scorecardresearch
Food subsidy bill to rise as FCI seeks more money for procurement

Food subsidy bill to rise as FCI seeks more money for procurement

Consumer affairs, food and public distribution minister K. V. Thomas said during Question Hour that the total requirement of subsidy for FCI is now estimated at Rs 85,359 crore.

The government will have to nearly double the allocation for the country's food subsidy bill to Rs 85,359 crore as the Food Corporation of India (FCI) requires more money for the procurement of foodgrains and also to clear dues, the Rajya Sabha was informed on Monday.

India needs 2nd Green Revolution: PM

Consumer affairs, food and public distribution minister K. V. Thomas said during Question Hour that the total requirement of subsidy for FCI is now estimated at Rs 85,359 crore because of the shortfall in allocation for the current year, arrears of past years and additional requirements due to declaration of bonus on procurement of wheat, increase in minimum support price (MSP) of paddy and additional allocation of foodgrains.

Food inflation rises to over 9 per cent

However, the allocation in this year's budget to meet the FCI's requirement is only Rs 47,239.80.

This increase in the food subsidy bill will make it that much more difficult for the government to limit its fiscal deficit at 4.6 per cent of gross domestic product (GDP) as the under-recoveries of the public sector oil companies are expected to touch a whopping Rs 121,000 crore during the current fiscal. In addition, the fertiliser subsidy has also shot up.

Thomas said the allocation of additional subsidy for FCI has been taken up with the ministry of finance. "There is a financial crunch but we are managing the situation," he added.

The minister said that after the passage of the Food Security Bill, the food subsidy will rise to Rs 100,000 crore.

MNCs grab opportunities in food business

In the July-September quarter, FCI needed about Rs 11,635 crore to make payments for the procurement of foodgrains.

"Against this, initially we had only Rs 4,000 crore (and) later the finance ministry released Rs 7,635 crore and all the dues have been paid," he said.

As procurement is higher this year because of the higher food production, FCI requires Rs 85,359 crore. To meet this, the cashcredit limit with banks is being enhanced to Rs 50,000 crore from the current Rs 35,000 crore.

Besides, the finance ministry is also being requested to earmark more funds in the coming budget, he added.

"We are confident whatever due FCI has to give, we will be able to fulfil our commitment," he said.

Food security isn't the same as foodgrain security

For meeting additional requirements after the food security bill is passed, Thomas said the government is taking steps to improve production besides toning up procurement and creating more storage space.

"We have initiated steps to create storage capacity of 153 lakh tonnes. About 30 lakh tonnes capacity will be ready by this year and the remaining by 2013," the minister said.

The FCI purchases foodgrain for the central pool at the MSP fixed by the government and makes it available to the state governments at the Central issue price for distribution under targeted public distribution system and other welfare schemes.

FCI is reimbursed subsidy to meet the difference between the economic cost of foodgrain and the Central issue price, the minister pointed out.

Courtesy: Mail Today