Reforming payment processes for food grain procurement, India

• Jul 29, 2025
• 1 min

The Government of India procures food grains through both centralized and decentralized models to ensure price support for farmers and maintain food security. Payments for these procurements are made to the Food Corporation of India (FCI), as the nodal agency for central procurement and state agencies. However, the current system of account submission for food grain procurement, reconciliation, and settlement is complex and inefficient, often leading to payment delays. These delays hinder fund flow predictability and affect operational efficiency across procurement agencies.

MSC was engaged by the Department of Food and Public Distribution to assess the existing settlement and reconciliation processes and identify structural and procedural bottlenecks. We proposed a re-engineered, rule-based, and real-time system to streamline claims settlement and enable Just-in-Time (JIT) fund releases for food subsidy payments.  We redesigned the process with clear turnaround times, responsibilities, and escalation protocols, consolidated into a standard operating procedure (SOP). We supported in digitizing the system by integrating newly designed modules into SCAN 2.0 using a functional requirement specification (FRS) and introduced a revised method for determining Procurement Incidentals (PIs), specifically, transportation, handling, and mandi labor charges, through time and motion studies and empirical data analysis.

The proposed reforms are expected to significantly reduce delays in claims settlement, increase transparency in procurement-related payments, and improve fiscal management.
The Gates Foundation commissioned the project.