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Disposal of wheat stock in Punjab: Centre likely to allow March 31 deadline




  • The federal government is likely to allow Punjab till March 31 for disposing wheat stocks after the latter refused to accept the deadline of March 16, sources close to the Finance Minister told Business Recorder. The sources said that the Punjab Chief Minister, in a letter addressed to the Prime Minister, had proposed that the federal government might maintain a strategic wheat reserve of around 2.5 million tons in the wake of a bumper wheat crop. 

    Accordingly, a summary for the ECC of the Cabinet was moved by erstwhile Ministry of Food and Agriculture, whereby it was desired that Secretaries Finance Division and Ministry of Food and Agriculture might undertake an in-depth analysis of the matter and submit recommendations to the ECC for an informed decision. In the light of the ECC decision, the Finance Minister agreed that wheat reserve stock of 2.5 million tons may be maintained by the Federal Government and modalities for maintenance thereof may be chalked out. Accordingly, a meeting under the chairmanship of Finance Minister was held on February 23, 2010, in which it was decided that the loan of Government of Punjab relating to cost of wheat stock reserve of 2.5 million metric tons may be transferred to Federal Government and settlement of incidentals for one year based on reconciled figures may be made. 

    In pursuance of the decision, the federal government released Rs 14.25 billion against the Punjab government’s claim pertaining to the wheat reserve stock. Subsequently, the ECC, in its decision on March 16, 2011 on a summary submitted by erstwhile Ministry of Food and Agriculture, while approving procurement targets for crop-2011 decided that: (ii) Punjab shall continue to export from the strategic reserves of 2.5 million tons; and (ii) strategic reserves 1.0 million tons shall be maintained, 500,000 tons by Passco and 500,000 tons by the government of Punjab. The federal government was to provide a sovereign guarantee to this effect. 

    As per understanding of the Finance Division, the sources said, the strategic wheat stock to be maintained by the government of Punjab on behalf of the federal government would be reduced to 500,000 tons. However, interpretation regarding maintenance of strategic wheat reserve has not been agreed to by Punjab Government. It has been suggested by Government of Punjab that notwithstanding vigorous export efforts only 600,000 tons of wheat could be exported in compliance with ECC decision of March 16, 2011 leaving a balance of 1.9 million tons on account of strategic wheat stock reserve maintained on behalf of Federal Government. 

    Difference of Opinion between the Finance Division and the Government of Punjab is on the following points: (i) cut-off date for strategic reserve is 16-03-2011 whereas Government of Punjab argues that it has to be up to the date when the stock declines to 0.5 million metric tons; (ii) incidental charges [gunny bag, financial cost storage cost handling charges, departmental charges, transportation etc] would be paid only for the first year and only mark up is to be paid on sliding basis commensurate with stock at different points in time. 

    Copyright Business Recorder, 2013

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