Home >Budget >Economic Survey >Food subsidy bill turning unmanageable

NEW DELHI : The Economic Survey 2020-21 released on Friday recommended an increase in the issue price at which poor households receive foodgrain, observing that the food subsidy bill is becoming an “unmanageably large" expenditure for the government.

Central issue price (CIP) is the amount priority households pay, 2 per kg of wheat and 3 per kg of rice, to avail grain from the subsidized public distribution system.

Also Read | Covid vaccination faces slow start

“While it is difficult to reduce the economic cost of food management in view of rising commitment towards food security, there is a need to consider the revision of CIP to reduce the bulging food subsidy bill," the survey said.

The issue price for wheat and rice has not been revised since the introduction of the National Food Security Act in 2013, the survey observed and noted that the economic cost to the Food Corp. of India (FCI) for wheat rose to 27 per kg in 2020-21 from 19 per kg in 2013-14, while for rice it increased to 37 per kg from 26 per kg in 2013-14.

This implies that the government bears a subsidy of 25 per kg of wheat and 34 per kg of rice it supplies to poor households under the food security scheme. India’s annual food subsidy bill is pegged at 1.15 trillion-plus off-budget borrowings by the FCI, which is estimated at 70,000 crore.

The Union government spent 80,000 crore in 2020-21 on food subsidy towards different pandemic-related relief schemes, in addition to the regular food subsidy bill, according to the survey.

Notwithstanding the survey’s recommendation, increasing the issue price could be politically challenging for the government as the covid-19 pandemic has dented incomes of poorer households and worsened the hunger situation in the country.

Besides food management policies, the Economic Survey said the recent agriculture reforms laws were “a remedy, not a malady". “The three agricultural reform legislations are designed and intended primarily for the benefit of small and marginal farmers, who constitute around 85% the total number of farmers and are the biggest sufferers of the regressive regulated market regime," the survey said.

The “newly introduced farm laws will herald a new era of market freedom, which can go a long way in the improvement of farmer welfare in India," the survey added.

This comes against the backdrop of hundreds of thousands of farmers camping at different entry points to the national capital since the end of November, demanding that the government repeal the laws. Farmers fear the laws will ease the entry of large corporations in agriculture markets and weaken government purchase at support prices.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout