Food subsidy to cost govt Rs.1.31 lakh crore

The revised National Food Subsidy Bill, which will give two-thirds Indians a legal right to cheap food, will make spending on food as India’s biggest national subsidy expenditure, but the costs are “manageable”, food minister KV Thomas has said.

At Rs.1.31 lakh crore, according to current projections, the food tab will nearly be twice as much as the spending on fertilizers and 35% higher than the expensive oil subsidy.

The government provides fuel and farm manures at lower-than-market prices to make them affordable.

Despite what “fiscal hawks” outside the government have been arguing, a government official, speaking on anonymity, said since the government’s oil subsidy expenses were coming down, the savings would help make up for the food bill.

The government has been gradually withdrawing petroleum subsidies to improve its fiscal deficit.

“If we can eliminate the diesel subsidy we certainly could (afford food handouts)… food subsidy and ability to feed the kids particularly should be a priority,” Nobel winning economist Amartya Sen said recently in Delhi, addressing students.

A close scrutiny of India’s food aid programme reveals that higher expenditure is not necessarily because of the proposed food law or more foodgrains being sought to be distributed, but because India’s population has risen.

Successive hikes in the price at which the government purchases foodgrains – known as the minimum support price -- are another reason why food spending will end up higher.

Even without the food law, India’s food subsidy would have risen to nearly Rs 1 lakh crore on account of the above reasons, Thomas said.


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