Bengal where FCI had to float tenders three to four times each. Though the tender in some of these states was finalised after three-four rounds of tender, there was hardly any competition in sight. Sources said there are only three parties who participated in all tenders across these states. And the end result was poor competition and heavy loss to farmers.
The basic objective of the Shanta Kumar report was to maximise the number of participants so that farmers end up getting most-competitive prices. However, certain terms and conditions in the policy have scuttled its smooth implementation.
Sources said FCI’s Kolkata regional office wrote to its headquarters to revisit the norms so that more players take interest in the tender. The ministry has reportedly declined to change the parameters.
In Jharkhand, a tender was floated for a single cluster and the Mumbai-based NCMSL bagged it as not many players showed interest in the bid. In Uttar Pradesh, four clusters were on the block and bids were called separately for each cluster. The tender was rejected in the first time while it evoked little response in the second time. Only one cluster was finalised in the third time.
Similarly in Assam, the state government has sent a proposal to the Centre to ease the policy guidelines considering that most of the procurement areas in the state are in hilly terrains and there may not be much participation unless the rules are eased.
KK Paliwal, General Manager (Procurement), FCI headquarters, has, however, refuted the above claims. He said the corporation has got very good responses in UP, West Bengal and Jharkhand. “Private players participated in all these states. Only in the case of Assam, we encountered some typical problems as it is a hilly state. We are planning to ease some of these norms for Assam,” Paliwal confirmed.
To a question that if the response was good what was the need for calling repeated tenders, Paliwal said the corporation did it to discover better prices.
“Conditions like a minimum turnover of 200 crore and a profit of at least 2 crore during last three years as criteria for private players have foreclosed the options of many mid-level private players with expertise in warehousing and procurement,” said an analyst. He said allowing select deep-pocket players in a sector as sensitive as MSP procurement will kill competitiveness and encourage monopoly by a select group of players.
The government’s objective behind the policy of involving private players in procurement was well-conceived. It was meant to help farmers and be a win-win game for farmers and the government. However, a ham-handed implementation of the programme has defeated its lofty objectives, said a farm expert.
