Food Subsidies Are Becoming Uncontrolled: Economic Survey

Food subsidies are becoming uncontrolled, amendment of CIP is necessary to curb this: Economic Survey.

Food subsidies are becoming uncontrolled day by day due to the shortages of subsidized food grains and food management to two-thirds of the country’s population.

This is a matter of grave concern. The government needs to think urgently to curb this. The Economic Survey Report presented in Parliament has suggested effective steps for this.

The first measure to reduce the increasing food subsidy should be the proportionate increase in the cost of food grains given to consumers along with the cost price of grains. For this, the Central Issue Price (CIP) rules need to be amended.

Under the National Food Security Act (NFSA), 67 percent of the population is provided grain at a very subsidized rate.

Given the increasing commitment to food security, it has become difficult to reduce the economic costs of food management.

Due to this, food subsidy is continuously increasing. Food management flaws also need to be removed. But there is a rule to revise the CIP (Output Price) after every five years.

But it has not been revised even once, due to which one rupee kg of coarse grains, two rupees of wheat, and three rupees of rice is distributed. Since 2013, food grains are being distributed at the same rate.

The price of that grain is much higher than the rates at which grain is being supplied from ration shops. NFSA requires 6.02 million tonnes of grain every year.

Due to this, a subsidy of Rs 1.5 lakh crore has to be given annually. The Economic Survey report recommends amending the CIP to reduce the difference between the actual cost price of grain and CIP.

In the year 2013, the central issue price of wheat was Rs 2 per kg and rice was Rs 3 per kg, at that time the cost price of FCI was Rs 19.08 for wheat and Rs 26.15 for rice.

In the year 2020-21, the cost price of wheat has reached Rs 26.83 and the cost price of rice has reached Rs 37.23 per kg. Whereas, ration shops are still giving wheat 2 rupees and rice three rupees per kg.

The central agency Food Corporation of India (FCI) has a capacity of storing 8.19 million tonnes of food grains, of which 6.69 million tonnes are kept in godowns and 15 million tonnes of grains are kept in the open.