The Hindu : Tamil Nadu News : Food subsidy set to cross Rs.4,000 crore

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Friday, Nov 27, 2009
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Tamil Nadu

Tamil Nadu

Food subsidy set to cross Rs.4,000 crore

S. Vydhianathan

Budget allocation is only Rs.2,800 crore; subsidy has been on the rise in the last six years

CHENNAI: There will be a substantial increase in the food subsidy bill of the State government, which is likely to cross the Rs.4,000-crore mark in the current financial year, as against the budget provision of Rs.2,800 crore.

The government is providing subsidised essential commodities under the universal public distribution system and incurring heavy subsidy as the selling price of essential commodities for cardholders in fair price shops is significantly less than the issue price fixed by the Centre.

According to policy note of the Food Department, the subsidy has been on the rise in the last six years. It was Rs.734.85 crore in 2003-04, rose to Rs.1017.78 crore in 2004-05, Rs.1559.64 crore in 2005-06, Rs.1833.02 crore in 2006-07, Rs.1961.06 crore in 2007-08 and Rs.2988 crore (unaudited figure) in 2008-09.

In the current financial year, the subsidy may cross Rs.4,000 crore as the price of all commodities being supplied under the special public distribution system and sugar had registered a steep hike in the last two months.

The main reason for the burgeoning subsidy component is the increase in price of dhal, sugar and rice in the open market, according to an official source. For example the Centre allots only 11,285 tonnes of sugar a month to the State as against the offtake of 34,000 tonnes at the PDS. To meet the shortfall, the State is purchasing non-levy sugar from the open market at Rs.34 a kg.

In the case of toor and urad dhal, the issue price through the PDS is Rs.40 a kg each and the monthly offtake is 12,000 tonnes of toor dhal and 4,500 tonnes of urad dhal. Six months ago, the State was able to get toor dhal and urad dhal at less than Rs.50 a kg each. The current market rate is Rs.80 a kg for both dal varieties. As there is no Central allotment, the State has to purchase from the open market. For dhal supply alone, the subsidy has increased to Rs.660 crore.

A major portion of the subsidy goes for the supply of rice through the PDS. Nowhere in the country rice is being supplied at Re.1 a kg, that too for all cardholders without income ceiling. The present Central allocation to the State is 2.96 lakh tonnes as against the offtake of 3.14 lakh tonnes. Of the 2.96 lakh tonnes, 65,262 tonnes is allotted under ‘Antyodaya Annayojana’ at Rs.3 a kg, 1.04 lakh tonnes under below poverty line category at Rs.5.65 a kg and 1.26 lakh tonnes under above the poverty line at Rs.8.30 a kg.

When the State demanded additional supply of rice at the APL rate, it was asked to purchase from the open market as it was supplying rice to all cardholders.

At his recent meeting with Union Food and Agriculture Minister Sharad Pawar, Chief Minister M. Karunanidhi urged him to make an ad hoc supply of 1.8 lakh tonnes at cost price to meet the shortfall. This has not been conceded so far.

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