No bailout for Madhya Pradesh, Centre refuses to buy surplus wheat

New Delhi: In a major jolt to the Congress government in Madhya Pradesh, the Centre has refused to buy 7 lakh metric tonnes of surplus wheat leaving the state staring at a Rs 1,400-crore bill.

The Centre and Kamal Nath’s newly-formed government have been on collision course over wheat procurement since April. Delivering on its poll promise of giving Rs 160 per quintal to wheat farmers over and above the minimum support price (MSP) of Rs 1,840 per quintal, the Nath government has procured a whopping 73.6 lakh metric tonnes of wheat.

However, the Food Corporation of India (FCI) has red-flagged the move and said this “incentive” is a “bonus” and flouts a 2016 agreement between the FCI and the state. According to the guidelines, if a state gives bonus to farmers, the FCI cannot buy wheat procured by the state in the central pool beyond 27 lakh metric tonnes.

Even after repeated requests from the state government, the Centre has allowed FCI to buy only 67.25 lakh metric tonnes from the Madhya Pradesh government. A senior MP government official said, “This leaves us with 7 lakh metric tonnes of wheat and the state has to bear the Rs 2,000 per quintal cost it has paid to the farmers. This leaves us with a huge surplus and nowhere to turn to.”


The FCI, however, has pointed out that government’s buffer stocks are up and it would need to go easy on procurement. Speaking with ET, FCI general manager (MP region) Abhishek Yadav said, “Under the agreement with the state government, bonus is not allowed. The decision has been taken as buffer stocks in north India are quite up –– they are beyond the limit (prescribed).” The Nath government has cited a similar scheme by the previous BJP government.

“A similar scheme was introduced by the Shivraj Singh Chouhan government and the FCI had bought all the wheat procured by the state,” the official said. Yadav confirmed that the FCI had bought the entire state government procurement of close to 73 lakh metric tonnes last year.

Every year, farmers registered with the government sell their wheat at MSP. The state agencies procure wheat at the procurement centres through a token system.

The state keeps what is required in the state pool for its public distribution system (PDS) and other schemes and the remaining is taken by the Centre’s FCI as per the guidelines. Yadav said the state government could dispose of the 7 lakh metric tonnes of wheat through a scheme or sell it in the open market or sell it to another state government.

“There are options before the state government. They could use it in the state by opening a scheme where people buy it at a subsidised rate,” said Yadav.

Nath is likely to escalate the matter and take it up with agriculture minister Narendra Singh Tomar, who is also from Madhya Pradesh and represents Morena constituency in Parliament.