Telangana Government Faces Massive Losses in Paddy Sales Due to Milling Stalemate

Hyderabad, September 19

The Telangana Government is grappling with significant financial losses, unable to initiate milling operations on a massive stockpile of paddy. Rabi paddy potential losses could run into thousands of crores, a staggering blow to Telangana state finances. However, there might be a ray of hope as tenders for 25 lakh tonnes of paddy have recently been finalized, signaling a potential solution.

The initial tranche of losses stands at a whopping Rs. 1562.50 crores, with each tonne incurring a loss of Rs. 6250. This translates to a staggering loss of Rs. 1562.50 crores for the 25 lakh tonnes currently up for sale.

The government called for tenders to offload this stock, and bids for 25 lakh tonnes have been approved, with a minimum support price (MSP) of Rs. 2060 per quintal, including transportation charges that push it up to Rs. 2300 per quintal.

Key Tender Details:

• Maximum bid price: Rs. 1,732
• Minimum bid price: Rs. 1,618

The average loss per quintal remains high at Rs. 625, amounting to Rs. 6250 per tonne. If the first installment of 25 lakh tonnes is sold as per the finalized tenders, the total loss could reach a staggering Rs. 1562.50 crores. However, these recently approved bids still await confirmation from the Five Men Committee.

The government procured a massive 66.85 lakh tonnes of paddy from farmers in the state last Rabi at an MSP of Rs 2,060 per quintal. However, milling operations stalled as the committee responsible for 100% paddy procurement support failed to submit its report. Consequently, the government resorted to selling the collected grain through tenders.

Out of the 66.85 lakh tonnes collected last year, 25 lakh tonnes were earmarked for sale in the first phase. These were divided into 25 lots, and tenders were invited. A total of 11 firms submitted 54 technical bids, but one bid from Guru Nanak Rice and General Mills Company of Haryana was rejected due to technical issues.

The eligible organizations include:

1. Kendriya Bandar
2. Sam and Company Private Limited
3. Pattabi Agrofoods Private Limited
4. Sreeramud Industry Limited
5. National Federation of Farmers Procurement Processing and Retaining Cooperative of India Limited
6. Nocha Agrotech Private Limited
7. Bagadia Brothers Private Limited
8. Sri Siddarameshwara Agro Industries
9. Srilalitha Enterprises Industries Private Limited
10. Financial bids received from Shambhudayal Jain and Companies

These 10 companies secured the lots, offering prices ranging from a minimum of Rs. 1,618 to a maximum of Rs. 1,732 per quintal.

The final decision lies with the Five men Committee, consisting of Finance Special CS Ramakrishna Rao, Industries Special CS Jayeshranjan, CMO Secretary Narsinga Rao, TSIIC MD Narsimha Reddy, and Civil Supplies Commissioner Anil Kumar. Their approval is essential to proceed with the sale. If they give the green signal, the government will still incur a substantial loss of Rs. 1562.50 crores in the first installment alone. The situation paints a grim financial picture for the Civil Supplies Department.