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Procurement Policy

The Central Government extends price support to paddy and wheat through the FCI and State Agencies across the country. The procurement policy is open ended. Under this policy, whatever wheat and paddy are offered by farmers, within the stipulated period & conforming to the specifications prescribed by Government of India, are purchased at Minimum Support Price (MSP) by the State Government agencies including Food Corporation of India (FCI) for Central Pool. However, if producer/farmer gets better price in comparison to MSP, they are free to sell their produce in open market i.e. to private trader/ anyone. The objective of foodgrains procurement by Government agencies is to ensure that farmers get remunerative prices for their produce and do not have to resort to distress sale. It aims to service the NFSA and other welfare schemes of the Government so that subsidised foodgrains are supplied to the poor and needy, and to build up buffer stocks of foodgrains to ensure foodgrain security.

Further, the different types of coarsegrains are procured by State Governments itself in consultation with FCI to the extent that the concerned State Govt. may utilise the same for distribution under National Food Security Act (NFSA) as well as Other Welfare Schemes (OWS).

Centralized Procurement System

Under Centralized Procurement System, the procurement of foodgrains in Central Pool are undertaken either by FCI directly or State Government agencies procures the foodgrains and handover the stocks to FCI for storage and subsequent issue against GOI allocations in the same State or movement of surplus stocks to other States. The cost of the foodgrains procured by State agencies is reimbursed by FCI as soon as the stocks are delivered to FCI as per cost-sheets issued by GOI.

Decentralized Procurement System (DCP)

The scheme of Decentralized Procurement of foodgrains was introduced by the Government in 1997-98 with a view to enhancing the efficiency of procurement and PDS and encouraging local procurement to the maximum extent thereby extending the benefits of MSP to local farmers as well as to save on transit costs. This also enables procurement of foodgrains more suited to the local taste.

Under this scheme, the State Government itself undertakes direct purchase of paddy/rice and wheat and also stores and distributes these foodgrains under NFSA and other welfare schemes. The Central Government undertakes to meet the entire expenditure incurred by the State Governments on the procurement operations as per the approved costing. The Central Government also monitors the quality of foodgrains procured under the scheme and reviews the arrangements made to ensure that the procurement operations are carried smoothly.

At present following States are under DCP system :-

Sr. No. State/UT DCP adopted for
1. A&N Islands Rice
2. Bihar Rice/Wheat
3. Chhattisgarh Rice/Wheat
4. Gujarat Rice/Wheat
5. Karnataka Rice
6. Kerala Rice
7. Madhya Pradesh Rice/Wheat
8. Odisha Rice
9. Tamil Nadu Rice
10. Uttarakhand Rice/Wheat
11. West Bengal Rice/Wheat
12. Punjab Wheat
13. Rajasthan ( in 9 District)* Wheat
14. Andhra Pradesh Rice
15. Telangana Rice
16. Maharashtra Rice
17. Jharkhand (5 District) Rice

*Exempted for RMS 2017-18 and 2018-19 only.