The government, burdened by huge stocks of grain, formally promised on Monday to overhaul its farm procurement policy and raised prospects that the country might at last alter its decades-old subsidy system.
But analysts said the pledge, made by President A P J Abdul Kalam in a government policy speech to Parliament, might be hard to implement in a year that will be dominated by state elections.
"There is an urgent need to review the current policies, which have impeded crop diversification and led to unsustainable food subsidies," Kalam told Parliament.
The world's second-most populous country, battling malnutrition in some areas while piling up grain in others, is under political and economic pressure to reform its food management system.
A panel of experts has recommended changes to the government procurement programme to bring the support prices at which it buys rice, wheat and oilseeds from farmers closer to international levels.
"The wide-ranging recommendations on long-term food management made by the high-level committee are being examined," Kalam said.
The government procures all grains that farmers bring to the market at a support price, which it fixes every crop season.
In the case of oilseeds, only part of the production is bought by the government and, as a result, over the years output of oilseeds has stagnated and production of grains surged.
Opposition from farmers
The proposed changes to the subsidy system are opposed by traders and farmers fearful of losing out.
"If the government stops procurement it will disastrous for the farmers as prices will crash because traders and middle men are not in a position to buy such large quantity of grains," Jagdish Lal, a leading trader said from Khanna, the Asia's largest grain market in Punjab.
"We will oppose any such move. The government can not take such a step if it wants to remain in power," Jaspal Singh, a wheat farmer, said from Haryana.
There were 20.27 million tonnes of rice stocks and 31.27 million tonnes of wheat stocks at the start of December 2002, compared to required national emergency stocks of 16.8 million tonnes of the grains, according to figures from the state-run Food Corporation of India.
India produces around 200 million tonnes of grains and 20 million tonnes of oilseeds annually.
It spends scarce foreign exchange on importing around half of its annual edible oil consumption of 10 million tonnes, mainly from Indonesia, Malaysia, Argentina and Brazil.
"It is very important that these words are coming from the president but we are going to have elections this year," said G Chandershekhar, commodities editor of the Business Line newspaper. "Will the government have the political will to do it at this time?"
Nine states hold elections this year in what is seen as a crucial dress rehearsal for national elections due by 2004.
But analysts say the government's costly open-ended procurement policy may not be sustainable even into 2004.
"For how long can you keep on doing this?" said Anil Sharma of National Council for Applied Economic Research.
India's food and fertilizer subsidy expenditure accounts for 200 billion rupees a year.
Chandershekhar said the government should cap procurement and buy only grains it needs for public distribution and food security.
"What the government needs to do is to buy around 10 million tonnes but it ends up picking up 16 to 18 million tonnes a year," he said.
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