Economic Survey pitches for hike in PDS rates to trim food subsidy bill

The Economic Survey on Friday asked the government to consider increasing the prices of foodgrains sold through fair price shops contending that the food subsidy bill had become “unmanageably large”.

“While it is difficult to reduce the economic cost of food management in view of rising commitment towards food security, there is a need to consider the revision of CIP to reduce the bulging food subsidy bill,” said the Economic Survey, presented by Finance Minister Nirmala Sitharaman to Parliament.

Also read: Healthcare spending must increase to 2.5-3% of GDP

Under the National Food Security Act, the Centre provides foodgrains at highly subsidised rates of Rs 3 per kg for rice, Rs 2 per kg for wheat and Rs 1 per kg for coarse grains through Public Distribution System (PDS).

Central Issue Price (CIP) is the subsidised rate at which foodgrains are distributed through ration shops.

Wheat and rice prices have not been revised since the introduction of the Act in 2013 although the economic cost has increased every year.

According to the survey, the government during 2020-21 fiscal allocated food grains through two channels – under the NFSA and the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY).

Track Economic Survey live news updates here

Under PMGKAY, additional foodgrain of 5kg per person per month at free of cost was given to all beneficiaries for 3 months—April-June, 2020. Accordingly, about 121 lakh tonne grains were allotted to approximately 80.96 crore beneficiaries entailing subsidy outgo of nearly Rs 46,061 crore.

The PMGKAY scheme was extended for a further period of five months for July–November 2020. Accordingly, about 201 lakh tonnes of food grains were allocated to beneficiaries entailing subsidy outgo of nearly Rs 76,062.11 crore.

Under Atmanirbhar Bharat Package implemented for three months till August 2020, about 5.48 crore migrants—who were not covered either state or central PDS—were given for free around two lakh tonne rice and 0.74 lakh tonne wheat with a total expenditure of approximately Rs 989.30 crore, the survey said.

Under PMGKAY, additional foodgrain of 5kg per person per month at free of cost was given to all beneficiaries for a period of 3 months -- April-June, 2020. Accordingly, about 121 lakh tonne grains were allotted to approximately 80.96 crore beneficiaries entailing subsidy outgo of nearly Rs 46,061 crore.

The PMGKAY scheme was extended for a further period of five months for July–November 2020. Accordingly, about 201 lakh tonnes of foodgrains were allocated to beneficiaries entailing subsidy outgo of nearly Rs 76,062.11 crore.

UNION BUDGET 2021 SPECIAL COVERAGE ONLY ON DH

Under Atmanirbhar Bharat Package implemented for three months till August 2020, about 5.48 crore migrants -- who were not covered either state or central PDS -- were given for free around 2 lakh tonne rice and 0.74 lakh tonne wheat with a total expenditure of approximately Rs 989.30 crore, the survey said.