New Pds To Take Food Subsidy Bill Up To Rs 9000cr

With most states likely to launch the targeted public distribution system (TPDS) from June 1, the total food subsidy in the current financial year will swell to about Rs 9,000 crore, nearly 50 per cent more than last years revised budgetary estimate of Rs 6,066 crore, and 20 per cent higher than the Rs 7,500 crore provided in the current years budget.

Besides the implementation of the new PDS to provide foodgrain to the poor at half the normal prices, the factors contributing to the unprecedented hike in food subsidy include a provision of Rs 60 a quintal as bonus on the wheat procurement price, and wheat imports.

The overall food subsidy figure may, in fact, increase further if the support price of rice for the next kharif season is also raised substantially without increasing the issue prices of foodgrain, food ministry sources point out.

The impact of the TPDS, which requires nearly 18.4 million tonnes of subsidised rice and wheat, was not felt last year because of the delay in its implementation. The total subsidy in 1996-97, therefore, could be contained to a manageable level of Rs 6,066 crore, only marginally higher than the budgetary provision of Rs 5,800 crore.

But most states, barring Punjab, Meghalaya and Delhi, yesterday told the Centre that they would be ready to launch the new PDS from June 1. Haryana and Tripura have already started implementing it from this month.

The food ministry, which had earlier estimated the food subsidy to rise to about Rs 8,200 crore as a result of the implementation of the TPDS this year, has now revised its estimates, taking into account the additional burden due to the bonus on bonus procurement and its imports. Wheat bonus alone is expected to push up the subsidy by around Rs 700 crore. The total subsidy bill, therefore, may be around Rs 9,000 crore, if not more, ministry sources say.

This development may upset the budgetary calculations of the finance ministry, but Krishi Bhawan is confident that fresh allocations would be made to take care of the additional subsidy requirement. While earmarking Rs 7,500 crore for food subsidy in the current years budget, the finance minister had categorically stated that more money would be allocated, if needed, sources point out.

The precise subsidy figure will depend on the extent of actual lifting of foodgrain under the TPDS, quantum of imports and increase in rice procurement prices.

Food secretary (public distribution) A K Venkat Subramanian told Business Standard yesterday that most states had demanded higher allocation of subsidised wheat and rice for the public distribution system.