Will the UPA policy initiatives be only in the new and green field areas with a sole aim to bring in short term foreign investment. What of reforms in existing institutions like the Food Corporation of India, the Fertilizer Corporation of India, Coal India Ltd, railways, road transport sector, transmission and distribution sector, and the repealing and modernizing of hundreds ancient acts that must happen to free India's constricted supply chain ? Will the reforms act be played out only by the finance ministry while others sit on their haunches and applaud. Does getting out of policy paralysis mean just waving one arm to show your are live and kicking? Let us take a look each week at reforms in India's monolithic institutions and its archaic laws both central and in the state that is responsible for slow distribution of goods to the people and choking the supply chain and growth of the economy.
In January 2012 Food Minister KV Thomas was quoted as saying "FCI is a white elephant. We are trying to revamp it from top to the bottom. It cannot be allowed to function in the present manner." The minister said FCI has a larger role to play in the wake of the government's decision to implement a food security regime. "Modernization of the FCI is important for strengthening the food security of the country. There are a number of corruption charges against several FCI officials. Several such cases have come to my notice. The FCI management needs to be made effective," added the minister.
However 18 months on there is still no signs of structural reforms at FCI. This is policy paralysis at its best where a minister after admitting that changes are needed has done nothing to improve the situation. Instead of putting in a capable professional in charge of the food sector behemoth for an effectively long period with a specific mandate, the Minister's revamp surprisingly replaced FCI's supposedly ineffective CMD Siraj Hussain a 1979 batch IAS officer with it's ED, another 1981 batch IAS officer Dr. Amar Singh who remained at the helm for just over a year, too short to make serious changes.
Last month C Vishwanath a 1981 batch IAS officer, an under secretary in I & B ministry took over charge from Dr. Amar Singh, a move that appears equally indecisive besides being grossly inadequate. FCI is still being run by half a dozen IAS officers from the ministries and reports to politicians for its day to day functioning making it a typically Babu Neta fiefdom, with absolutely no accountability to the people. The existing mechanism of including MPs and MLAs of a locality in the advisory panels of the FCI gives the politician direct access to the grain storage and distribution mechanism, as a result of which the babus at FCI and the Netas often are hand in glove in scams. This leads to the distribution control being actually with politicians and the appeasement of constituencies rather than a rationalized distribution system, a reason why PDS shops in some areas are barren while in some areas overflow with stocks, that are then sold in open market.
The Rs. 2 lakh crore food grain scam in Uttar Pradesh that saw the arrest of senior Congressman and transporter Daljeet Singh by the CBI in May 2012 along with rice mill owners, flour mill owners, several SDM's and other babus for diversion of PDS grain to private players is typical of the malice that the Babu Neta distribution structure breeds into the system. FCI needs to be restructured as a professional corporate like any of the other Navratna PSU's out of the influence zone and direct supervision of the Babu Neta combo. It must be made accountable for distribution as well as storage to give it last mile connectivity and broken up into 6 zones that was proposed long ago but never implemented. If needed legislative changes must be done by passing a bill or an ordinance to make FCI function like a corporate and be made completely accountable and professional.
Today the Food Corporation of India remains the same inefficient and leaky bucket and the primary cog in the food security of the nation. Despite food subsidy and state support going up steeply the gap of storage space is increasing each year, and the condition of existing storage facilities have deteriorated and pilferage and accounting discrepancies are high due to weak or non existent internal audit . The Comptroller and Auditor General of India (CAG) said in its report that was tabled in Parliament during the first week of May 2013 that the storage gap widened to 331.85 lakh metric tonnes (LMT) from 59.95 LMT in the six-year period between 2007 and 2012. Only 34 LMT of capacity was added during the period. The CAG also criticized the internal audit and physical verification conducted by FCI stating that it was largely inadequate and lacked independence. The porus open storages of FCI not only cause rotting of food grains but also help large scale pilferage and goes unchecked due to the poor internal audit system of the organization.
However it is not only FCI that needs to be re structured. Another reform that is urgently needed is the repealing of the archaic ESA or Essential Commodities Act of 1955 that has long lost its significance as India moved from a deficient food grain producer to a surplus food grain producer. This will enable it to hire professional transporters and cargo movers into food grain environment and ensure faster movement to distant parts of the country. Today the ESA and couple of state laws makes movement of food grains across the country illegal without permits, another instance of the Licence Raj holding up genuine reforms. It is only the politically connected transporters like Daljeet Singh who manage to become approved transporters of PDS food grains today in this restrictive environment. Transportation of food grains is a national priority and needs to be conducted like an open book with complete transparency. The current transportation laws need to be repealed, and the entire sector needs to be de-regulated and opened up for speedy movement of food grains to the poor.
