Kerala Civil Supplies Corporation (Supplyco) is a reputed entity in the public distribution system under the government of Kerala. And with a comprehensive machinery for sale of essential commodities at reasonable prices, it is one of the best models of the kind in the country. Any one would vouch that it functions in such a way as to ratify its slogan Essentials within reach of all. But of late things have turned topsy-turvey for Supplyco in a big way. At a time when in general price rise has been severe, Supplyco which is bound to make effective interventions is not able to play that rome. What more, it in in such a state that it cannot stock and sell even essential food items. A visit to any of the outlets of Supplyco would tell a story of the firm being debilitated to such an extent that it is sorely incapable of making any dent in the market. And the most recent reports indicate that the state is closing the doors for overcoming this crisis. The unwillingness of the government’s finance minister to pay the Rs 1,524 Cr that the state owes to Supplyco only deepens the crisis. If things more at this rate, it will endanger the very existence of Supplyco. Thus the fall of a state enterprise that used to be a source of relief to the state’s population, even at a modest scale, will hit utmost the common man.
The current crisis can be summarised as a product of a combination of the usual lackadaisical attitude of the Corporation authorities and a failure of the government’s finance management. This inference is based on the finance ministry’s obstinacy that it cannot release funds due to the inefficiency of Supplyco’s management. What the finance ministry says, without putting it explicitly, is that Supplyco has failed in its mission. In a sense there is substance in this assessment. Nearly every one can see that for some time recently the performance of Supplyco has not been in the right direction. There is a point in the government’s evaluation that the corporation has failed in enforcing financial discipline. What the ministry alleges is that the crunch can be attributed to the wrong routes Supplyco adopted to clear arrears f procurement. Instead of the earlier practice of taking funds from co-operative consortium, it approached a consortium of bank with which things went haywire. Supplyco also made serious lapses in collecting arrears from the Centre for paddy procurement. The fact that the Corporation failed in submitting prompt audit reports for the last five years is a sign of its failure. In the backdrop of all this, the government, and its finance ministry, are of the view that even if funds demanded by Supplyco are disbursed, the crisis of Supplyco will not be resolved.
Even as these contentions are all well-founded, there is a flip side to it. Supplyco owes over Rs 700 crore to its distribution agencies alone. If this due is not cleared, the remaining operations of Supplyco also will come to a halt which in turn will not only cause a collapse of the public distribution system, but even upset the mid-day meal distribution in schools. And this when even the current mid-day meal scheme is not moving along desired lines. For that very reason, what is called for at this stage is a change that strengthens government intervention in the open market, and not a tussle between finance ministry and Corporation that happens in its place, which does not bode well at all. Beyond all this, the main villain of the piece the government’s financial crisis. In the normal course, releasing Rs 1524 crore which the Corporation has demanded, would not be a big hurdle for the government – even if there is a flaw in their finance management. But the fact here is that the government does not have the funds for even that. . It is a fact admitted several times by the finance minister, the government is going through times when it finds it hard to meet even its day-to-day expenditure. This impacts not only Supply co; in the matter of mi-day meal scheme of school, Education department also has to receive arrears of Rs 200 crore. What more, even the social welfare pension is running into arrears of three months. The reasons for these have already been laid bare: On the one hand, the policies of the central government leads the country to acute economic crisis and unemployment. On the other hand there is the attitude of total neglect the Centre shows to Kerala as a state ruled by Opposition. The Modi government is not prepared to release even the legitimate tax share due to the government. It should not be forgotten that if at least the central arrears are promptly received, it can mitigate to a large extent the crisis of Supplyco. In this situation, along with the modernisation of the functioning and financial management of Supply, the state government should make efforts to put pressure on the Centre and get the entitlements including the tax share. Or else, it will lead to food crisis and price rises. And a government, that rose to power with a guarantee of zero price rise, cannot absolve itself of its responsibility.