Granular thinking

The rising subsidy bill has put everyone in government in a spot of bother. So much so that a food ministry proposal to allocate additional grains to states for distribution through ration shops was reworked twice – that too, downwards – before it was finally approved. The food ministry first demanded an allocation of 26 million tonnes of wheat and rice over and above the normal annual allocation. This would have not only met one of the states’ main demands but also ease chronic shortages. The proposal was turned down apparently because the subsidy burden of Rs 33,000 crore was considered too high. Later, the ministry scaled down the requirement to 14 million tonnes, which would have entailed an additional subsidy of around Rs 16,000 crore over and above the Rs 75,000 crore pegged for 2012-13 (the subsidy is needed because the grain would be sold at rates much cheaper than their cost of procurement and storage). Eventually, an Empowered Group of Ministers approved only 8 million tonnes of additional allocation, for which the government will have to bear an additional subsidy of around Rs 10,000 crore.