Finance minister P Chidambarm on Monday announced a 25% hike in allocation under the food subsidy bill to Rs 115,000 crore for 2014-15 over this year?s revised estimate, mainly for the implementation of National Food Security Act.
The food security legislation, which was passed by Parliament last year, envisages providing more grain to 82 crore population of the country that requires additional financial allocation.
?Rs 1,15,000 crore has been allocated for food subsidy keeping in mind the government?s firm and irrevocable commitment to implement the National Food Security Act throughout the country,? Chidambaram said.
However, despite an additional allocation of R23,000 crore towards the food subsidy for the next fiscal, the unsettled dues to Food Corporation of India (FCI) from the current fiscal (2013-14) would mount to more than R40,000 crore due to the government holding on to huge stocks of grain, more than the requirement.
According to FCI officials, the ?unsettled dues? from the government is expected to rise to more than R40,000 crore in FY14 after exhausting the budgetary allocation of R92,000 crore for 2013-14 under the food subsidy allocation.
A food ministry official told FE that a sum of R32,000 crore worth of unsettled dues under the food subsidy head was carried forward to current fiscal due to the rising grain procurement in the recent years against requirement under the Targeted Public Distribution System (TPDS).
With a sharp rise in outstanding dues against funds allocated under the food subsidy head, the FCI will raise R15,000 crore as a short-term credit for meeting the expenses for carrying out its operations of procurement and distribution of grain till end of FY14. Besides, the FCI would raise R8,000 crore in FY14 through bonds.
During FY13, on account of unsettled dues, the FCI had paid more than R6,000 crore towards interest on the loan taken for running its operations.
The latest data indicates that the FCI has 24.2 million tonnes of wheat and 16.9 mt of rice stocks at the start of the month. The current stock is far above the strategic reserve and buffer stocks norm of 25 mt.
