Interim Budget 2024: Govt may allocate Rs 2.2 trillion for food subsidy

The ongoing financial year's food subsidy has already surpassed the allocated Rs 1.97 trillion in Budget 2023-24

The Union government is contemplating an allocation of Rs 2.2 trillion for food subsidy in the upcoming budget, anticipating a 10 per cent increase from the previous financial year, according to a report by Mint. This substantial allocation is intended to cover the escalating costs of higher farm support prices and the extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY), the free food distribution initiative for the underprivileged.

The envisioned increase may be attributed to the rise in the minimum support price (MSP) for wheat & paddy crops, the five-year extension of PM-GKAY, and associated expenses. Meeting these demands will necessitate the procurement of 40.8 million tonnes of rice annually for an extended period, requiring an estimated Rs 11.80 trillion over five years.

The report also suggested that the budget estimate would hinge on the quantity of wheat and rice procured under MSP operations and the MSP for these crops. A rise in allocation would accommodate these factors more effectively.

Additionally, Union Food and Public Distribution Department's secretary, Sanjeev Chopra, also told Mint that the current financial year's food subsidy has already surpassed Rs 2 trillion. The 2023-23 Budget allocated Rs 1.97 trillion for food subsidies. Therefore, the Rs 2.2 trillion budget would better align with the actual expenditure. Chopra, however, did not specify whether this allocation would be part of the interim budget on February 1.

The Department of Food and Public Distribution, responsible for securing food through procurement, storage, and distribution, receives a significant portion of its budget for subsidies. In the 2023-24 Union Budget, the department was allocated Rs 2.05 trillion, with an anticipated 5-10 per cent overall budget increase for the upcoming financial year, Chopra added.