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Sinha's largesse fails to activate food processing dept

Neena Haridas in New Delhi

Finance Minister Yashwant Sinha's Budget-time assurance that food processing would be encouraged to emerge as the industry of the future, has not met with a positive follow-up action from the department concerned.

Carrots like incentives for investors that Sinha dangled have failed to stir the officials concerned into an active mode. They are busy fighting for the status of 'ministry' for the 'department' of food processing. In October 1999, the then ministry of food processing was scaled down to the status of a department under the Ministry of Agriculture or MoA.

A bitter argument is brewing within the MoA with the Cabinet undecided yet on whether to have a ‘ministry' or a ‘department' for food processing.

Observers say it might be a while before the government gets going with its policies for this sector.

If the parliamentary standing committee on agriculture, which tabled its report in Parliament on April 24, is to be believed, the issue has led to confusion, mismangement and under-allocation of funds in the food processing department. According to officials, everything else has taken a back-seat.

The committee's chairman, S S Palanimanickam, says, “We have recommended to the government that the ministry status be restored to food processing, in the larger interest of the industry. The decision to scale it down was rather arbitrary and was a high-level decision -- the reasons of which are not known to the department till date.”

According to the committee, the scaling down has cost the industry dearly in terms of funds, and has also led to under-utilisation of funds. Palanimanickam says that against a projected demand of Rs 1.10 billion for 1999-2000, the department was allocated only Rs 470 million. "The department’s request to enhance the allocation went unnoticed. Yet again, the department demanded Rs 583.7 million at the revised estimate stage but it was given only Rs 400 million. We are afraid that there is purposelessness in the efforts made by the department because due to paucity of funds, the food processing sector will not get the necessary boost it deserves.”

The committee has also accused the department of complacency. “The department claims that available funds have been earmarked optimally. But we feel that optimum utilisation of funds may leave most of the department schemes fund-starved. It may result in stalling full operations of the schemes to the next financial year until more funds are released.”

Palanimanickam says, “The department had projected Rs 583.7 million for revised estimate 1999-2000. The department was not able to convince the finance ministry the need to enhance its funds. This shows lack of seriousness on the part of the department which is further evident from the allocation for 2000-2001 of Rs 500 million and non-Plan outlay of Rs 450 million. Of this, ten per cent goes to the north-eastern states, which will leave Rs 450 million towards Plan outlay with the department. This is very little, considering the big plans that the finance minister was talking about in the Budget.”

It is not just the problem of under-allocation of funds that the department is facing. There seems to be rampant under-utilisation of funds as well. Palanimanickam says that there is 40 per cent to 50 per cent under-utilisation of funds in the department. “Several schemes which are meant to modernise industries such as milk processing, agro-processing and small scale sector, have not even taken off because the funds have not reached them.

"And the funds have not been allocated because the department has failed to present complete and viable proposals to the ministry concerned. For instance, the department was given Rs 4 million for strengthening the fish processing technology, but it failed to even utilise this meagre fund.”

The department has also been accused of not being able to do enough in terms of generic advertising for processed foods and for providing marketing assistance to farmers, entrepreneurs, non-government organisations and others. Even with the Rs 10 million allocated for the purpose of advertising, the department had done nothing.

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