Precursor to NTR’s rice scheme

After leaving Krishna district as Collector, I became the Senior Regional Manager of the Food Corporation of India (FCI) for the Andhra Pradesh (AP) region. This was a Government of India job involving procurement, storage, movement and distribution of food grains, - almost all of it rice, entailing close liaison with the Government of Andhra Pradesh at several levels but most importantly with the State’s Civil Supplies Commissioner and the District Collectors. It also involved liaison with the Railways and the Central Warehousing Corporation.

The FCI’s headquarters was Delhi. There was a FCI zonal office for the entire south of India with Chennai as headquarters of which the Andhra Pradesh region was a part. That position obtains today as well. Since the FCI’s job is purchase of levy rice from the rice millers for the central pool, the laws regarding which are implemented by the State Government through the Collectors under the leadership of the Commissioner of Civil Supplies, closest cooperation existed between the FCI and the State Government. The rice millers are key to the success of procurement as they are the manufacturers of rice and should deliver part of their production as levy to the FCI at the FCI’s warehouses. The central pool rice is procured with the funds of the Government of India and belongs to it and part of it is made available to the state of AP for its use in the state’s Public Distribution System (PDS). The balance is moved to the rest of India mostly by rail. This sale of the rice to the states is priced at a cost lower than the price of the procured rice plus the cost involved in its acquisition, and is called the Consumer Issue Price (CIP). This difference in price is what constitutes the subsidy to the states from the Centre. The overall expenditure required for all these operations is paid to the FCI as food subsidy by the Government of India.

There have been strong opinions expressed against the working of the FCI. Some have even called for its abolition. Speaking for myself, I believe in the FCI and its relevance to the welfare of the farmers and maintenance of the PDS in India despite all its shortcomings. While increased production and productivity are the function of the farmer, we need an agency to buy what has been produced at the minimum support prices (MSP) guaranteed by the Centre when the market fails to ensure it. Such grain needs to be stored and moved for distribution needed anywhere in India. Would private agencies and the market do it? If there are shortcomings and corruption they need to be dealt with by good governance based on sternest measures. Abolition cannot be the answer.

The years 1975-77 were significant for two entirely unconnected reasons. June 1975 saw the imposition of the infamous Emergency. 1976 was the year India became free from being a chronic importer of food. For those of us in the field dealing with food and issues related to it these were dramatic years. Because of the fear generated by the Emergency food grains flowed into the government hands as never before. Procurement records fell by the wayside with no particular effort on the part of the Government. Simultaneously, food grains contracted for imports from abroad of a magnitude of several million tonnes were also pouring in. The FCI had to move the imported grain to storage points from the ports into the interior but warehousing accommodation ever in shortage was under tremendous pressure. This led to food grains bought with scarce foreign exchange being stored in the open.

I was receiving hundreds of thousands of indigenously procured rice and paddy and imported wheat with the result I had about 700, 000 tonnes of these grains stored in the open. Now, the Andhra area sits on the Bay of Bengal prone to repeated cyclones and therefore the large quantities of procured rice and paddy needed to be brought into the interior, in addition to the wheat from abroad. The FCI did what is called CAP (cover and plinth) storage, which meant keeping the bags of grain on raised platforms and crates in the open and covered with polyethylene sheets. I took on lease 5 unused airports, some of the Second World War days, at Tadepalligudem, Gannavaram, Badangi, Warangal and Rajahmundry to do this type of storage.Tadepalligudem was the first such airstrip to be taken over for open storage in all of India and the operations were inaugurated by Chief Minister Vengal Rao, who declared that but for such unprecedented action farmers would have been orphaned. The FCI announced an emergency bank-financed scheme of construction of warehouses by private entrepreneurs refinanced by the Agriculture Refinance and Development Corporation(ARDC), later to be renamed the NABARD. FCI’s AP region was the first off the blocks long before others even planned action and we got built nearly half a million tonnes of warehouses in our state.

The Collectors got involved in this effort which also included acquisition of lands for construction by the FCI warehouses of huge capacities. An outstanding example of that was the 50, 000 tonne warehouse for which land was acquired in record time through private negotiations in Khammam thanks to the efforts of Collector PVRK Prasad IAS, DRO S.B. Bannerjee IAS and Sub Collector Sheila Bhide IAS. Another huge warehouse came up in Moula Ali in Hyderabad. Large scale recruitment took place of staff in the AP region, a highlight of which was the clearing of backlog in recruitment of several hundred reserved SC/ ST vacancies. It was a war as we fought rain and cyclone to signal the arrival of India’s freedom from imported food. No praise for this would be too high for the staff of the Food Corporation of India. However, a sub plot to this story is that four years later I would receive a memo seeking my explanation for having caused a loss of Rs 67 lakhs to the FCI in the construction of the ARDC warehouses, a figure arrived at by the FCI based on the few paise of rent per square foot the storage construction committee presided over by me paid to the private entrepreneurs beyond the ceiling stipulated by the FCI, and multiplied by the number of square feet I built! After all, one tonne of space equals 6 square feet! In other words the more area I built to safe guard precious food grains imported with scarce foreign exchange and produced by the sweat of our toiling farmers for which I had been commended by the top FCI management earlier, the more guilty I became after the emergency ceased. Sometimes such are the wages of work! Years later, as that file lived on in the FCI headquarters, its Financial Adviser Srinivasan told me that it was harassment by the FCI. Our system, generally if not always, ensures that no civil servant savours even for a little time his or her contribution to the country. If there are any surprising exceptions to this, they only prove this rule.

To return to where I began, this work with the FCI and my earlier work in regard to food grains procurement as Sub Collector and Collector traversing more than a decade would form the backbone to my becoming a participant in NT Rama Rao’s two rupees a KG rice scheme. The twist, however, is that it would happen only after another Congress Chief Minister Vijaya Bhaskara Reddy, had played his part.

Andhra Pradesh saw in 1982 three Congress chief ministers – T. Anjaiah, Bhavanam VenkataRam Reddy and K. Vijaya Bhaskara Reddy. Vijaya Bhaskara Reddy had been Minister of Cooperation in Brahmananda Reddy’s cabinet and he decided in 1967 to depute IAS officers to rehabilitate the cooperative sugar factories set up during the Second Plan period, whose capital value had been nearly wiped off by a combination of political electives and officers of the cooperative department. I was sent to the Amadalavalasa Sugar factory in Srikakulam. Its sickness had plumbed the depths, the factory just crushing 35, 000 tonnes of cane in 1967-68 against the requirement of 1, 50, 000 tonnes in a season to break even. Thanks to an upward revision of statutory cane price and perhaps on account of my management the 1968-69 season saw the factory crush 1, 63, 000 tonnes at 9.30 % sugar recovery. This had endeared me to Vijaya Bhaskara Reddy. Now in 1982 he was the Chief Minister with the Congress party under enormous pressure created by the challenge posed by a charismatic NT Rama Rao not only invoking Telugu pride but promising two concrete things: rice at two rupees per kg and eradication of corruption. Just the things the people of Andhra Pradesh wanted.