New Delhi: In what is being considered the most exhaustive report on the functioning of Food Corporation of India (FCI), a study has proposed the division of the public sector food behemoth, even as the issue is being looked at by a high level committee (HLC) on food grains.

The report of the administrative staff college of India (ASCI) Hyderabad, has proposed division of FCI into state food corporations and "unbundling" the storage operations to Central Warehousing Corporation, which is estimated to result in an overall saving of Rs 4,530 crore.

The study is with the Food Ministry for nearly a year, but it is yet to decide whether to make it public and to work on its recommendations, official sources said.

They said, the ministry is counting more on the HLC, which will have to give its comments on the ASCI report.

According to the report, FCI must be unbundled in terms of functions, with internal checks by keeping multi-tier system in operations.

That would mean the Centre would have to give operational autonomy to FCI, through a memorandum of understanding (MoU). The control of performance must be given up as most of the parameters are currently beyond the control of FCI.

Centre would need to gradually withdraw from the direct day-to-day operations of the food system in favour of the states, but sources said the latter are reluctant to take the responsibility.

The study assumes significance with government saddled with 65 million tonne grains valued at over Rs 50,000 crore with a carrying cost of Rs 20,000 crore.

Significantly, the study does not favour doing away with the Corporation and says, "FCI can perform the task, given the tools. It is at present under too much strain from the policy makers to achieve divergent and impossible activities."

Alternative before the Centre is to divide the behemoth with the current staff strength of 50,000 people on regional or functional lines to streamline its activities.

Regional division of FCI will increase the responsibility of the state governments and remove additional cost of levies imposed by states. Savings in terms of state taxes and cesses will be Rs 1,285 crore, the study says.

State taxes and market cess represents transfer payment to be routed through the budget and not to be considered in economic cost calculations, it says.

At present, states are using FCI as a dumping ground for excess production and poor quality grains, the study says.

Open market operations should also be carried out by an autonomous organisation of the government and not by the government itself. This would not only induce commercial spirit but also reduce the subsidy.

Strongly advocating the continuance of FCI, the report says food security of the nation cannot be left to the private sector companies of the developed world.

But then FCI must develop as an organisation equal to the task of competing with the multinational companies.

Meticulously listing the savings, the study says state food corporations would lead to regional self-sufficiency and lower buffer stock holdings. Excess stocks will be sold off and savings will be Rs 1,220 crore.

PTI