Punjab CM Meets Paswan To Seek Fresh Review of Rs 31000 Cr Foodgrain Procurement Debt.

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Union Minister Agrees to Capt Amarinder’s Request For Higher User Charges on Used Gunny Bags

Capt Amarinder Says State Getting Geared Up For Smooth Kharif Procurement

Punjab Chief Minister Captain Amarinder Singh on Tuesday called upon Union Minister of Consumer Affairs, Food and Public Distribution, Ram Vilas Paswan, to seek central support in settling the unsustainable debt burden of Rs 31,000 crore and requested a review committee to examine the matter afresh.

The Minister agreed to consider the suggestion, while also accepting a request from the Chief Minister to allow higher user charges in lieu of depreciation of once-used gunny bags for the forthcoming Kharif season in Punjab. The Union Minister assured Captain Amarinder that the necessary orders for this would be issued this week.

While Captain Amarinder described the meeting as fruitful, Paswan said Secretaries of both the sides will take the discussions forward. All the issues were being amicably resolved, the Union Minister told mediapersons after the meeting.

Since the Rs 31000 crore debt issue related to the Finance Ministry, his ministry could only examine the matter and make suitable recommendations to Finance, as suggested by Captain Amarinder, the Union Minister explained.  There was some confusion over the findings of the Jha committee, which was set up by the central government in April 2016 to examine the Punjab government’s claim of Rs 20,000 crore in foodgrain dues, said Paswan, adding that the Chief Minister had therefore suggested setting up of another committee to look into the entire issue again.

Captain Amarinder, who also sought from the Union Minister reimbursement to the state for losses incurred in procurement operations for the Central Pool, said his government wanted to be fully prepared for the Kharif season, which was expected to yield a good 18.2 million tonnes of rice.

The Chief Minister assured smooth and streamlined procurement of Kharif in September just as the wheat procurement had been handled smoothly, without any problems this time. Barring south Punjab, the state had good rainfall and was gearing up to ensure that the procurement is done in a timely manner, with the farmers not facing any problems, he told mediapersons.

Earlier, during the meeting, the Chief Minister pointed out that the Rs 31000 crore debt, which includes an interest component of Rs 18,500 crores, had arisen due to difference in actual cost and provisional/ final cost approved by Government of India as a result of non-rationalization of Principles of Procurement Incidentals (PPIs). He further said in a formal letter to the Union Minister that despite repeated assurances from the central government, no progress had been made so far in resolving the issue.

Captain Amarinder said the state had continued to carry out procurement operations despite these gaps, in view of the National Food Security and the unrest that could spread among the farmers if the procurement of wheat and paddy was not carried out.

According to an official spokesperson, Captain Amarinder further observed that failure to resolve the issue ahead of the procurement season had forced the state government to to convert the whopping gap of Rs. 29919.96 crore (as on 31.03.2017) into a clean term loan. As a result, the Government of Punjab has been burdened with an onerous unsustainable debt burden with an annual debt-servicing liability of Rs.3240 crore for the next twenty years.

The Chief Minister urged the Union Minister to ensure that the matter is looked into afresh and proportionate burden is shared by all in a just and fair manner in the interest of the food security of the nation and to ensure that no farmers’ unrest occurs in case the procurement operations are hindered as a result of this decision in the ensuing paddy season starting in September 2017.

On the issue of the gunny bags, the Chief Minister cited change in GoI policy, whereby on 50% of the bags used in packing of paddy, very low user charges  @ Rs.10/- per  quintal of paddy would be paid in lieu of depreciation @ 38% of the cost of Bags (Rs.48.14 per quintal for KMS 2015-16).  He proposed that the Punjab state agencies be paid usage charges at the rate of Rs.24/- per quintal for procuring adequate used gunny bags for storage of paddy purchased during Kharif-2017. Alternatively, Captain Amarinder suggested that the State Government be exempted from use of old gunny bags for procurement of paddy for Kharif-2017.

The Chief Minister pointed out that the State Procurement Agencies (SPAs) have 1.68 lac left-over used bags from the previous season, which they had retained as per DPD policy. If no depreciation is allowed on these used gunny bales, it will lead to gap of Rs. 318.53 Cr in the accounts of the SPAs. Further, he said that the SPAs are still short of 1.09 lac bales to complete the arrangement of gunnies for which Rs. 264 crores are required for purchase from JCI. These can be sourced from Millers as per new policy but due to low user charges (@Rs 10 per quintal) millers are not ready to supply these bags. As such, if SPAs procure new bags the addition gap would be Rs. 243.56 Crore in SPAs accounts.

The Union Minister agreed to allow higher user charges for the SPAs to save them from losses on this count, said the spokesperson.

Raising another issue of serious concern, the Chief Minister informed Paswan that due to non-rationalization of the Principles of Procurement Incidentals, the State Procuring Agencies are suffering the losses of about Rs.1100 crore every year. As per the advice of Ministry of Food and Civil Supplies, Government of India, this needs to be met out of the State Budgetary Provisions, which is totally unjustified in case of State of Punjab, where 100% of purchase is made for the Central Pool for the food security of the nation, he added.

Given the circumstances, the Union Ministry should favourably consider the pending issues of the State of Punjab and reimburse all the recoverables based on actual charges with retrospective effect as per the report of the Jha Committee.