Dear Mr Modi: who will sort out the mess at Food Corporation of India? - Vivek Kaul's Diary
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Dear Mr Modi: who will sort out the mess at Food Corporation of India?

Jan 15, 2016

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Data released by the Petroleum Planning and Analysis Cell (PPAC) suggests that on January 13, 2016, the price of Indian basket of crude oil touched $27.32 per barrel. I expect the government to increase the excise duty on petrol and diesel soon, to capture the benefit of this 'further' fall in the price of oil.

If and when this happens this will be the eight such rise since November 2014. While the government has been quick to increase excise duty on petrol and diesel in order to shore up its finances, the same enthusiasm has been missing when it comes to controlling wasteful expenditure.

Let's take the case of the Food Corporation of India(FCI). Last week the Supreme Court was hearing a case concerning the loaders at FCI and the exorbitant salaries they draw. As the judges reacted: "The report shows that in August 2014, 370 labourers received more than Rs 4 lakh in salary. Around 400 others got between Rs 2 lakh and 2.5 lakh in the same month...How is that possible?"

The judges were essentially referring to the Report of the High Level Committee on Reinventing the Role and Restructuring of Food Corporation of India (better known as the Shanta Kumar committee report). This report was released in January 2015.


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In fact, as the Shanta Kumar committee report points out: "Some of the departmental labours (more than 300) have received wages (including arrears) even more than Rs 4 lakhs/per month in August 2014. This happens because of the incentive system in notified depots."

Interestingly, even those who did not get paid Rs 4 lakh in August 2014, get paid quite a lot. The average salary of an FCI worker was Rs 79,588 per month between April and November 2014, which is seven to eight times higher than what a contract labourer gets paid. As can be seen from the following table the average salary of a worker has more than doubled between 2009 and 2014.

Financial year Average Salary
2009-10 38,459
2010-11 53,389
2011-12 63,763
2012-13 71,358
2013-14 78,549
April to Nov 2014 79,588

Source: Shanta Kumar Committee Report

As the Shanta Kumar committee report points out: "FCI engages large number of workers (loaders) to get the job of loading/unloading done smoothly and in time. Currently there are roughly 16,000 departmental workers, about 26,000 workers that operate under Direct Payment System (DPS), some under no work no pay, and about one lakh contract workers. A departmental worker (loader) costs FCI about Rs 79,500/per month (Apri-Nov 2014 data) vis-a-vis DPS worker at Rs 26,000/permonth and contract labour costs about Rs 10,000/per month."

There are a few points that need to be made here. First, is the fact that workers are paid different wages depending on how they are categorised, even though the do the same work. Hence, an FCI worker gets paid eight times that a contract worker gets paid. This is not fair.

The second point is why pay workers close to Rs 80,000 per month for loading and unloading stuff, when the same job can be carried out at the cost of Rs 10,000 or Rs 26,000 per month? This is a clear waste of money. The Supreme Court judges put the loss at Rs 1800 crore. This doesn't sound much on its own, given the big numbers we are used to when we talk about the government.

But compare this with the plan outlay of the ministry of environment for 2015-2016, which is at Rs 1,446.60 crore. As the budget document points out: "The Plan outlay of Ministry of Environment, Forests & Climate Change is Rs 1,446.60 crore. An Amount of Rs 758.16 crore is allocated for Ecology and Environment which, inter alia, includes Rs 63.14 crore Conservation of Natural Resources and Ecosystems, and Rs 213.05 crore for Research and Development, Rs 100 crore for National Coastal Management Programme and Rs 76.10 crore for Environmental Monitoring and Governance. Rs 150 crore has been provisioned for National Adaptation Fund for Climate Change."

The point being there are better ways of spending money than paying an FCI worker Rs 79,500 per month.

Also, it is not surprising that those making Rs79,500 per month or more, get cheaper contract labour to do their work. If I was earning Rs 4 lakh per month and was in a position to outsource my work to someone at the cost of Rs 10,000 per month, I would do the same thing.

As the Shanta Kumar committee report points out: "Some of the departmental labours (more than 300) have received wages (including arrears) even more than Rs 4 lakhs/per month in August 2014. This happens because of the incentive system in notified depots, and widely used proxy labour. This is a major aberration and must be fixed, either by de-notifying these depots, or handing them over to states or private sector on service contracts, and by fixing a maximum limit on the incentives per person that will not allow him to work for more than say 1.25 times the work agreed with him.These depots should be put on priority for mechanization so that reliance on departmental labour reduces."

The Supreme Court judges have given the government a time of 10 days to respond on how this daylight robbery of the country can stop. "Labourers in FCI have an aggressive past. Officers have been murdered. There is a clique that is operating there and FCI has become a hen that lays golden eggs for them. The FCI is literally held to ransom by the labourers and their unions and there is something seriously wrong with it, "the Supreme Court judges said.

The prime minister Narendra Modi before he became the prime minister talked a lot about "minimum government maximum governance". This is one area where the slogan can be put into practice. The loot of the nation by a few thousand workers of the FCI needs to stop. The money thus saved needs to be put to better use.

The question is will this stop? The trouble is that after being elected Modi has continued with the maximum government handed down to him. Any elected official (or for that matter even any individual) has limited time and mind-space to tackle things. This is even more true for this government, where the lack of ministerial talent is glaringly obvious and the government is run more and more by the prime minister's office.

The prime minister's office is busy with many things, propping up loss making units like Air India and MTNL, being among them. In this environment does it have the time and the mind-space to tackle the mess that FCI is in?

Vivek Kaul is the Editor of the Diary and The Vivek Kaul Letter. Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. The latest book in the trilogy Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System was published in March 2015. The books were bestsellers on Amazon. His writing has also appeared in The Times of India, The Hindu, The Hindu Business Line, Business World, Business Today, India Today, Business Standard, Forbes India, Deccan Chronicle, The Asian Age, Mutual Fund Insight, Wealth Insight, Swarajya, Bangalore Mirror among others.

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11 Responses to "Dear Mr Modi: who will sort out the mess at Food Corporation of India?"

ganapathi rao

Dec 22, 2016

Mr.vivek
I too appreciate your effort. But it is waste aggression y becoz those who got 4 laks are not desk job holders they are labours they will get piece rate for each bag this means that 4 lakhs is thier sweat &blood and their muscle. They got 4 lakhs only in that August but they will be paid 15000 each month. I am a son of an dps labour i know their pain and work behavior.

Like (5)

Rashmin Shah

Jan 16, 2016

Mr. Vivek

I appreciate your effort. But really disappointed with your wake up time and your reporting to right person at wrong time.

Like (5)

Krishna Rau

Jan 15, 2016

FCI operations need to be automated. Bulk handling must be mandatory. They should be mandated to use only containers and stopped from using the gunny bags.

Like (5)

william

Jan 15, 2016

Many Govt Establishments are not willing to employ permanent employees on their payroll because of long term and short term financial and procedural problems. Staff strength is mostly inadequate. Many times employees are forced to do compulsory Over-time duties which can be more than 50% of their normal duty hours. Hence what you have stated above is only by relying on external information. Employees of FCI may be able to tell you what the actual situation is. Also as per the chart provided by you the actual yearly increase in salaries is only about 10%. The fault does not lie with FCI but with The Govt Of India. I would request you to write to The Govt to completely abolish OT Duty as employees are not able to give sufficient time to their families. Plus the work that they do is of lifting heavy sacks which people like you and me may not able to do at all. I pray to God that proper justice should be done to the FCI employees. I love your comments but the picture is not very complete. Thanks.

Like (5)

RS Rathore

Jan 15, 2016

This is eye-opening article by you Vivek.

Hats off to you for such a great & convincing analysis.

The said small & exclusive Group operating at FCI must be brought to justice and those on finding guilty before the special bench of judges within a period of one month maximum must be severely punished in a way that thereafter no such clique ever takes a birth. Had there been any such nasty Group operating in Israel, they would have been shot dead by their government long ago. Traitors don't have any place over there.

Like (5)

Krishnendu Chattopadhyay

Jan 15, 2016

This is very sensitive issue. Imbalance between Govt worker and outside worker is having great desparity

Like (5)

Subramaniam K V

Jan 15, 2016

A very well articulated report. There is possibly many such areas incurring wastefully expenditure. Government should go by the dictum a rupee saved is a rupee earned.
The comparison with allocation for environment and forests is very relevant in these days of natural calamities.

Like (5)

dhaveji

Jan 15, 2016

Pl.publish data of correction
In oil prices internationally,
Indian crude basket,prices in Bombay.
Arnab Goswami does not touch these subjects for obvious reasons.

Like (1)

Manoj

Jan 15, 2016

Why we need FCI. Only for wasting of money. Batter we should get rid of the FCI. FCI is very famous for unprofessional storage of food,Loss of food.

Like (2)

Hiren Vira

Jan 15, 2016

Dear Mr. Vivek,

You're pointing out your finger at Mr. Modi but this practice is going on since the earlier governments while the present government has taken the reigns in it's hand only since May '14. So how can you blame Mr. Modi for the practices of earlier governments? You, as the learned person, also must be knowing that it takes long time to improve the deep-rooted system. So please stop blaming the Mr. Modi's government. It would be better on your part to draw his attention to such flaws and he will surely take the necessary steps. And if he doesn't take the necessary steps after your suggestions, you can surely blame him. Please accept my suggestion and do the needful.

Hiren Vira.

Like (2)
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