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LATEST NEWS UPDATES | Food subsidy bill may rise to Rs 81,000 cr

Food subsidy bill may rise to Rs 81,000 cr

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published Published on Jan 10, 2011   modified Modified on Jan 10, 2011

Government’s food subsidy bill is expected to swell to around Rs 81,000 crore in the current financial year, up from the Budget estimate of around Rs 68,000 crore for 2010-11 because of higher cost of procurement of wheat and rice and increased allocations to below poverty line and above poverty line families in the current financial year, official sources said.

The 19% estimated increase in food subsidy also includes those part which has been carried over from 2009-10. The difference between economic cost of foodgrain and their issue prices under targeted public distribution scheme (TPDS) and other welfare schemes is provided by the government as food subsidy. In 2009-10, government released Rs 58,242.45 crore as food subsidy and till November 2010, around Rs 40,832 crore has been released as food subsidy. “We will demand more in this Budget, but don’t know how much will be granted,” a senior government official said.

The central issue price (CIP) of foodgrain has been kept unchanged since 2002, while the economic cost (which includes, procurement price along with transportation and storage charges have risen consistently). In 2009-10, government bore a subsidy of 86% for distribution of wheat under the AAY scheme, 72.4% for BPL families and 59.2% for APL families. For distribution of rice to AAY families, it bore a subsidy burden of 84.2%, 70.2% in case of BPL families and 56.2% in case of APL families.

Meanwhile, in a related development officials said of the targeted 13.3 million tonne of storage space expected to built by private players, contracts have been finalised for around 8 lakh tonne which are expected to become operational in the next two years. The government is also unlikely to hike the import duty on crude and refined edible oils which stands at zero and 7.5%. There will not be any increase in import duty of crude and refined edible oils,” a senior government official told reporters, here.

To protect the domestic processors from cheaper imports, industry body Solvent Extractors Association of India (SEA) has been demanding an increase in the import duty on edible oils.

However, rising food inflation, which has increased to 14.44% for the week ended December 18, 2010, has forced the government not to tweak the existing duty structure.

Currently, with a zero import duty on crude palm oil, the domestic pricing of oil is directly exposed to price fluctuations in palm and soybean in the global markets.

In Delhi’s retail markets, prices of sunflower oil increased to Rs 108a kg on Tuesday from Rs 72 a kg in the same period last year, according to official data.

Similarly, mustard oil and soya oil prices have risen to Rs 77 a kg each from Rs 62-72 a kg in the review period, it showed.


The Financial Express, 5 January, 2011, http://www.financialexpress.com/news/food-subsidy-bill-may-rise-to-rs-81-000-cr/733376/0


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