Food subsidy could spoil FM's Budget maths

Feb 25 2013, 12:14 IST
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Food subsidy outlay for next fiscal could be Rs.10,000 crore more than the Budget allocation this fiscal. (Reuters) Food subsidy outlay for next fiscal could be Rs.10,000 crore more than the Budget allocation this fiscal. (Reuters)
SummaryFood subsidy outlay for next fiscal could be Rs.10,000 cr more than the Budget allocation this fiscal.

While the government is on an expenditure control overdrive, the food subsidy outlay for the next fiscal could be R10,000 crore more than the Budget allocation this fiscal, according to official sources.

With Congress chairperson Sonia Gandhi keen to launch the distribution of subsidised foodgrains to a wider population under the National Food Security bill ahead of the general elections, the finance ministry has to oblige.

The headroom created on the fiscal front by stringent expenditure curbs is also aimed at launching mass-based popular schemes, the biggest of which will be the food security legislation.

A senior government official requesting anonymity said, “The finance ministry is likely to earmark R85,000 crore as against R75,000 crore provided for the current fiscal for food subsidy.”

This comes at a time when the finance minister has sounded off his cabinet colleagues of lower fuel and fertilizer subsidies for the next fiscal. Sources also say that food subsidy Bill is expected to touch R1 lakh crore by the March end.

In the current fiscal, the food ministry already has released R85,000 crore of funds to the Food Corporation of India (FCI), the nodal agency undertaking delivery of subsidised grains under the Targeted Public Distribution System (TPDS).

Officials said the rise in food subsidy Bill in the current fiscal is also attributed to cost of holding on to huge grain stocks.

With economic growth crumbling under pressure due to poor demand and revenue collections taking a hit, finance ministry is keen to achieve the fiscal deficit pegged at 4.8% to GDP for the next fiscal.

Food minister KV Thomas recently told FE that the government annually needs an extra R20,000 crore for the implementation of food subsidy legislation, which implies if the food security law is implementated across the country, the annual subsidy burden will be R1,20,000 crore.

The National Food Subsidy Bill, 2011 is expected to be re-introduced in the Budget session of Parliament, which commences on Thursday.

Meanwhile, the food ministry has revised the food bill and now proposes to give legal right to over 5 kg of foodgrains at R1-3 per kg per month to about 70% of the population as suggested by the Parliamentary panel. The panel had also recommended coverage of 75% pf rural and 50% in urban population with uniform entitlement.

A revised food Bill has been sent to the law ministry, after which it will be moved to

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