Citizens' Issues
Food Corp -FCI needs to be made answerable and accountable

FCI acts independently, is answerable to no one in particular and has become a mammoth organisation that now needs to be restructured and reorganised to meet the changing needs of the country

According to press reports, in response to an application filed under the Right to Information (RTI) last year, it has been revealed that Food Corporation of India (FCI) has "admitted" that 1.94 lakh tonnes of food grains were wasted, due to various reasons, between 2005 and 2013.


The truth of the matter is that this figure of 1.94 lakh tonnes may be the tip of the iceberg. Only a more detailed investigation by a competent agency can reveal, if at all possible, how much more has been lost due to pilferage, how much ended up as feed for rodents, and how much was damaged due to natural causes of decay. Oh yes, we may never how know much more was "stolen" or "misappropriated" during this period, when these were in "transit".


In a recent meeting that James Bevan, the British High Commissioner had with Harsimrat Kaur Badal, he informed her that a delegation would visit India to extend cooperation and to offer assistance in curbing food wastage in India. Earlier, a US based organisation had estimated that India wastes fruits and vegetables worth around Rs13,000 crore every year, due to poor storage facilities.


A percentage of these perish due to poor transportation, becoming unfit for human consumption and are thrown away, only to be eaten by stray cattle on the road side! Besides, periodic strikes by transporters first "create" an artificial shortage in the market resulting in price rise, during which time an unestimated amount of fruits and vegetables would again be lost due to natural process of damage, and when the situation returns to "normalcy" some more would have perished! All this must stop and Minister Harsimrat Badal plans to revolutionize food processing at the farm level.


In the new NDA government, we have at least four ministries involved in food and related matters, such as:


Ramvilas Paswan - Consumer Affairs, Food and Public Distribution


Harsimrat Kaur Badal - Food Processing Industries


Radha Mohan Singh - Agriculture


Sanjeev Kumar Balyan (MoS) - Agriculture, Food Processing Industries


Besides these, Finance Ministry would also be involved as they are the ones who finance the entire FCI operation!


It may be remembered that the FCI was established exactly 50 years ago, in 1964. The entire operation of FCI is financed by the Government and yet FCI acts independently, answerable to no one in particular and has become a mammoth organisation that now needs to be restructured and reorganised to meet the changing needs of the country.


In the past, various proposals have been made for reorganising FCI operations. Their activities come into public view when shortages occur in the market or when weather conditions cause untold damage to food grains stocked in the open, poorly covered with plastic sheets and tarpaulin etc. After a few explanations and "assurances" of the matter receiving due "attention", promises are made that everything will be taken "care of in the future." The matter slowly dies down from public view and public memory is short, being swamped by newer and newer scams that appear on the TV screen.


What has been going on like this for some 50 years cannot be "fixed" overnight. A strong, independent committee of experts, with a specific term of reference, as rightly outlined by the Prime Minister in his speech in Parliament is the need of the hour. It should work with a time frame, must come up with a possible and workable alternative. They may bear in mind the following needs:


  • - Existing storage and warehousing would most likely need upgrade, modernisation and/or expansion

  • -Rice should be stored and not "paddy"

  • -Surplus rice areas should have milling units nearby (much like onsite milling) so that paddy is converted to rice for easy handling; labour and transportation cost of paddy is more than milled rice.

  • -Fleet of trucks/lorries will have to be owned and operated by the concerned warehouse; FCI cannot and should not "hire" these vehicles

  • -All states must be encouraged to offer land for interested corporate houses to build warehousing facilities

  • -A standardized warehousing design/format to be prepared with varying capacities so that these can be used on a national scale

  • -Officials who run these facilities must be accountable; existing staff must account for the lapses that have occured and action taken against them where dereliction is proved.

  • -Both MSP and PDS procedures to be cleared and outlined atleast 3 months before the harvesting starts

  • -All payments to be directly made into the banking accounts of concerned people - not through intermediaries, who should be eliminated completely

  • -Maintenance, handling, security and regular quality inspection must be done on an in-house basis

  • -Surprise inspections by independent and approved surveyors to be made periodically so as to ensure quality and quantity of food grains stored, and are certified fit for human consumption

  • -The reorganised FCI could expand to take oversea marketing as well instead of using STC (State Trading Corporation), MMTC (Metals and Minerals Trading Corporation) and PEC (Project and Equipment Corporation) for exports


In order to do all these operations, it is naive to assume that a single corporation can handle such a giant enterprise. It may be prudent and desirable that the various operations could be treated as independent companies, by having a holding company. The government can own a 26% share in such operations and let the balance come from the investing public so that the entire operation

become a public enterprise.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




3 years ago

Currently, FCI make payment to farmers for the procurement of paddy at minimum support price (MSP), while stocks are stored with rice millers under Custom Milling of Rice (CMR) agreement and only milled Rice handed over by the Agencies are stored in FCI godowns.


3 years ago

The author lacks thorough knowledge on the subject and it became a habit now to simply criticising on the functioning of FCI ever since the trifurcation proposal caught the attention. It is to note that FCI procures and stores Rice not Paddy. Also, using owned trucks by the warehouse, not to hire is a comment due to ignorance of FCI operations, since the stock goes out from FCI for which the custodian is the State Govt. only. However, it is the need of the hour that FCI too needs improvement like any other sleeply publich sector unit which need not be through only trifurcation. change is always acceptable.

Dr Anantha K Ramdas

3 years ago

I appreciate your comments and agree with them, mr Warrier.

If an independent study is made by a reputed management consultant who has had experience in such matters, this new government can take up the issue further. But has been happening is that every successive government, which has been mostly controlled by Congress, one way or another, has let the situation continue without much change.

It is time for change, as we can no longer accept such attitudes and loss of food grains which could have fed millions of people.

It is also possible that genuine efforts by hardworking and honest officials may have also fallen on deaf ears. All these have to be rectified and we should try to start with a clean slate. Don't you agree?


MG Warrier

In Reply to Dr Anantha K Ramdas 3 years ago

I fully agree. Moneylife is participating in the efforts being made by 'WE THE PEOPLE' by making the people's voice heard. Thanks

MG Warrier

3 years ago

Several of our public sector organisations with all India and state jurisdictions lack leadership and professionalism at the top. FCI is one of them. While there are several options before the government to revamp these organisations, in the recent past, government/s succumbed to pressures and left all efforts midway making ‘public sector’ the whipping boy of public disgust. Coming back to the limited issue of FCI, government and the tax-payer need to take note of the situation and ensure that the corporation fulfils its mandate at various levels. For the purpose, the responsibility need to be shared by all playing their respective roles:
1. FCI management pointing out to GOI the kind of support needed to make the running of the organisation professional. This is the right time to approach Centre for the purpose.
2. State governments, by monitoring the procurement facilities including a ‘viable’ price for the FCI which will be storing and distributing the stock.
3. Local Self Governments up to at Panchayat level, by ensuring timely procurement and marketing of local farm produce.
4. Centre should have clarity in its policy on support price, subsidy etc and who should be footing the bill in case of losses. The burden cannot be passed on to FCI.

Moneylife Foundation, Samir Zaveri Railway Helpline and CSRT urge PM Modi to rollback hike in season ticket fares

PM Narendra Modi should urgently consider a significant roll back in rail fare hike, especially the over 150% hike in monthly season ticket or pass, says the letter sent by Moneylife Foundation, Samir Zaveri Railway Helpline and Coalition for Safe Rail Travel

Moneylife Foundation, the Samir Zaveri Railway Helpline and the Coalition for Safe Rail Travel urged Prime Minister Narendra Modi to roll back the highly unreasonable hike in suburban train fares and season tickets (monthly pass).

Sucheta Dalal, Founder-Trustee of Moneylife Foundation, in a letter sent to the PM, said, "While we support the need for taking tough decisions and understand that a lot of corrective measures are required to bring the economy back on track, I am sure you will agree that a 100%-153% hike is unfair and hard to deal with when inflation is also very high. The fare hike will cause enormous hardship to over 75 lakh Mumbaikars, for whom the suburban railway network is a lifeline."

"Sir, I would like to add that the cost of a railway monthly pass is not the only daily commuting expense for most Mumbaikars. A large section of people have to spend on buses or auto-rickshaws to reach their homes or offices even after getting off from trains. Auto fares are also due to be hiked even though there is no effort in the past decades to provide decent connectivity from train stations."   

"It is hard to believe that this extraordinary hike has been done with full thought and understanding of the Mumbai situation. We urge you to consider a significant roll back urgently," Ms Dalal said in the letter sent on behalf of over 30,100 members of Moneylife Foundation and thousands of railway activists and daily commuters from Mumbai.

Her letter added that, "We have a lot of expectations from your government and urge you to re-consider such a drastic step. There are other revenue options available. Ever since the 1990s, there have been many suggestions to raise funds through the exploitation of valuable space at the railway stations. This would be an opportunity to modernise stations and also provide commuter facilities such as restaurants, shopping and even decent paid toilets. None of this has happened -- instead illegal hawkers crowd run-down over-bridges while corrupt railway officials and police collect bribes."

"We don't even have ambulances and proper medical facilities for the 25 odd people who meet with railway accidents everyday. Another avenue to raise funds would be to create paid parking towers near stations, at least in the distant suburbs, to provide better connectivity.  Surely, these ideas can be revived to raise funds to make life easier for the Mumbai commuter, rather than burden them further with higher fares. We would be happy to provide any cooperation that is sought from our groups," the letter noted.

Last week, Indian Railways decided to hike passenger fares by 14.2% and freight rates by 6.5% from 25th June. Second Class monthly season ticket (MST) fares of suburban and non-suburban would be charged on the basis of 30 single journeys instead of approximately 15 single journeys.  Fares of First Class monthly season tickets will be charged at four times the Second Class MST fares as is done presently. Revised fare are also applicable as per the existing method of computation on quarterly season tickets (QST), half yearly season tickets (HST) and yearly season tickets (YST), the Railway Ministry had said in the release.



TS Rao

3 years ago

I fully agree. If the daily commutation costs are subsidised then the overall cost of production would decrease and inversely if they are raised, naturally the production costs would escalate. So the authorities may like to reconsider the hike imposed.


3 years ago

Dear Madame, I have read many editorials asking to roll back fare hikes and raise money in other ways. But no one is saying about reduction of salaries(70% of total income) which are way high for any organisation like railways. Ideally it should not cross 50%. Also we have excess people working in railways.

And everyone asks about high speed rails, international amenities and safety. Still rail fares are lot cheaper if we consider bus fares.

Suiketu Shah

3 years ago

Root problem is the damage done in last 10 yrs due to EVM fraud that such harsh measures are required to be taken by respected PM Mr Modi.It is very harsh and painful but he is just about starting to erase the wrongdoings of the last 10 yrs which was due to EVM fraud.if it wasnot for EVM fraud BJP would have been ruling India for 15 plus yrs and India would have been a far far far better place in the last 10 yrs than what has happened.



In Reply to Suiketu Shah 3 years ago

Root problem is the damage done by the "Recount Minister"

Suiketu Shah

In Reply to Dev 3 years ago

hahahaha great joke on a hectic tuesday to start off mate:)))))))))))))))))))
Thanks ,agree 100%.


3 years ago

There is no doubt our suburban railways need considerable improvements and this means costs.I would feel rather than put a heavy burden on railway pass holders who are compelled to stay far away from their workplace the railway ministry could consider monetizing the assets all along the rail lines. Churchgate to Virar and CST to Kalyan offer tremendous value opportunities by building above & along the 40 or 50 railway stations. This could be restaurants, shops, malls, supermarkets etc. You should be able to generate several crores by way of monthly rents and also ensure cleaner stations with innovative plans and designs. There is almost 100km of distance between the 2 main rail lines of Mumbai.

Railway hikes passenger fare by 14.2%, freight by 6.5% from 25th June

Railways on Friday decided to hike passenger fares by 14.2% and freight rates by 6.5% from 25th June

Faced with an acute cash crunch, the Indian Railways on Friday decided to hike passenger fares by 14.2% and freight rates by 6.5% from 25th June. Currently, Railways is facing severe financial crunch with passenger subsidy touching Rs26,000 crore.


"The Railway passenger fare and freight rate revision was done as part of interim budget presented by the previous government. But the implementation of revised rates was withdrawn by previous regime because of the elections. Meeting the annual expenditure would not be possible unless the revised rates as finalized by previous government is implemented, hence order of withdrawing implementation of revised fare and freight has been withdrawn. Accordingly, the revised passenger fare and freight rates and freight structure rationalization will come into effect from 25 June 2014," the Ministry of Railways said in a release.


Second Class monthly season ticket (MST) fares of suburban and non-suburban shall be charged on the basis of 30 single journeys instead of approximately 15 single journeys.  Fares of First Class monthly season tickets will be charged at four times the Second Class MST fares as is done presently. Revised fare are also applicable as per the existing method of computation on quarterly season tickets (QST), half yearly season tickets (HST) and yearly season tickets (YST), the Ministry said in the release.


Earlier in March, Mallikarjun Kharge, while presenting the interim rail budget had factored in an across the board 10% hike in passenger fares besides an additional 4.5% raise as fuel adjustment component (FAC) and an increase of freight charges of 6.5%.


On 16th May, the Railways had announced a hike in both, passenger fares and freight rates, by 14.2% and 6.5% respectively from 20th May. However, the hike notification was put on hold later in the day leaving the decision to the next Railway Minister.


Railways was aiming to garner Rs8,000 crore through the increase in passenger and freight charges last month.


According to Nomura, the fare hikes will add slightly to inflation in the near term. "The rise in passenger fares will add around 10 basis points to CPI inflation, while there will be a limited indirect impact on the CPI from the freight hike. WPI inflation is likely to see a marginally larger impact (the railway accounts for around 35% of freight traffic in India) as the cost of transporting goods such as coal, cement, oil, steel and food grains will rise. However, the hikes will improve the profitability of the railways and hence they are a move in the right direction," it said in a note.


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