Allocation for food law increased

Rs 26,500 crore to be used to meet the carry-over subsidy expenditure from 2013-14

Hoping to roll out its ambitious national food security scheme across all states soon, the government has allocated Rs 88,500 crore towards this in the 2014-15 interim Budget, compared with Rs 10,000 crore in the 2013-14 Budget.

Overall, food subsidy was pegged at Rs 115,000 crore. Of this, Rs 88,500 is for the food security law, while the rest will largely be used to meet the carry-over subsidy expenditure from 2013-14.

"Rs 1,15,000 crore has been allocated for food subsidy, keeping in mind our government's firm and irrevocable commitment to implement the National Food Security Act throughout the country," Finance Minister P Chidambaram said in his 2014-15 interim Budget speech.

He also accepted a long-standing demand of southern states to exempt loading, unloading, packing, storage and warehousing of rice from service tax.

Earlier, Tamil Nadu Chief Minister J Jayalalithaa had written to the prime minister to exempt rice storage from service tax.

Most experts feel as the revised food subsidy estimates for 2013-14 is a mere Rs 2,000 crore more than the Budget Estimate of Rs 90,000 crore, the subsidy spillover in 2014-15 will be at least Rs 35,000 crore.

"In 2013-14, FCI (Food Corporation of India)'s own calculations show its subsidy requirement is about Rs 1,30,000 crore, against the Budget Estimate of Rs 90,000 crore. Now, with the increase in wheat and rice procurement prices in 2014-15, subsidy of Rs 1,15,000 is surely inadequate. It remains to be seen how much of this will be used to meet the spillover," said a senior official.

According to the government's estimates, about 10 states and Union territories have been allocated foodgrain under the National Food Security Act, as these have started implementing the law by identifying the beneficiaries.

While Karnataka and Chhattisgarh started this in January this year, Uttarakhand, Maharashtra and Chandigarh began work towards this in February.

In September 2013, Haryana became the first state to have started implementing the scheme. In October 2013, Rajasthan, Delhi and Himachal Pradesh followed. Punjab started in December.

In September 2013, Parliament passed the food security Bill, to give 67 per cent of the population the right to subsidised foodgrain.

The Act entitles 820 million people to five kg of foodgrain a person, a month at Rs 1-3 a kg. To implement the law, India needs about 62 million tonnes of foodgrain a year.

Under the scheme, every eligible person would get rice at Rs 3/kg, wheat at Rs 2/kg and coarse cereals at Rs 1/kg, through state governments, under the Public Distribution Scheme.