Parastatals and Food Policies: The Indian Case - From Parastatals to Private Trade - page 74

This body of evidence suggests FCI, as well as the regulatory supports to
its operation, has continued beyond its usefulness. The reform process can be-
gin by lifting the restrictions on domestic markets by eliminating rice levies,
delinking minimum support prices from procurement prices, eliminating re-
strictions on private stocks, and discontinuing cheap credit and preferential
treatments to FCI. This course of action will reduce procurement (and stock),
help private markets and institutions (including risk mitigation) evolve, and di-
minish FCI's role in India's grain markets. The key challenges are twofold: de-
fusing the interest groups and devising alternative mechanisms to provide more
cost-effective SSN programs. Analysis clearly shows that alternative SSN pro-
grams, such as food coupons, are more cost effective, and the country has the
technological capacity for large-scale implementation.

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