Food subsidy bill set to cross Rs 50,000 crore | business | Hindustan Times
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Food subsidy bill set to cross Rs 50,000 crore

business Updated: Jun 17, 2009 21:44 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The annual food subsidy bill could well cross the Rs 50,000-crore mark as the government finalises ways and means to announce the promised Rs 3 per kg of foodgrain scheme to below poverty line (BPL) families.

While the government has promised a National Food Security Act, that would statutorily require supply of 25 kg of rice or wheat at Rs 3 per kg to BPL families, officials said it was examining whether a scheme can be announced in the forthcoming budget itself.

A senior official, who did not wish to be identified, said the process would involve subsuming the existing Annapurna scheme, under which 10 kg of foodgrains per person per month is supplied free of cost.

“This would mean higher funds under the food subsidy bill,” the official said.

Food subsidy is provided in the budget of food and public distribution department to meet the difference between the cost of procurement of wheat and paddy from farmers and selling it at a lower price through fair price shops.

The subsidy is provided to Food Corporation of India, the main government body responsible for procurement and distribution of foodgrains under targeted public distribution system (TPDS) and other welfare schemes and for maintaining the buffer stock of foodgrains as a measure of food security.

In 2008-09 the food subsidy bill stood at Rs 43,627 crore.

Officials said efforts are being made to persuade all states to move to a decentralised state-driven procurement and distribution system to enable a reduction in the food subsidy bill. Under this scheme, the Centre passes on the subsidy directly to the states.

At present 11 states — Uttar Pradesh, Madhya Pradesh, Chhattisgarh, West Bengal, Uttarakhand, Tamil Nadu, Andaman and Nicobar Islands, Orissa, Gujarat, Kerala and Karnataka — have undertaken the responsibility of not only procuring foodgrains from within the state but also distributing it through the public distribution system.

“Efforts are being made to persuade other states to adopt this scheme,” the official said.