Agriculture Reference
In-Depth Information
ket price is normally higher than the levy price, various avenues of corruption
in grain marketing are created. Millers have incentives to sell their rice to the
open market, which will require bribing the food and law-enforcement officials.
Similarly, FCI officials have an interest in delaying procurement (on a number
of possible grounds) and asking for “extra” to expedite the procurement. And
all the extra payments and transactions add up to inefficiency-induced social
costs that the Indian people have to bear.
Changes in Public Intervention
This section analyzes changes in the degree of market intervention and the scale
of FCI's operation.
DEGREE OF MARKET INTERVENTION
. The degree of market intervention
—represented by public procurement, stock, and distribution as percentage of
total production—has increased significantly over the past 30 years (Table 3.6).
12
Compared to early years of the Green Revolution, FCI's market shares have
doubled from less than 9 percent of production in the 1960s to more than
26 percent in recent years. The implications for increasing FCI market share are
more pronounced in the surplus states. For instance, according to records of
the Food and Supplies Department of Punjab, private traders' market share in
the foodgrain trade has consistently been very low, ranging between a high of
7.6 percent in 1998 to a low of just 0.92 percent in 1995.
13
This depressed share
is not surprising, given that procurement in Punjab accounted for a significant
proportion of total government procurement, ranging from 35-45 percent for
rice to 55-65 percent for wheat over the past three decades. A key message from
these numbers is that government interventions increased when policy justifi-
cations lost their significance. In the years when farmers did benefit from the
policy, that is, the 1960s and 1970s, public procurement was only about 10 per-
cent of production.
SCALE OF FCI
'
S OPERATIONS
. The size of the FCI's workforce increased
with increasing degree of intervention. In 1965, FCI started its operation with
only 3,904 employees, which quickly increased to about 29,000 by 1970, to
50,000 by 1980, and to about 70,000 in the 1990s. Today, FCI reports about
55,000 regular employees and more than 170,000 casual workers enlisted with
its procurement centers and warehouses across the country.
14
FCI's employees
12. Note that these numbers do not reflect the full degree of intervention. A more accurate
measure would be to express it in terms of government's share in marketable surplus (total pro-
duction minus home consumption, seed, feed, and precautionary storage). The estimates of mar-
ketable surplus are not readily available, but it can easily be inferred that the degree of intervention
would have been higher, had total production been replaced by marketable surplus.
13. Government's purchases includes those by FCI and five state agencies.
14. The World Bank (1999) reported 65,000 regular employees and 175,000 casual workers.
