IAS Gyan

Daily News Analysis


16th January, 2024 Economy


Copyright infringement not intended

Picture Courtesy: blogs.agrivision4u.com

Context: The Union Food Minister addressed the 60th foundation day of the Food Corporation of India (FCI), emphasizing that the FCI's role goes beyond delivering ration.

Key Highlights of the Speech

  • The Union Food Minister highlighted that the role of the FCI extends beyond delivering ration; it also involves instilling confidence in farmers and beneficiaries through transparency and accountability.
  • He emphasized the importance of FCI becoming a trusted partner for farmers and citizens of the country. The organization plays a crucial role in implementing flagship schemes like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), providing ration to beneficiaries nationwide.
  • He stressed the need for FCI to embrace digitalization and technology, particularly in ensuring the quality of operations. Areas such as inspection, procurement, transportation, distribution, and storage should benefit from technological advancements.
  • To improve operational efficiency, the Minister suggested measures such as route optimization, mechanized loading/unloading, innovative storage solutions, and other cost-cutting measures.
  • The Minister highlighted the effectiveness of the open market sale scheme (domestic) operations in moderating the prices of wheat and rice. Interventions regarding essential commodities like atta (flour), dal (pulses), onion, and tomato have contributed to price stabilization.

Food Corporation of India (FCI)

  • The Food Corporation of India (FCI) is a statutory body under the Ministry of Consumer Affairs, Food and Public Distribution.
  • It was established in 1965 following the enactment of the Food Corporation Act, 1964 with the objective of fulfilling various aspects of the National Food Policy at the time.
  • The FCI is one of the largest corporations started by the government of India and one of the largest supply chain management in India.
  • It is responsible for ensuring the food security of India by procuring, storing, and distributing food grains through a Public Distribution System (PDS).
  • The FCI is headed by a Chairman and Managing Director (CMD), who is usually an IAS officer on deputation from the central government. The CMD is assisted by five Executive Directors (EDs), who are in charge of procurement, storage, movement, quality control, and finance.

Function of FCI

  • The FCI mainly procures wheat and rice from farmers at Minimum Support Prices (MSPs), which are fixed by the government every year based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). The MSPs are intended to provide a fair return to farmers and incentivize them to produce more food grains.
  • The FCI stores the procured food grains in its own godowns or hired warehouses or silos. It maintains operational stocks for meeting the monthly requirement of PDS and other welfare schemes, and buffer stocks for meeting any unforeseen situation such as natural calamities or emergencies.
  • The FCI distributes the food grains to the state governments or their agencies at Central Issue Prices (CIPs), which are subsidized rates fixed by the government. The state governments or their agencies further distribute the food grains to the beneficiaries under the PDS or other welfare schemes such as the Mid-Day Meal Scheme, Integrated Child Development Services Scheme, etc. The FCI also exports surplus food grains to other countries as per the government's directions.

Significances of FCI

  • It has ensured adequate availability of food grains in the country by procuring surplus production from farmers and maintaining buffer stocks.
  • It has ensured the accessibility of food grains to the poor and vulnerable sections of society by distributing subsidized food grains through PDS and other welfare schemes.
  • It has ensured the affordability of food grains to consumers by regulating market prices and preventing hoarding and black marketing.
  • It has ensured the quality and safety of food grains by adhering to quality standards and norms during procurement, storage, and distribution.
  • It has contributed to agricultural development by providing remunerative prices to farmers and encouraging them to adopt improved technologies and practices.
  • It has supported the national economy by saving foreign exchange on food imports and generating employment opportunities.

Steps Taken to Improve Food Security

Implementing an online procurement system to ensure transparency and accountability in procurement operations.

Introducing a direct payment system to ensure timely and hassle-free payment to farmers through electronic mode.

Adopting modern storage techniques such as silos, metal bins, and pallets to reduce storage losses and improve storage quality.

Strengthening quality control mechanisms by deploying more quality personnel and equipment and conducting regular inspections and audits.

Streamlining movement and transportation of food grains by using railways, roadways, waterways, and ropeways as per the availability and suitability.

Digitizing distribution systems by implementing end-to-end computerization of PDS and linking it with Aadhaar and biometric authentication.

Rationalizing allocation of food grains to states based on their actual requirement and utilization.

Reforming PDS by introducing targeted PDS, priority PDS, Antyodaya Anna Yojana, etc. to focus on the poorest of the poor.

Enacting National Food Security Act, 2013 to provide legal entitlement to subsidized food grains to about 67% of the population.

Challenges Faced by FCI

  • Excessive procurement of food grains leads to the accumulation of stocks beyond the buffer norms and creates storage and management problems.
  • Inadequate storage capacity and infrastructure lead to wastage and deterioration of food grains during storage and transit.
  • The high cost of procurement, storage, and distribution leads to huge financial burden on the government and FCI.
  • Inefficient and leaky distribution system leading to diversion and pilferage of food grains meant for PDS and other welfare schemes.
  • Poor quality and adulteration of food grains affect the health and nutrition of the beneficiaries.
  • Lack of diversification of food basket leading to over-dependence on wheat and rice and neglecting other nutritious food items such as coarse grains, millets, pulses, etc.
  • Lack of coordination and cooperation among various stakeholders such as central government, state governments, FCI, CACP, farmers, traders, consumers, etc. affects the smooth functioning of FCI.

Way Forward

  • Restricting procurement of food grains to the buffer norms and encouraging states to procure their requirements through a decentralized procurement system.
  • Enhancing storage capacity and infrastructure by building more godowns, silos, cold storages, etc. and utilizing private sector participation and public-private partnership models.
  • Reducing the cost of procurement, storage, and distribution by adopting cost-effective methods such as direct procurement from farmers, direct delivery to states, direct benefit transfer to beneficiaries, etc.
  • Improving the distribution system by implementing a one nation one ration card scheme, doorstep delivery of food grains, portability of ration cards, etc.
  • Improving quality and safety of food grains by enforcing strict quality standards and norms and imposing penalties for violations.
  • Diversifying food baskets by procuring and distributing more varieties of food items such as coarse grains, millets, pulses, oilseeds, etc. under PDS and other welfare schemes.
  • Improving coordination and cooperation among various stakeholders by establishing a common platform for information sharing, consultation, decision-making, monitoring, evaluation, etc.


  • The Food Corporation of India stands as a critical pillar of India's food security architecture. Despite facing challenges, its efforts have significantly improved the lives of millions. Continuous optimization and reform efforts are crucial for FCI to maintain its relevance and effectively contribute to ensuring food security for future generations.


Q. What is the primary role of the Food Corporation of India (FCI) in the country's food security and agricultural support system, and how does it contribute to the procurement, storage, and distribution of food grains?