Shanta Kumar Committee on FCI restructuring submitted its report to the Prime Minister

Shanta Kumar Committee on 21 January 2015 submitted its report on restructuring of Food Corporation of India (FCI) to the Prime Minister Narendra Modi.

The Prime Minister asked the Department of Food and Public Distribution to give its comments on the report so that the recommendations can be implemented in a time-bound manner.

Recommendations of the Shanta Kumar Committee
•  FCI procurement should focus on eastern belt, where farmers do not get minimum support price.
• FCI should hand over procurement of wheat and rice to six States which include Punjab, Haryana, Andhra Pradesh, Chhattisgarh and Odisha.
• Grain storage needs to be outsourced to private and government agencies like state-owned Central Warehousing Corporation (CWC), State Warehousing Corporations (SWCs) and private organisations.
• Proposed uniform tax of minimum 3 percent and maximum 4 percent on wheat and rice and the same to be included in the minimum support price (MSP). In Punjab, this tax rate on wheat and rice as of now is 14.5 percent.
• To strengthen distribution of foodgrains, there needs to be end-to-end computerisation and a vigilance committee needs to be set up. At present, the leakage in Public Distribution System is estimated at 13.7 percent.
• Recommended cash transfer in 52 cities having 1 million or more population in two years and also asked the government to give deficit states the option of either supplying grain or cash transfer.
• Called for encouraging private investment in logistics in next two-three years and suggested bulk handling of foodgrains through grain trains.

Background
The eight-member High Level Committee on FCI restructuring chaired by Shanta Kumar was set up in August 2014.

The members of the committee are FCI Chairman-cum-Managing Director C Viswanath, Electronic and IT Secretary Ram Sewak Sharma, Former Chairman of Commission for Agricultural Costs and Prices (CACP) Ashok Gulati, Chief Secretaries of Punjab and Chhattisgarh; and Academicians G Raghuram and Gunmadi Nancharaiah of IIM-Ahmedabad and Hyderabad University respectively.

The Terms of Reference of the Committee were:
• To examine the present day administrative, functional and financial structure of FCI
• To examine the modus operandi of its various operations
• To suggest a model for restructuring FCI to improve its operational efficiency and financial management
• To suggest measures for overall improvement in management of foodgrains by FCI.