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LATEST NEWS UPDATES | Pranab vetoes extra food subsidy to states-Ravish Tiwari

Pranab vetoes extra food subsidy to states-Ravish Tiwari

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published Published on Mar 28, 2012   modified Modified on Mar 28, 2012

In the first example of his intention to take “difficult decisions” to contain the ballooning subsidy burden to control the fiscal deficit, Finance Minister Pranab Mukherjee on Monday denied permission to food minister KV Thomas for about 26.5 million tonnes of additional food grain allocation to states at subsidised rates over the normal allocation that would have cost the exchequer Rs 32,794 crore of food subsidy.
 
“It will have to be done keeping in view the the food subsidy limit,” Pranab Mukherjee was learnt to have tersely said returning the food ministry’s proposal for additional food grain allocation to states at highly subsidised rates while chairing the meeting of the Empowered Group of Ministers (EGoM).

The food ministry’s proposal sought to enhance the food grain entitlement to above poverty line (APL) category households to 20kg per family as against the normal allocation of 10 kg per family with an additional allocation of 12.5 million tonnes for the APL category across the states, including West Bengal which had recently mounted pressure on Thomas to expedite the additional sanctions.

The food ministry, in addition had proposed 10 million tonnes of food grains for BPL category households at the highly subsidised rates with another four million tonnes of good grains for the APL category at prices marginally higher than the APL rates but much lower than the economic costs.

“The subsidy on account of the above additional allocations is estimated to be Rs 15,029 crores in respect of BPL allocation and Rs 17,765 crores in the case of increased APL allocations at 100 per cent offtake, after adjusting for savings on carrying cost,” Food Ministry’s proposal had projected in its note to the EGoM.

Sources in the ministry, however, suggested that the decision did not mean rejection of their proposal and they need to re-work their proposal keeping in view of the food subsidy provisions for the next fiscal.

But, this return of the proposal meant another headache for the food ministry with the wheat procurement season starting next month. Apart from providing subsidised food grains to the needy sections, the proposal was envisaged as a step towards “liquidating the surplus stocks” to free up space for fresh procurements.

However, the EGoM decided to continue the permission of exports of wheat and non-basmati rice under Open General Licence (OGL) given the huge food stocks with the government and estimates suggesting bumper harvest of wheat as well. In another decision, the EGoM approved further exports of one million tonnes of sugar.

The Indian Express, 27 March, 2012, http://www.indianexpress.com/news/pranab-vetoes-extra-food-subsidy-to-states/928817/0


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