Food subsidy keeps growing

SUBSIDY BILL/ Over 2% higher than Rs 25,200 cr in the revised estimate for 2003-04

The Union Budget presented yesterday has earmarked Rs 25,800 crore as food subsidy this fiscal, over 2 per cent higher than the Rs 25,200 crore in the revised estimate for 2003-04.

The hike in the food subsidy bill has been attributed to the increased off-take of foodgrains. The government's expenditure on food subsidy accounts for over 61 per cent of the major subsidies amounting to Rs 42,021.15 crore estimated in the Budget.

Other subsidies include Rs 8,143.15 crore earmarked under the retention price scheme for indigenous (urea) fertiliser, Rs 473 crore for imported urea, Rs 4,046 crore identified for payment to manufacturers and importers of fertilisers and agencies. In addition to this, Rs 3,559 crore has been set aside as petroleum subsidy.

Finance Minister P Chidambaram said he would table a report on subsidies in the next session of Parliament.

"Seven years ago, I placed before Parliament the first paper on subsidies. The national common minimum programme pledges that all subsidies will be targeted sharply at the poor and truly needy like small and marginal farmers, farm labour and the urban poor. I have asked the National Institute of Public Finance and Policy (NIPFP) to prepare a blue print to accomplish these objectives. I expect to place the report before the House in the next session of Parliament," Chidambaram said.

The Union Budget last year had initially estimated a food subsidy bill of Rs 27,800 crore during 2003-04, which was later revised downwards to Rs 25,200 crore. The downward revision was mainly due to the reduction in carrying cost of food stocks.

Food subsidies continues to be the largest non-Plan expenditure of the Central government. The huge food subsidy bill is preceded only by interest payments and the country's spend on defence, which have been estimated at Rs 1.20 lakh crore and Rs 60,300 crore respectively in this year's Budget.