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Operational cost of FCI declines on recommendation of McKinsey

Written by: Staff

New Delhi, May 12 (UNI) The government today admitted in the Rajya Sabha that operational expenditure of the Food Corporation of India (FCI) has witnessed a downward trend after the it has put into practice the recommendations of the Mckinsey Company.

Replying to a question, Minister of State for Consumer Affairs, Food and Public Distribtion Dr Akhilesh Prasad Singh said that the operational cost of the FCI has come down to Rs 12,811 crore (Revised Estimates) during 2005-06 in comparison to Rs 15,300 crore (Provisional) during 2004-05.

The reduction in operational expenditure is due to a number of factors which include implementation of the recommendations of McKinsey&Co.

On the bonus on wheat procurement, the Minister said that an incentive bonus of Rs 50 per quintal for procurement of wheat over the MSP of Rs 650 per quintal has been announced by the Government on April 22, 2006. The incentive will be applicable for wheat procured by the FCI and agencies of the State Governments from March 20 to June 30, 2006.

Dr Singh clarified that on reviewing the trend in procurement of wheat by FCI/State Agencies for the Central Pool during the RMS 2006-07, there was apprehension of significant shortfall in the procurement of wheat against the estimated procurement of 162 lakh tonnes due to aggressive procurement of wheat by the private sector.

Therefore, to enhance procurement of wheat, an incentive bonus on procurement of wheat by FCI/State Agencies was announced.

Regarding transportation of wheat, the Minister informed that wheat is procured at Rs 650 per quintal plus Rs 50 as bonus with effect from April 20. The transportation cost of wheat, on account of Railway freight, from wheat producing States of Punjab and Haryana to Southern States is Rs 144 per quintal on an average.

He said action has been taken to reduce the cost of transportation by employing linear programming module to determine the least cost linkage from loading stations to unloading stations.

On production and import of wheat, Dr Singh said that as per the Third Advance Estimates for the year 2005-06 (as on May 5, 2006) the production of wheat is estimated to be 71.54 million tonnes vis-a-vis 75.53 million tonnes targeted for the year 2005-06.

He also said that no wheat was imported on Government account during 2004-05 and 2005-06. The Government authorised the State Trading Corporation (STC) to import 5 lakh tonnes in February, 2006 for the Southern States, for which arrivals commenced in April 2006 for the Southern States only. In addition to this, in April 2006, the Government has approved the import of 30 lakh tonnes of wheat by the STC to augment the buffer stocks.

The Minister also informed that contract for import of 5 lakh tonnes of wheat has been awarded to the lowest bidder Australian Wheat Board at a price of 178.75 US dollar per metric tonne C&F (Cost and Freight). The landed cost at the ports works out to Rs 7981 per metric tonne in Indian currency.

The details regarding supplies, quantity and rate for import of 30 lakh tonnes of wheat would be known on finalisation of the tender floated by STC for this purpose.


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