After LPG success, Narendra Modi government wants public to give up food subsidies

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New Delhi | April 25, 2017 7:15 AM

Buoyed by the success of the Give-It-Up campaign that coaxed over 1 crore households to forgo the subsidy on cooking gas, the Centre has written to all state governments seeking their support for a similar scheme to cut its rising food subsidy bill.

The Centre’s food subsidy budget has increased 61% to Rs 1.45 lakh crore (budget estimate) for the current fiscal from Rs 89,740 crore in 2013-14. (Reuters)

Buoyed by the success of the Give-It-Up campaign that coaxed over 1 crore households to forgo the subsidy on cooking gas, the Centre has written to all state governments seeking their support for a similar scheme to cut its rising food subsidy bill. Sources told FE that the Union food ministry in a communication to states has said Give-it-Up should be promoted under the Targeted Public Distribution System (TPDS). The ministry wants all the 5-lakh-odd fair price shops in the country to display the “real cost of the subsidy” for rice and wheat so that those who can do without the sop could be persuaded to give it up. The Centre expends Rs 21.09 per kg and Rs 29.64 per kg respectively as subsidies on wheat and rice currently.

While the food ministry’s plan is part of the Modi government’s plan to curb the leakages of welfare funds and limit the benefits to the really needy, sources said it would be much more difficult to implement the Give-it-Up scheme for TPDS. As many as 82 crore people — two-thirds of the country’s population — are covered under the National Food Security Act (NFSA) while the LPG subsidy is limited to some 19 crore households.

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Food ministry sources NFSA beneficiary list appears to be “on the higher side”. While NFSA beneficiaries get monthly entitlement of 5 kg of rice, wheat or coarse grains at Rs 3, Rs 2 and Rs 1 per kg, some states like Chhattisgarh, Odisha and Madhya Pradesh give even higher subsidy, at the state governments’ cost. “We are constantly taking steps to ensure that only those who need highly subsidised foodgrains get them through TPDS,” an official said.

The Centre’s food subsidy budget has increased 61% to Rs 1.45 lakh crore (budget estimate) for the current fiscal from Rs 89,740 crore in 2013-14. The government has adopted several measures such as seeding of Aadhaar cards of 23 crore ration card holders, besides installing electronic point of sale (e-PoS) machines at fair price shops (FPSs) to curb diversion of subsidised foodgrains.

While 78% of ration cards have been seeded in the country, e-PoS machines have been installed in around 36% of the FPSs.

Under the voluntary Give-it-Up programme initiated by the petroleum ministry, more than 1 crore LPG consumers (households) have opted to buy cooking gas cylinders at the market price out of the total 20 crore. The subsidy amount is now directly transferred to beneficiaries’ bank accounts.

Food Corporation of India in collaboration with state government-owned agencies procures around 55 to 58 million tonnes of rice and wheat annually. While around 50 mt is allocated to be distributed under NFSA, the rest is stored as buffer stock.

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