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Grain bill may bloat subsidy tab

business Updated: Jan 25, 2010 20:50 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The annual food subsidy bill could swell by several thousand crores of rupees as the Centre finalises ways and means to announce a promised Rs 3 per kg of foodgrain scheme to families classified as below poverty line (BPL) on the basis of their basic consumption.

The government has promised a food security law that would statutorily require supply of 25 kg of rice or wheat at Rs 3 per kg to BPL families. Officials say the government is pondering whether the scheme can be announced in the budget for 2010-11 to be announced next month.

“This would mean higher funds under the food subsidy bill,” said an official who asked not to be identified.

President Pratibha Patil had, on June 4 last year, said a National Food Security Act would be formulated under which each BPL family would be entitled by law to get 25 kg of rice or wheat per month at Rs. 3 a kg. The vow was made by the Congress before general elections last year.

Food subsidy is provided to meet the difference between what the government pays to farmers and what it charges in government-run fair price shops.

In 2009-10, the subsidy bill is estimated at Rs 52,489.72 crore.

At present, the Centre provides 35 kg of rice or wheat per month to each BPL family. Wheat is supplied at Rs 4.15 per kg and rice at Rs 5.65 a kg to more than 6.85 crore families living below the poverty line.

Of these, about 2.43 crore families are provided 35 kg or rice of wheat per month at a price of Rs 3 and Rs 2 per kg under the Antyodaya Anna Yojana Scheme that was launched in 2000. The current monthly allocation of food grains under AAY is around 8.50 lakh tons per month.

A debate is raging meanwhile on who qualifies as Below Poverty Line, with the Suresh Tendulkar panel putting it at 41 per cent of the population and the other – by the Planning Commission – puts it at 27 per cent.

“The Tendulkar committee’s poverty estimates, if adopted, will have a major bearing on the financing and administration of the subsidised foodgrain distribution schemes,” the official said.