Govt's foodgrain buys may suffer if extra funds not sanctioned

The food ministry has revised the food subsidy bill upwards by Rs 26,314 crore to Rs 81,535 crore for 2010-11 from earlier projection of Rs 68,198 crore, the official said.

"As of now, Rs 55,211 crore has been allocated and if additional funds are not made available, this Department will not be able to release full subsidy amount to FCI and state procurement agencies. This could impact procurement operations this year," the official noted.

The Food Corporation of India is the government's nodal agency for the procurement and distribution of foodgrains.

Of total revised estimate of Rs 81,535 crore, the anticipated food subsidy requirement of FCI is Rs 65,575 crore, while that of state agencies Rs 15,950 crore for the current fiscal.

The food subsidy bill has gone up due to additional allocation of 83 lakh tonnes made in the course of the year pursuant to the government decisions, the official said.

"Delayed or inadequate release of the food subsidy amount to FCI and state agencies would further add burden of interest on food subsidy," the official stressed.

A major part of the food subsidy amount is used to reimburse the Food Corporation of India (FCI) and the state agencies for buying rice and wheat from farmers at the minimum support price and to maintain buffer stock as a measure of food security.

FCI is also reimbursed of distribution cost of subsidised foodgrains to poor via ration shops.

FCI has so far purchased over one million of rice grown in the 2010-11 Kharif season. It has kept a target to buy 31 million tonnes till September 2011. It will start wheat procurement from March 2011.