India’s food subsidy bill in 2012-2013 financial year has swelled to over Rs 101,879 crore in the first six months itself, 36% more than the Budget estimate according to a calculation made by the Food Corporation of India (FCI). This could seriously jeopardize government’s plan to rein the fiscal deficit at 5.1% of GDP as rice procurement for 2012-2013 kharif season is yet to start in full swing.
The government plans to purchase 15% more rice from farmers in 2012-2013 as compared to last year. The purchases have already begun in Punjab and Haryana and would begin from other parts of the country around November. This year, FCI purchased around 38.14 million tonnes of wheat, around 35% more than last year and stored almost 70-75 million tonnes of foodgrains in its warehouses. Food along with fertilizer and petroleum constitute the three major components of government’s subsidy bill.
FCI said that the subsidy bill has inflated because of rise in amount of procurement, increase in acquisition cost due to hike in the minimum support price, rise in stockholding by FCI and arrear food subsidy, the Corporation said. Of the over Rs 100,000 crore food subsidy, around Rs 22,008 crore is the arrear carried over from 2011-2012.
The estimates show that the same arrear will now swell to around Rs 39,909 crore as on March 31, 2013 as against the requirement of over Rs 100,000 crore, government has till date allocated just around Rs 61,978 crore as food subsidy as against the requirement of over Rs 100,000 crore. However, senior Food Corporation of India (FCI) officials allayed fears that slow release of subsidy would hamper their procurement and storage operations.
“FCI would continue to purchase and store and distribute grains as earlier and their won’t be any delay in payment,” FCI chairman Amar Singh said. Meanwhile, to liquidate its stocks from warehouses, the government is negotiating with Iran for exporting 2 lakh tonnes of wheat in December and 10 lakh tonnes annually for the next three years, FCI said.
"Negotiations are being held with Iran government for export of 2 lakh tonnes of wheat in December 2012 and in the long run 1 million tonnes each for the next three years," the chairman said. India lifted ban on wheat exports in September 2011 through private trade on account of record production in two consecutive years.
On the oft repeated question of wastage of foodgrains due to storage and transportation problems, FCI documents show in 2012-2013 till September 1, foodgrains worth around Rs 1.10 crore has been wasted, which is minuscule 0.007% of the total foodgrains offtake of 18.81 million tonnes
