What is Buffer Stock and its Impact on the Rationing System of India?
Buffer stock is an arrangement or scheme in which it is stored during good harvest times so that crop values do not fall below the predetermined minimum limit, and then made accessible when the crop is not excellent and prices are anticipated to rise. strategic stock or safety stock or buffer inventory is another name for the buffer stock. It is utilized for Targeted Public Distribution System distribution as well as dealing with drought, crop failure, and other related emergencies.
The Food Corporation of India was founded in 1965 with the goal of ensuring equitable distribution of food grains and price stability across the country. The corporation procures food grains for the government in order to meet its goals and maintains a food grain buffer stock. The Public Distribution System makes this food grain available for purchase at reasonable prices in fair pricing shops. On January 16, 2015, the Cabinet Committee on Economic Affairs (CCEA) authorized changes to the Buffer Standard Rules for food grains in the Central Pool.
Some of the main reasons to create a buffer stock:
- Foodgrains such as wheat and rice, which the government obtains from surplus states through FCI. After that, the food grains are stored in granaries.
- It helps the government to distribute in deficient areas and to the poorest members of society at a significantly lower price than the market price by its Public Distribution System.
- Food shortages caused by natural disasters such as droughts, floods, and earthquakes can be alleviated with buffer stock.
Impact on the rationing system in India:
Rationing was first used in India in the 1940s, in the aftermath of the Bengal famine. Prior to the Green Revolution, during the 1960s, when there was a severe food crisis, the rationing system was resurrected. There are two types of rationing systems: RPDS and TPDS.
1. Revamped Public Distribution System:
In June 1992, the Revamped Public Distribution System (RPDS) was developed to reinforce and streamline the PDS while also increasing its coverage into remote, hilly, isolated, and inaccessible areas where a major part of the impoverished life. The Desert Development Program (DDP) was being implemented, as well as some Designated Hill Areas (DHA) identified as needing special attention in consultation with state governments. The States were given food grains for distribution in RPDS regions at a discount of 50 paise off the Central Issue Price. The issue weight per card was up to 20 kg.
2. Targeted Public Distribution System:
The Targeted Public Distribution System (TPDS) in India is a statewide initiative whose demand-side operation entails allowing qualified households to purchase specific food and cooking materials at reduced costs at designated outlets. Even though the benefit (i.e. the amount of subsidized food that households can purchase at approved stores) varies depending on the number of household members, the choice is made at the household level. The TPDS covers about 82 percent of India’s household program recipients, while the NHPS covers the remaining 18 percent. People are classified as below the poverty line (BPL) in the Targeted Public Distribution System (TPDS) by analyzing their income or consumption using a Means Test (MT) or estimating it using a Proxy Means Test (PMT). Rather, the program uses a combination of categorical targeting and multidimensional poverty measurements (MPMs) to reflect a level of welfare that isn’t always a proxy for income or consumption. Currently, the TPDS uses data from the Socioeconomic and Caste Census to classify persons as BPL.
- Stabilizing Pricing: Farmers’ incomes are aided by stable prices. Farmers may go out of business as a result of a sharp reduction in prices, resulting in structural unemployment.
- Increasing Investment: Price stability supports more agricultural investment. The addition of supply to assist lower open market prices through price stabilization or market intervention. When there is little to no change in the economy over time, it is called price stability. This indicates that prices are not undergoing inflation or deflation.
- Reduced Inflation: Target pricing helps consumers avoid paying excessive prices and minimize food inflation. This could be critical for low-income families who may struggle to afford high prices during years of scarcity.
- Consistent Supply: It aids in the preservation of the food supply. Food preservation is the process of processing and managing food in such a way that it is protected from rotting and foodborne illness while retaining its nutritional content, texture, and flavor. It also aids in the avoidance of its flaw.
- Food security: Food security entails adhering to the minimal buffer stock requirements. . Food security, according to the United Nations Committee on World Food Security, is described as having constant physical, social, and economic access to sufficient, safe, and nutritious food. For an active and healthy existence, they require nutritious food that satisfies their food choices and dietary demands at all times.
- Welfare Programmers: Foodgrains are released monthly for distribution under the Targeted Public Distribution System (TPDS) and other welfare schemes (OWS). The government of India places a high priority on farmer welfare and is implementing several farmer welfare initiatives to reinvigorate the agriculture sector and improve farmers’ economic conditions.
- Emergency use: Handling emergency scenarios such as when the production of crops is low, due to constant demand, there is a chance to increase the price of the crops. To avoid such conditions, buffer stock helps to keep control of the price within some limits.
The food procured by the FCI is provided to the weaker sections of society through government-run ration shops. Ration shops can now be found in most towns, villages, and cities. There are around 5.5 lakh ration shops spread across the country. Foodgrains, sugar, and kerosene for cooking are kept in ration shops, also known as Fair Price Shops. Every month, any family with a ration card can purchase a set amount of these commodities from a nearby ration shop (e.g. 35 kg of wheat, 5 liters of kerosene, 5 kgs of sugar, etc.).
The buffer stocking of food grains ensures that there are enough food grains on hand to meet operational food grain requirements and exigencies at any moment. Monthly disbursements under the TPDS and other welfare systems are part of the operating requirement, while exigencies include things like a production shortfall, natural disasters, inflation, and so on. The Food Corporation of India is India’s primary organization for food grain purchase, storage, and distribution. While four months’ worth of food grains for TPDS and OWS are designated as operational stocks, any excess is designated as buffer stock, and both buffer and operational stockpiles are physically integrated into one and are indistinguishable. The GOI currently treats extra food stock over the minimum norms as excess stock, which it liquidates regularly through exports, open market sales, or further allocations to states. Every five years, the buffer stock figures are usually evaluated.