[GS3] Shanta Kumar report on FCI-restructuring, Buffer stock, PDS & Food security & Direct Benefit Transfer

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IAS Mock Interviews
  1. What is Food security?
  2. Origin of FCI
  3. Timeline of Food management in India
  4. Disturbing Numbers: FCI and Food Mismanagement
  5. Shanta Kumar Committee on FCI restructuring
    1. #1: Outsource procurement to State Governments
    2. #2: Procurement Payment reforms
    3. #3: Buffer stock reforms
    4. #4: Storage reforms
    5. #5: Transport reforms
    6. #6: Direct cash transfer to Farmer
    7. #7: Direct cash transfer to Consumer
    8. #8: Curtail National Food security Act (NFSA)
    9. #9: Pink slips and VRS
  6. Criticism against Shanta Kumar report
  7. Appendix: FCI structure
  8. Mock Questions for CSAT

What is Food security?

Food and agriculture organization (FAO) says Food security is made up of four pillars viz. Availability, Affordability, Nutrition, and Stability.

Food security PillarWhat has India done to achieve it?
food should be available in sufficient quantity at all times and at all places
  • Union: MSP, fertilizer subsidy
  • States: cheap canal water and electricity
  • Together, they encourage farmers to produce more grains.
Food should be affordable To poor peopleThrough Targeted-PDS and National Food Security Act (NFSA), Government provides cheap grain to poor.
Food should be nutritious to ensure healthy development of body of mind.Through Mid-day meal, Food-security Act, Integrated-Child Development scheme (ICDS) and half dozen other schemes, Government ensures nutritious food to children.
In food prices and supply must be stable. Otherwise political and social unrest.FCI keeps ‘buffer-stock’ of grains. It can be sold to open market or distributed among people during high inflation, natural disaster etc.

Origin of FCI

  • In the 50s and 60s, India faced major shortage of grains.
  • Our domestic wheat-production was very low. Our foreign exchange reserve too was very low. We could not sustain wheat-import from global market from our own. Therefore, we had to reply on American PL- 480 “Food for peace” program. But the shipments were irregular.
  • Finally Government decided to end this humiliation by focusing on ‘self-sufficiency’ in food production.
  • We imported high yielding seeds (HYV) of wheat from Mexico, distributed them to farmers along with subsidized fertilizers.
  • End result is known is “Green revolution”. You can read more about its features, phases and limitations in NCERT Class 11 Economy, page 24 onwards.
Timeline of Food management in India
1950sState Government begin enacting their Agricultural Produce Market Committee (APMC) Acts to ‘protect’ farmers. But it fails to curb the nuisance of middlemen, hoarding and inflation. For more click me
1964Food corporation Act passed. Subsequently FCI setup in 1965. FCI falls under Ministry of consumer affairs, food and public distribution.
1965
  • Agricultural Prices Commission begins prescribing minimum support price (MSP) for staple food such as wheat and rice.
  • FCI was ordered to buy grains from farmers, at this price, IF farmer couldn’t sell his produce in open market.
1985
  • CACP: Commission for Agricultural Costs and Prices (CACP) under Agriculture ministry, recommends minimum support prices (MSP) based on certain economic criteria for 23 crops before each Rabi and Kharif Season.
  • And for Sugar, Department of food and Public distribution decides the “Fair and remunerative price (FRP)”.
  • Thus 23 + 1 sugar = 24 agro-commodities covered under public procurement system.
1997
  • Decentralized Procurement Scheme (DCP), introduced
  • Now on behalf of FCI, the respective state governments themselves will procure foodgrains from farmers and distribute them among poor beneficiaries.
  • In theory, this ought to reduce transport cost and leakages but very few states adopted it, that too for rice only.
1997
  • Targeted Public distribution system (TPDS)
  • Two tier pricing structure: BPL and APL.
  • State Governments decide BPL and APL based Planning commission guidelines.
2000Antyoday Anna Yojana: 25 kg foodgrain per family at the rate of Wheat Rs.2 and Rice Rs.3 per kilo
2003Union Government drafts “Model APMC” Act, asks state governments to adopt it. Although many states yet to implement.
2008Private Entrepreneurs Guarantee (PEG) Scheme under Department of Food & Public Distribution (DFPD). Under this scheme, new godowns will be constructed on PPP finance, FCI will hire private godown to store public-procured food grain for contractual period of 10 years.
2010
  • Nutrient Based subsidy (NBS) regime.
  • Under NBS, govt. gives subsidy based on weight of the different Macro/micro nutrient in the fertilizer to companies, so they design new product mixes with micro-nutrients, according to soil requirement in each region.
  • Although #EPICFAIL Because Urea not covered in this system.
2010A new statutory body- Warehouse Development and regulatory authority under consumer affairs ministry. It certifies warehouses and resolves disputes related to Negotiable Warehousing Receipts (NWR)
2013National Food security Act passed. click me for more detailed article

Disturbing Numbers: FCI and Food Mismanagement

PDS leakages are unacceptably high in India

23Is the number of crops for which, CACP announces minimum support prices (MSP). This includes even non-food crops such as cotton and jute. But…
Only 6%
  • Of Indian farmers could sell their produce to Government agencies.
  • Other farmers are either unaware, or lack the access to MSP-system.
  • Only the ‘big’ farmers in north-western states have benefited from this MSP-procurement system.
40-60%
  • Of PDS-grains are siphoned off to blackmarket, says NSSO report (2011)
  • FCI transports 25 lakh gunny-bags every day so imagine the scam!
  • Best States Chhattisgarh, Andhra Pradesh and Tamil Nadu;
  • Most Bogus: Manipur, Diu-Daman, Delhi.
DoubleFor the last 4-5 years, FCI has stored double the grains than prescribed buffer limits. Result? (1) shortage in open market and thereby inflation (2) rotten grains due to FCI’s limited Storage capacity.
8-12%Was the food-inflation in recent years, YET Government did not release grains from its FCI-warehouses to increase supply and curb inflation.
58%Of subsidized foodgrain doesn’t reach BPL families. (Planning commission, 2005)
1.15 lakh Cr.Is the official budget allotment for implementing food security act, to cover 67% of Indians (2014-15)
YET only 11States have so far implemented food security act. Haryana, Delhi, Himachal Pradesh, Rajasthan, Punjab, Karnataka, Chhattisgarh, Maharashtra Chandigarh, Bihar and Madhya Pradesh. Other states are given time extension because they’re yet to even identify the beneficiaries.
9 cr.Is the number of agriculture households in India. 3/4th of them not even aware of MSP system. (NSSO, 2012)

Bottom line is, FCI has failed in all three objectives because

ObjectiveWhy fail?
1.ProcurementLarge number of farmers are out of the MSP regime.
2.StorageLarge quantity of food grain either siphoned off or gets rotten
3.DistributionTargeted PDS system has unacceptably high leakages.

In the light of these problems, Shanta Kumar Committee was setup

Shanta Kumar Committee on FCI restructuring

Chairman
  • Shanta kumar- the ex-CM of Himachal Pradesh, Ex-Union minister for Consumer affairs ministry and later rural Development ministry.
  • Plus, 6 members whose names not important for exam.
Purpose
  • How to Restructure FCI organization?
  • How to reform public procurement, food storage and distribution?
DurationSetup in 2014-August, gave report in 2015-January.
RelevanceUPSC Mains examination:

  • GS2 Paper: Welfare schemes for vulnerable sections of the population by the Centre; Issues relating to poverty and hunger.
  • GS3 Paper: Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security.

hence this 15 page Ph.D article

Let’s check his recommendations one by one:

Recommendations of Shanta Kumar Committee for restructuring Food corporation of India (FCI)

#1: Outsource procurement to State Governments

Shanta says FCI must not handle grain procurement for entire India

Avoid these areasFocus here
Punjab, Haryana, Andhra Pradesh, Chhattisgarh, Madhya Pradesh, OdishaEastern Uttar Pradesh, Bihar, West Bengal, Assam
These state Governments already have sufficient experience, manpower and infrastructure to procure grains for their own PDS requirements.
  • In the States, Market rate are below MSP.
  • Small Farmers are exploited.
  • Their (Bogus) State governments are inept and lack infrastructure to procure grains from the farmers in a transparent and efficient manner.
  • So FCI should simply hand over operations To the state governments under decentralised procurement system.
  • For short-term, give them technical training and arrange them finance through ADB-IFC etc. international bodies.
FCI itself Procure grains from the states, until the situation improves.

#2: Procurement Payment reforms

  • Popularise Negotiable Warehouse Receipt System (NWRs). Encourage farmer to deposit his produce to an authorized-warehouse, get a receipt, and borrow agriculture loan for next crop-cycle, from banks and cooperatives, by pledging those receipts. Loan-Value of such receipts will be 80% of the MSP x quantity stored in warehouse.
  • If market prices dip below MSP, government should only ‘compensate’ farmer for the losses incurred, but without procuring grain. i.e. let them store and sell it to private players later on when market recovers.
  • If state government pays additional bonus over and above the MSP to its farmers (mainly for vote-bank politics) still FCI should not procure more grain from that state, once buffer stock quota is filled. [At present FCI indulging in “open ended procurement” i.e. all incoming grain is accepted, even if buffer stock is filled.]
  • FCI or third party must perform Quality check before accepting grains from state government agencies and farmers. Don’t accept substandard grains.
  • On FCI procurements, State government levy commission between 2% to 15%. There should fix uniform rate for entire India – just 3%.

#3: Buffer stock reforms

  • FCI is supposed to maintain “buffer stock” of grains- to ward of any emergency food-shortage situation during natural disaster, famine or war.
  • But over the years, FCI has overcrossed buffer stock norms- leading to rotten grain and shortage in open market. Observe following graph:

FCI Buffer Stock for PDS foodgrains

Why FCI did overcross Buffer stock norms?

  1. Lack of coordination. While FCI is basically a “keeper” of grains. But how much grain should be stored as “buffer/backup” for emergencies?- Consumer ministry decides that.
  2. For vote bank politics, Union Government always increases MSP for wheat and rice each year. AND state governments too offer additional “BONUS” to farmers above MSPs. Hence most farmers prefer to grow rice-wheat instead of moving to vegetables and edible oils.
  3. Given this ‘oversupply’ of what and rice- the Market forces will offer lower prices to farmers. So, big farmers from rich states approach FCI and state procurement agencies.
  4. “Open ended procurement” i.e. FCI doesn’t have a quota in mind- whatever wheat/rice the farmers/state agencies supply to FCI- it purchases all of it.
  5. Ideally, FCI should sell-off the excess foodgrains, above the buffer quota, to open market- that’ll increase retail-supply and stabilize prices.
  6. But there is no ‘automatic-liquidation-rule’. It all depends on Government’s mood.

Results?

  1. Rotten wheat on one side+ food inflation on other side=> Crores of rupee wasted by both Government and consumers.
  2. Government randomly bans export bans on wheat-rice during food inflation, without finding the underlying reasons. This hurts our export competitiveness particularly in rice- where India is world’s largest exporter.
Shanta Kumar’s prescribed norms for Food-stocking
To implement Food security Act~61MMT
Strategic Reserve5 MMT
Forex currency reserveSufficient to import

  • 3 MMT wheat
  • 2 MMT Rice.
  • =total 5 MMT foodgrain

Whenever FCI has grains above buffer norms, it should automatically sell excess stock in open market. a.k.a. “Pro-Active Liquidation Policy”.

No harm in importing

  • Reduce import duty on wheat and rice.
  • Instead of keeping excessive buffer/backup storage, just store in moderate quantity. And as and when required, simply import rice and wheat from world market.
  • Same way, instead of transporting rice from Andhra Pradesh/Punjab to North East, it’s cheaper to import rice from Myanmar to North East.

#4: Storage reforms

  • FCI should gradually outsource grain-storage function to central warehousing corporation (CWC), state warehousing corporation (SWC), and private sector players- under Private Entrepreneur Guaranty (PEG) Scheme) on competitive bidding- give them contract to store FCI grains for 20 years.
  • Don’t store grain in “Cover and plinth” godowns. Convert them into “Silos” with Mechanized / robotic assemblies, with help of private sector. Madhya Pradesh has already begun doing this.
  • End to End computerization and Online tracking of entire system from procurement to retail distribution.
  • North East and Jammu Kashmir state Governments must create storage capacity that can last for 3 months. So, even sustain during bad weather, natural disaster and bandh-hartals, there is no shortage of food, even if they’re cutoff from rest of India.
  • If grains are transported in containers, instead of gunny-bags, it’ll reduce losses, get faster-turn-around time at railways and waterways.
  • Immediately after the procurement, give 6 months’ ration to poor-beneficiaries, with cheap-grain bins for storage. Result? FCI will have to store less grain in its godowns. Juntaa themselves will take care of storage.

#5: Transport reforms

  • As far as possible, grain should be transported in containers. It should be packed in gunny backs only at District HQ level- from where it’ll be transported to retail outlets
  • Stop labourers from using iron hooks to lift gunny bags. Provide bags with “ears” to eliminate hook-requirement.
  • As and where possible, use forklifts instead of manual labour.
  • Improved night security at rail-points, because >85% of PDS Grain is transported through railways and maximum siphoning off occurs here.
  • Construct silos at mandis, and provide rail connectivity to them.
  • As and where possible, use inland water transport for moving wheat and rice. Example from Visakhapatnam to north-east and Kerala. Improve rail connectivity between such ports and their hinterlands.

#6: Direct cash transfer to Farmer

Present systemShanta Says
  • Government adopted Nutrient based subsidy system (NBS)
  • But Urea kept out of this system.
  • Result: Soil degradation in Punjab, Haryana, Rajasthan due to excessive and mindless use of cheap urea; even smuggling to neighboring countries
  • China gives direct cash subsidy to farmer- according to per hectare owned. Then farmer free to choose crop, fertilizer, pesticides as per his requirement.
  • Shanta recommends India too should give Direct cash subsidy of Rs.5,000 to 10,000 per hectre to farmer’s UID linked Jan-Dhan account.
  • Then Farmer will judiciously use N, P and K fertilizers and even organic manures, according to requirements of his soil-crop requirements.
  • He’ll grow vegetables, pulses, non-cereals as per his business wisdom and prevailing market rates.

#7: Direct cash transfer to Consumer

GrainMSP
Rs./quintal (2014)
FCI’s Real Cost
Rice1360 (common grade)1400 (“A” grade)Rs. 3,000/quintal
Wheat1400Rs. 2,200/quintal

Suppose, Government wants to ensure all poor families get Rice at Rs.3 /kg.

MSP-PDS regime
  • After considering procurement, storage, distribution and leakages- the cost of delivering 1 kg rice to poor family is Rs.30. [because FCI’s real cost of handling 1 quintal rice Is Rs.3,000]
  • And if Government sells it to them at Rs.3 /kg, then it means 30 – 3 = 27 Rupees subsidy cost.
  • NFSA wants to give rice at 3/kg but Tamil Nadu, Andhra Pradesh and Chhattisgarh state government giving rice even at cheaper rate. All such schemes need to be streamlined into one.
Direct cash transfer
  • Shanta Kumar says
  • Give Rs. 700/ month to Antyodaya family
  • Give Rs. 500/ month to Priority household.
  • Then, Let them purchase whatever cereal and non-cereal foods they wish to purchase from market.
  • Government’s subsidy burden will decline by 20-25% (30,000 to 35,000 crores in absolute figure).
  • The money thus saved, should be used in improving rural infrastructure.

How to implement Direct Cash transfer?

  • First link Jan Dhan accounts with Adhar card UID numbers.
  • Money be transferred to lady of the house under “Direct Benefit transfer” (DBT)
  • Amount should be linked with inflation index.
  • People will be given free choice to purchase whatever food they want- rice, wheat, milk, vegetables.
  • First, begin this cash-transfer process in big cities with over 1 million population. Then to states with grain surplus.
  • Complete this process within 2 to 3 years.
  • J&K and North-east State governments should be given the option to either continue physical grain distribution or adopt cash transfer.

#8: Curtail National Food security Act (NFSA)

Food Security Act 2013 prescribesShanta Kumar observes
Cover 67% of Indian population (such that, 50% urban and 75% rural public covered)
  • Government doesn’t have the financial resources to cover so many people.
  • At max we should guarantee food security to only the bottom 40% poor.
  • This target will comfortably cover all BPL families and some of the “Above poverty line” families.
State Government to identify the beneficiaries, distribute grains at subsidized rate and if they fail they’ve to give money to the families.So far only 11 states finished this process. Other states given time extension to implement NFSA.
Antyodya households (AAY) – the bottom strata of BPL population will get 35 kg grain per family on monthly basis, at following price:

  • Rice: Rs 3/kg
  • Wheat: Rs 2/kg
  • Coarse Grain: Rs 1/kg
Yes continue that.
Priority households- those slightly better off than AAY-BPL families- they’ll get grains at Rs 3/2/1/kg.
  • No. don’t give so much subsidy. It should be just 50% below MSP.
  • At present the MSP for wheat is ~14 Rs/kg each. So, sell it to priority households at Rs.7 per kg. (either physical grain through PDS shop, or transfer required subsidy in their account to enable them buy it at market price. e.g. if market price is Rs. 30 then 30-7=Rs.23 cash transfer in account)
  • similar for rice and coarse grains.
  • Otherwise, Government’s subsidy expense will become unsustainable.
Priority households get 5kg grain per person.
  • Under TDPS system, BPL families used to get 7 kg per person. So, Food security act is actually fooling them.
  • Better give 7kg/per person to priority households. And assuming average family size is 5 members- thus each Priority household too will get 7 x 5=35 kg per family per month- just like Antyodaya households.
Free meals, take home ratios for children; pregnant and lactacting mothers to get cash installments and free meals; grievance redressal mechanism at district and state level.Shanta Kumar silent on these issues because it’s beyond the subject-scope of the Committee. His Committee concerned with FCI-reforms.

#9: Pink slips and VRS

WorkerAvg. monthly salary paid
FCI’s top 350 babusRs.4 lakhs per month!
FCI’s departmental laborer~25,000 to 80,000/-
Contractual LabourHardly 10,000/-

Shanta Kumar recommends

  • First begin mechanization of operations- to reduce manual labour requirements.
  • Reduce the number of Zonal and regional offices. Keep direct touch with state agencies via e-governance modules.
  • Then give VRS to FCI’s permanent staff.
  • At top level, hire executives from private sector (instead of replying Generalist-IAS on deputation).
  • As and where possible simply outsource or hire dailywage contractual laborers.
  • Result? Leaner and nimble FCI, low-cost of operations and higher “economies of scale”.

Criticism against Shanta Kumar report

Since Shanta Kumar criticized FCI, then someone must criticize Shanta Kumar to complete the Karma-Cycle. And who is more qualified to perform this ‘religious duty’, than the columnists at theHindu newspaper? So let’s begin:

Angry trade unionShanta recommends FCI to hire contractual staff, close regional offices and give VRS to employees. Trade union leaders don’t like it. Not one bit.
Survey method wrong
  • Shanta says only 6% farmers benefited from MSP procurement regime and nearly 50% of the foodgrains are siphoned off from PDS system (NSSO, 2011).
  • But experts dispute the NSSO-survey methodology used in deriving these numbers. (Jean Dreze, EPW)
Privatization wrong
  • It is true that large number of farmers are not benefited from public procurement, but FCI has not opened branches outside selected regions.
  • So, instead of privatizing the operations, FCI should open more offices at subdistrict level.
Poors left out
  • Shanta wants to reduce the coverage of food security act from 67% population to only 40% population. he prescribes that priority households should not be given cheap grains at 1/2/3 rupees.
  • Many poor families will be deprived of their basic right to food.
  • Instead of limiting the population under PDS, we should approach universal PDS i.e. everyone rich or poor eligible for subsidised food grains.
Bowing to “Imperial” Masters
  • Recall the WTO-Doha-round-10%-Food subsidy-peace-clause controversy. click for detailed article
  • It seems Shanta Kumar has tailored his numbers to pacify the food-subsidy quota requirements under WTO’s agreement on Agriculture (AoA), and Modi-Obama deal to infinitely continue peace-clause was just an eyewash.
Farmer suicides
  • Given the UPA’s trend of announcing bumper increases in MSP each year- large number of farmers growing rice and wheat.
  • Modi did not increase MSP for wheat and rice significantly after assuming power.
  • So, to cover those farmers’ losses and prevent any distress sales and suicides, the state Government announced higher “bonus” price above MSPs.
  • Now Shanta recommends Modi not to do “open ended procurement” from such states, above buffer stock limits.
  • This will catalyze distress sells and farmer suicides.

DBT idea is flawed:

  1. USA too uses similar “food stamp” program, but many poors misuse the foodstamps for purchasing liquor and even narcotic drugs.
  2. While food can be ‘shared’ among family members, cash can be misused-Even if cash transferred to lady of the house, there is no guarantee Indian husband won’t beat her up, loot the money and spend it on desi-liquor and gambling.
  3. Yes, Brazil Mexico and other Latin American nations use “Conditional cash transfers” but not only as a “Supplement” and not ‘replacement’ for their public distribution system.
  4. Such “Free cash” will increase bidi and gutka usage among rural men and women- every time they visit local kirana store. Sometimes even shopkeeper will lure them saying he doesn’t have chillar- so take this gukta pouch! (Counter argument: with Rupay card the chillar problem will vanish, and family can fullfil “use Rupay card every 45 days” to claim accident insurance; Double-counter argument: banking penetration still low-many tribal families in remote areas will be left out for the lack of Jandhan account and outlets)

In short, Cash transfers are likely to bring in their trail predatory commercial interests and exploitative elements, eager to sell alcohol, branded products, fake insurance policies, Saradha-like-ponzi schemes or other items that would contribute very little to people’s nutrition or well-being. (Jean Dreze, Indianexpress )

Food corporation of India (FCI) organization chart

Appendix: FCI: Present structure
Main bodyBoard of directors

  1. chairman of the board
  2. MD of Central warehousing corporation
  3. MD of FCI
  4. 3 directors to represent union ministries
  5. 6 directors
Daily
firefighting
  • MD of FCI from Delhi HQ
  • Chiefs of 5 zonal offices
  • Chiefs of 25 regional offices.
Manpower~25,000 permanent staff and ~1 lakh contractual staff.

Now let’s check Shanta Kumar’s major recommendations one by one:

Mock Questions for CSAT

Q1: Consider following Pairs of Committee vs their official mandate:

  1. Shanta Kumar: Restructuring of national food security act, Mid-day meal and other food distribution schemes.
  2. Usha Thorat: Granting licenses to small banks
  3. Nachiket Mor: Granting licenses to payment banks

Which of them are correctly matched?

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. all of them

Q2. Find correct statements

  1. National food security act aims to cover 65% of Indian population.
  2. Shanta Kumar Committee recommends this NFSA-coverage be reduced to 50% of Indian population only.
  3. Both A and B
  4. Neither A nor B

Q3. Arrange following in the correct chronological order

  1. FCI
  2. Target PDS system
  3. food security Act
  4. Nutrient Based subsidy (NBS)

Answer choices

  1. 1234
  2. 1243
  3. 2143
  4. 4123

Q4. Which of the followings are outside the purview of Agriculture ministry?

  1. FCI
  2. Minimum support prices to farmers
  3. Decentralized procurement system

Answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. all of them

Q5. Private Entrepreneurs Guarantee (PEG) is administered by

  1. Commerce ministry
  2. Finance ministry
  3. Consumer affairs ministry
  4. agriculture ministry

Q6. Official mandate of FCI includes

  1. public procurement of foodgrains
  2. storage of foodgrains
  3. distribution of foodgrains

Answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. all of them

Q7. Which of the following are recommended by Shanta Kumar Committee on FCI restructuring

  1. FCI alone should handle all procurement throughout India
  2. Create a separate autonomous body to perform quality checks on the grains procured by FCI
  3. FCI’s contractual staff should be converted into full-time permanent staff.

Answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. None of them

Q8. Which of the following are not recommended by Shanta Kumar Committee on FCI restructuring

  1. Coverage of National food security act should be widened.
  2. Priority households under NFSA should be given more grain allotment
  3. Antyodaya households should be given grains at 50% below the MSP

Answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. None of them

Q9. Shanta Kumar Committee on FCI restructuring has recommended building “Strategic” reserve of foodgrains. Under which

  1. 5MMT grains to be stored in physical form
  2. 5MMT grains-equivalent to be stored in forex currency form
  3. Both A and B
  4. Neither A nor B

Q10. Shanta Kumar Committee on FCI restructuring has recommended which of the following measures?

  1. To provide livelihood to jute industrial workers, FCI must transport grains in only in jute gunny bags – right from procurement to retail distribution chain.
  2. To ensure employment to manual-laborers, FCI godowns should avoid usages of forklifts and other mechanized instruments.
  3. Both A and B
  4. Neither A nor B

Q11. For cash transfer, which of the following are not recommended by Shanta Kumar Committee?

  1. Farmers be given subsidy on per hectare basis.
  2. Direct benefit transfer to PDS-Consumers must be rolled out first in J&K and North-east where leakages are maximum
  3. Cash transfer should be made in the jandhan account of the patriarch of the family

Answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. None of them

Descriptive Questions for mains examination:

  1. From the food-shortages of 1960s, India has moved into food-surpluses in post-2010 period, but somehow the FCI-TPDS has not able to deliver on its objectives very efficiently. Critically examine the reasons and suggest remedies.
  2. Since its inception, FCI’s procurement and buffer norm practices have been ‘tonnage centric’ rather than ‘farmer centric’ or ‘poor centre’. Discuss how it has hurt Indian economy and people.
  3. Shanta Kumar Committee has asked Government to reduce the coverage of NFSA in the interest of fiscal consolidation. Justify your stand on this recommendation.
  4. “To prescribe direct cash transfer as the panacea for the ills of poverty and hunger, is an oversimplification of the problem.” Elaborate.
  5. “Decentralization and private sector participation is essential for efficient management of procurement and public distribution system of Modern India”. Elaborate.
  6. Define Food security and list the measures taken by Government of India to ensure food security in India.
  7. (interview) Apart from what Shanta Kumar recommended, what other suggestions would you make for reforming PDS system in India? What if we simply privatize  FCI?

Mrunal recommends

  1. (free) NCERT, NIOS, TN-Books 4 History,Geo,Sci
  2. Indian Polity M.Laxmikanth (Hindi | English)
  3. Spectrum: Modern History (Hindi | English)
  4. Maths: Quantam CAT Sarvesh Kumar
  5. Objective General English SP Bakshi
  6. Word Power made Easy -Norman Lowe
  7. Topic wise Solved Paperset by Disha

50 Comments on “[GS3] Shanta Kumar report on FCI-restructuring, Buffer stock, PDS & Food security & Direct Benefit Transfer”

  1. Thank u very much sir.
    superb article

  2. sir…..plz conduct….postal. mains test series….for….student. who r nt able to go there in delhi…or gujrat…..optional too if possibl…..thanxxxxxxxx. alot

  3. Even reading this whole article at one go is not easy. I wonder how much efforts and research it takes to write it with so much simplicity. #Respect !

  4. Nice one…Thank you!!!

  5. Sir,,Thanks a lot . U are my Dronacharya and I am trying to be an Ekalaviya . God bless for this u ..

  6. thank u sir ,,..you are helping us a lot …god bless u

  7. Thank you Mrunal and Rajtanil :)

  8. 1) b
    2) 4
    3) b
    4)c
    5)c
    6)d
    7) d
    8)d
    9)c
    10)d
    11)b

    1. #DR i think 8th question has answer “c”..refer this…#8: Curtail National Food security Act (NFSA)
      in the pdf above…

  9. sir plz upload economics study material from IGNOU, just lyk u uploaded for pub ad,sociology.

  10. What does this last line indicate Mrunal sir
    Now let’s check Shanta Kumar’s major recommendations one by one:

  11. Thank you so much sir

  12. thanks sir…..God bless you…..

  13. dear sir

    in lakshmikanth polity 14.5 mutual delegation of functions in state center relations.pleasr explain

  14. omygod…sir..you are like “catalyst” in the competitive exam reaction..your input like NOS in the racing game..give us edge for every winning opportunities..really sir fallowing your article from last 6 month its really help full..specially for “me” who deprived to destitution and unable to join expensive classes like others..thank u.

  15. Thank u sir.can u give guidelines to NABARD exam?

  16. Correct me if there are any wrong answers
    1.b
    2.4
    3.b
    4.a
    5.c
    6.a
    7.d
    8.d
    9.b
    10.d
    11.d

    1. MCQ, ANS.

      4- c
      6-d
      8-c
      9-c
      rest I concur with Ashwin

      1. 11. b
        rest all same as above

  17. Was waiting for this!!..Thanks a ton..:-)

  18. Thank u so much Mrunal sir

  19. brother mrunal..i do follow ur webiste regularly

  20. wat i wana say is u use some satirical words in explaing subjects wat evr it may b econmy may b curnt affairs ur explanation is filld wid humour too v like it thanks fr ur teachng n guiddng us…

  21. thank u sir.. u r doing such a wonderful job..

  22. sir geo k lecture upload kr do…….plz

  23. Sir, why should hindi, as a language in upsc, not be removed? So that we all can feel equal in terms of our mother language. Prevailing system helps those aspirants whose mother language is hindi more than people from other language. They can pass the whole exam by understanding only hindi language except compulsory english. Why all this bias.
    Sir please clarify the aspirants.

  24. thnku sir , plzz upload ur class videos also sir , they are very helpful for us sir , plz sir … u will be blessed by many sir

    1. Hello yamini,what is your optional

  25. It’s amazing sir.

  26. Thanks a lot mrunal bhai.. amazing article! Long live mrunal patel! :-)

  27. Sir , upload NEXT lecture of GEOGRAPHY

  28. Thanks Wonderfully done!

  29. Thankyou very much mrunal sir& rajtanil mam:-)

  30. Pls notify me about any new posts on the website.

  31. Than u sir for everything .Please upload economic notes and geography .It

    will help both in prelims and main if passed.

  32. thanks mrunal sir..

    I have a doubt regarding Nutrient Based Subsidy.. how non inclusion of urea under NBS is resulting in its over use??
    Someone pls clarify..

  33. Hi Nila,
    In NBS , govt. fix the subsidy on the nutrients ‘N’ – Nitrogen, ‘P’ – Phosphorus, ‘K’ – Potash and ‘S’ – Sulphur contents and MRP is fixed by companies. Hence, when the input cost goes up, the price goes up, since subsidy is fixed. In case of urea, it’s MRP is fixed by govt., due to which it’s relative cost is much less than other fertilizers.
    What govt. should do is to fix the subsidy for urea as well, and let market decide the price, that will make the price of all the fertilizers , so that farmers choose the fertilizer, not based on price but based on the soil requirement.

  34. Sir, as per the book Indian Economy by Sanjiv Verma, the AAY scheme offers 35kg of wheat and rice. I hope my stats are correct regarding this as 25kg has been mentioned above.

  35. Great simplicity

  36. DBT Reform

    (For Interview)

    Instead of sending money in Bank a/c, they should be loaded with “Digital Food/Goods”, once the person goes to the shop, s/he can use the RuPay card to convert the digital item into physical item with paying subsidised amount. The shopkeeper will be given the remaining amount by Govt. on market price as proof of sale will also be there.

  37. how many backward talukaa accordig SANTAKUMAR COMMITY

  38. can we have correct answers of mcqs ?

  39. tank u so much sir….

  40. Still relevant. Where did my earlier comment go in which i wrote Bibek Debroy recommendation?!

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