New Delhi: Food subsidy may be increased 20% in the budget, likely in July, after it was stepped up to ₹1.84 trillion for the current financial year in the interim budget, presented on 1 February, on account of the Food Corporation of India's (FCI) allocations under the National Food Security Act and the sum granted for decentralised grain procurement taking the amount to over ₹2.21 trillion.
A 20% rise will add over ₹36,000 crore to the subsidy bill, currently pegged at ₹1.84 trillion, and take the total to ₹2.21 trillion. In the 2018-19, the subsidy was ₹1.71 trillion.
While the subsidy towards the FCI and the decentralised food procurement is set to be increased in the budget, some small rise is also expected to come up towards sugar subsidy under the public distribution system (PDS), according to sources.
Since the government follows front-loading of expenditures, up to ₹47,000 crore has already been spent on the food subsidies, sources say adding there is no way to avoid further hike.
Food subsidy for the FCI was pegged at ₹1.51 trillion, decentralised grain procurement at ₹33,000 crore and the sugar sector at ₹220 crore in the interim budget.
Given the government's sensitivity towards the food needs of all, a 20% rise in the fund allocation would be a natural move, they say.
There are also provision of providing 'ways and means advances' (WMA) — temporary loan facility — to the FCI. Earlier, the FCI was given ₹50,000 crore under the WMA, which has already been repaid by the corporation.