After Arun Jaitley scraps sugar subsidy of Rs 4,500 cr provided to BPL families, Food Ministry urges FM to keep scheme alive for the poorest

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New Delhi | Published: February 15, 2017 5:23:11 AM

While under BPL around 40 crore beneficiaries were getting sugar subsidy, under NFSA the coverage for getting highly subsidised foodgrains through PDS has been virtually doubled

Finance Minister Arun Jaitley. Source: PTIFinance Minister Arun Jaitley. Source: PTI

While finance minister Arun Jaitley, in Budget, scrapped allocation of annual sugar subsidy of R4,500 crore provided to Below Poverty Line (BPL) families from next financial year, the food ministry has urged the Centre to continue with providing subsidy at least to the ‘poorest of the poor’ — 2.5 crore Antodaya Anna Yojana (AAY) families.

Official sources told FE that the rationale behind discontinuing sugar subsidy from the next fiscal was that following the implementation of National Food Security Act (NFSA), the category of BPL family has been done away with and replaced by more number of people referred to as ‘priority’ category.

“As there is no definition of BPL families in the food security legislation, the states are yet to inform us about the subsidised sugar being given through PDS system thus leading to a possible diversion of subsidy,” an official said.

Since last couple of years, following commencement of NFSA in 2014, the states have not provided details about the beneficiaries being covered under sugar subsidy especially those states who had started implementation of food security legislation few years back.

The sugar subsidy for BPL families at present are provided to around 40 crore beneficiaries in 30 states and union territories. About 2.7 million tonnes of sugar per annum is distributed through PDS sale where the food ministry provides Rs 18.50 per kg subsidy for purchase of sugar by the states for selling at subsidised rate through PDS. The rest of the Rs 13.50 per kg of sugar sold through PDS is paid beneficiaries while the sugar is sourced from the open market by states.

The food ministry has urged the finance ministry to provide sugar subsidy to AAY families as the category has been defined in the NFSA. The food ministry has already informed the states that the central government has decided to withdraw subsidy on sugar from next fiscal and they would have to bear the entire cost of sugar for selling at a cheaper rate via ration shops.

Sources also said that states are expected to protest the decision shortly as discontinuing sugar subsidy would impact them adversely. However, many food department officials from states acknowledge that following roll out of NFSA last year, sugar subsidy can’t continue as it would entail far greater number of people to be provided with subsided sugar which is financially crippling.

While under BPL around 40 crore beneficiaries were getting sugar subsidy, under NFSA the coverage for getting highly subsidised foodgrains under PDS has been virtually doubled.

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