Eco Survey for rationalisation of burgeoning food subsidy bill

There is a need to address the "burgeoning food subsidy bill" in order to sustain the government's food security programme for the poor, the Economic Survey said Thursday.

The government, in its interim budget presented in February, had pegged food subsidy bill at Rs 1,84,220 crore for 2019-20 as against Rs 1,71,298 crore last year.

"For sustainability of food security operations, the issue of burgeoning food subsidy bill needs to be addressed. ...The rationalisation of food subsidy and greater use of technology in food management will ensure food security for all," the survey, presented in Parliament, said.

The food subsidy bill has "risen substantially" over the years because of widening of the gap between the economic cost and the central issue price (CIP) of foodgrains under the National Food Security Act (NFSA).

The economic cost is the expenditure incurred by the central government on procurement of wheat and rice at the minimum support price (MSP) and storage. Whereas the CIP is the subsidised rate at which the grain is sold to the poor.

Under the NFSA, the government is providing foodgrains at a highly subsidised (CIP) rate of Rs 1-3 per kg to more than 80 crore poor people in the country.

The economic cost of wheat has increased from Rs 19/kg in 2013-14 to Rs 24.35/kg in 2018-19 on account of sharp hike in MSP over the years. Similarly, the economic cost of rice has gone up from Rs 26.15/kg to Rs 34.72/kg in the same period.

"However, the CIP of wheat and rice for NFSA beneficiaries has not been revised from Rs2/kg in case of wheat and Rs3/kg in case of rice," the Economic Survey 2018-19 said.

These rates were fixed under the NFSA initially for a period of three years from the date of commencement of the Act (July 13, 2013). But the NDA government has not revised it.

The NFSA provides a wider coverage than the erstwhile Targeted Public Distribution System (TPDS) and with lower CIPs have obvious implications for the food subsidy bill, it noted.

According to the survey, PDS has become more transparent at Fair Price Shops (FPSs) through technology intervention. However, it said there is a need for "holistic monitoring" along the supply chain to completely prevent the diversions and leakages of foodgrains and also to maintain the quality of foodgrains distributed through FPS.

There are 5.33 lakh FPSs and over 23 crore ration card holders in the country as on March 2019.

About 3.95 lakh FPSs have been automated by installing the electronic point of sale device. "However, the level of computerization of FPSs across States is not uniform," the survey added.

It also emphasised the need to further improve the management of food supply in various aspects in view of lower score and rank of India in the Food Security Index 2018.

"India's food security challenges lie in the areas of low GDP per capita, sufficiency of supply, public expenditure on research and development (R&D) and protein quality," the survey added.