Roadmap for Answer Writing

1. Introduction: Define Key Terms

• Operational Stocks: Stocks maintained by the government to fulfill food security needs, especially for public welfare programs like the Public Distribution System (PDS).
• Strategic Reserves: Surplus stocks held to stabilize food prices and ensure supply during emergencies (e.g., droughts, market shocks).

2. Role of Buffer Stocking Policy

• Purpose: The buffer stocking policy in India aims to ensure food security, stabilize prices, and prevent shortages. It involves maintaining stocks of foodgrains that are well beyond immediate distribution needs.
• Key Objectives: Ensure availability, price stabilization, manage crisis situations, and support farmers through MSP (Minimum Support Price) procurement.

3. Buffer Stocking Policy: Positive Aspects

• Food Security: The policy has contributed significantly to ensuring food availability in the country.
• Price Stabilization: Helps mitigate food price volatility, especially in times of crop failure.
• Support for Farmers: Ensures MSP for farmers, thus encouraging agricultural production.

4. Criticism of the Buffer Stocking Policy

a) Open-ended Procurement

• Issue: The government procures unlimited quantities at MSP, leading to surplus stocks that exceed the buffer norms.
• Fact: As of August 2023, the stock of rice (243 LMT) and wheat (281 LMT) was much higher than the official limit.

b) Financial Burden

• Issue: The gap between procurement price and issue price results in high subsidies.
• Fact: The food subsidy bill reached ₹2.88 lakh crore in FY 2021-22, creating a fiscal strain.

c) Ineffective Procurement

• Issue: Fixed procurement prices announced before sowing don’t adjust to market demand fluctuations.
• Fact: The government faces pressure to purchase large quantities even during bumper crops, leading to inefficiencies.

d) Storage Problems

• Issue: Inadequate storage capacity and poor conditions lead to significant food grain wastage.
• Fact: More than 1,500 MT of grains are wasted annually due to improper storage.

e) Limited Private Sector Participation

• Issue: Government control and high MSP hinder private market participation.
• Fact: Laws like the Essential Commodities Act restrict private sector involvement.

f) Lack of Crop Diversification

• Issue: Focus on wheat and rice neglects other essential crops.
• Fact: India imports about 56% of its edible oil needs.

5. Conclusion

• Reevaluation Needed: The buffer stocking policy needs to be optimized to reduce fiscal strain and improve efficiency.
• Recommendations:
  • Focus on improving procurement efficiency.
  • Increase private sector participation.
  • Expand storage capacity and improve storage conditions.
  • Promote crop diversification to reduce over-reliance on wheat and rice.

Relevant Facts for the Answer

• Operational Stocks: Maintained to fulfill food security requirements under welfare schemes like PDS.
• Strategic Reserves: Surplus stocks for price stabilization and crisis management.
• Excessive Procurement: In August 2023, FCI held rice (243 LMT) and wheat (281 LMT) beyond the official limits.
• Financial Burden: The food subsidy bill reached ₹2.88 lakh crore in FY 2021-22.
• Ineffective Procurement: Fixed MSP prices create inefficiencies, especially in bumper crop years.
• Storage Wastage: Over 1,500 MT of food grains wasted annually due to poor storage conditions.
• Private Sector Participation: Government control and restrictions hinder private sector participation.
• Lack of Crop Diversification: India imports 56% of its edible oil needs.