DMEO has floated a request for proposal, inviting bids from consultancy firms to support in the evaluation. The budgetary allocation allocation to decentralized procurement has gone up from Rs 32,000 crore in 2017-18 to Rs 72,250 crore in 2023-24.
The evaluation will assess the efficiency of decentralized procurement relative to centralized procurement of rice (paddy) and wheat while also comparing the economic cost and benefit of the two modes of procurement.
The focus will be to do on in-depth study of the procurement process followed by the states to understand the cost-effectiveness of operations, the ease of selling the produce by farmers, transparency in the whole process, the level of satisfaction of different stakeholders, and mechanism for reimbursement of subsidy to various stakeholders under decentralized procurement, DMEO said.
“Further, the assessment will help to understand the impact of a decentralized procurement scheme on state finances among DCP states relative to non-DCP states,” it said.
“To suggest good practices and technological innovations from within or outside the country to improve the procurement processes with a view to rationalize the food subsidy outgo, and from international negotiations perspective,” it added. The scheme of decentralised procurement (DCP) ensures that Minimum Support Price (MSP) is passed on to the farmers, to enhance the efficiency of procurement and to encourage procurement in non-traditional states (the states where limited production of the food grain used to take place), thereby extending the benefits of MSP to local farmers as well as to save on transit losses and costs. This also enables procurement of food grains more suited to local taste for distribution under the TPDS, the DMEO said in the RFP document. At present, 17 Indian states have adopted Decentralized Procurement of wheat or paddy.
Under the scheme, introduced in 1997-98, the state governments themselves undertake the responsibility of procurement of food grains (wheat and paddy), their scientific storage and distribution under National Food Security Act (NFSA) and other welfare schemes.
Under the centralized procurement system, the procurement of food grains (wheat and paddy) is undertaken either by Food Corporation of India (FCI) directly or through state government agencies that handover the stocks to FCI for storage and FCI subsequently issues the stocks to states against allocation by the central government.