Narendra Modi Report on Food Price Control

Following the publication of my Sunday column, Coffee Break, headlined 'NaMo proposes, PM disposes', readers wanted further details of the report submitted by the Working Committee headed by Gujarat Chief Minister Narendra Modi which was set up at a Chief Ministers' Conference, chaired by Prime Minister Manmohan Singh, to come up with recommendations for the Union Government to hold the price line for essential commodities. The remit of the Modi Committee was to propose actionable short-term and medium-term measures to control food inflation. Hence, the committee's report is not about long-term reforms in the agricultural sector. The two are entirely separate issues.I have with me the executive summary of the Modi Report on how to fight food inflation, which is reproduced below:

Modi Report gives 20 recommendations with 64 actionable points and emphasizing;

• Ban on Future trading of Essential Commodities
• Set up Price Stabilization Fund by Government of India
• set up a Ministerial level Coordination mechanism at the National
and the Regional level for coordinated policy making
• Priority sector lending to Agri-marketing activities
• Speedy Reform of APMC Act across the Country and Liberalization of
Agri-markets
• Time bound development of Agri-marketing infrastructure including
storage capacities in food deficit regions, cold chain,
agro-processing etc.
• Unbundling of FCI operations of procurement, storage and distribution
• Increase competition by promoting retailing by organized sector and
cooperatives

Shri Narendra Modi, Chief Minister of Gujarat, Chairman of the Working
Group on Consumer Affairs, submitted the Report of Working Group to
the Hon’ble Prime Minister of India, Dr. Manmohan Singh in the
presence of Union Finance Minister Shri Pranab Mukherjee, Professor K.
V. Thomas, Minister of State (Independent charge) for Food, Public
Distribution and Consumer Affairs, Minister of State in PMO Shri V.
Narayanasamy, at Prime Minister's residence.

The Working Group on Consumer Affairs was constituted on 8th April,
2010, finalized its Report earlier in January 2011 by the Committee
led by Shri Narendra Modi, Chief Minister Gujarat with other member
Chief Ministers of States of Maharashtra, Andhra Pradesh and Tamil
Nadu.

Unlike the usual practice of voluminous reports often bordering along
academic approach, the Modi Committee Report is a precise document
which gives 20 recommendations with 64 detailed actionable points that
will facilitate expeditious implementation of the Report.

With regard to the Future Markets and considering lack of strong
linkages between spot and future markets at present, the Modi
Committee Report has suggested that for the time being, essential
commodities should be kept out of the Future Market.

The Modi Committee Report has suggested setting up of a Price
Stabilization Fund by Govt. of India to help State Government for
procurement and distribution of essential commodities in short supply.

Some of the major recommendations made in the Modi Committee Report
include liberalization of Agriculture Markets for improving the
efficiency of distribution channel from farms to consumer, increasing
participation of organized sector/ cooperatives in retailing
including farmers’ markets, agro- processing, storage and cold
chains for wastage control and reduction, proactive monetary
policy etc.

For evolving single National agriculture market, the Modi Committee
Report has recommended to set up a Ministerial level Coordination
mechanism at the National and the Regional level for coordinated
policy making.

In addition, the Modi Committee Report has recommended enlarging the
scope of priority sector lending such that the Agriculture Marketing
activities are also be made eligible and the ratio of priority sector
lending to the agriculture sector should also be raised further from
the current level of 18%.

To minimize information asymmetry in the Agriculture Market, the Modi
Committee Report also calls for establishing a mechanism, if necessary
by creating a dedicated agency, to collect and widely disseminate
information to all stakeholders on production, import, stocks and
overall availability of essential commodities besides extensive use of
the Information Technology.

Since, the FCI plays a major role in procurement and distribution
system of essential commodities, a suggestion has been made to explore
unbundling of FCI operation in terms of procurement, storage and
distribution functions.

Further, the Modi Committee Report has also emphasized preparation of
a 10-year Perspective Plan for improving Agri-infrastructure of
backward and forward linkages for Agriculture Production and
Marketing.

The Modi Committee Report has also recommended that offences under
Section 10-A under the Essential Commodities Act should be made
non-bailable and Special Courts should be set up for speedy trial of
offences under the E.C. Act.

In addition, the Modi Committee Report also recommends that the period
of preventive detention under the PBM Act (Black Marketing Act in
common parlance) should be increased from six months to one year.

The report was submitted on March 4, 2011. Since then it has been gathering dust in the PMO.