Due to an increase of over Rs 100 per quintal in the economic cost of foodgrains.
The subsidy on wheat and rice supplied through the public distribution system (PDS) has risen sharply, thanks to an increase of over Rs 100 per quintal in the economic cost of foodgrains.
The level of subsidy in 2009-10 worked out at between 56 and 60 per cent for the above poverty line (APL) category consumers and between 70 and 72.4 per cent for the below poverty line (BPL) consumers.
According to the latest estimates made by the Ministry of Food and Public Distribution, the net economic cost (procurement price plus incidentals and overheads) of wheat rose to Rs 1,504.39 per quintal in 2009-10, up Rs 111.71 from Rs 1,392.68 in 2008-09.
In the case of rice, the economic cost surged to Rs 1,893.71 per quintal from Rs 1,789.78 in the previous year, registering a gain of Rs 103.93 per quintal. The increase in economic cost of grains and the subsidy is attributed by ministry sources to hike in procurement prices and increase in the foodgrain stocks without any change in the issue prices of wheat and rice.
The procurement price of wheat was hiked by Rs 80 per quintal to Rs 1,080 in 2009-10 and that of paddy by Rs 100 a quintal to Rs 950 per quintal for the common paddy and Rs 980 for grade ‘A’ paddy. The issue prices (at which the Centre supplies grains to the states for the PDS) have remained unchanged at Rs 610 a quintal for wheat meant for the non-poor (APL) and Rs 415 a quintal for the BPL.
For rice, the issue prices have remained static at Rs 830 a quintal for the APL and Rs 565 a quintal for the BPL.
The total stocks of wheat and rice in the central grain coffers were estimated at over 43.8 million tonnes on October 1, 2009, more than two-and-half times the mandated minimum stockholding of 16.2 million tonnes under the buffer norms for that date. The stock of wheat was 28.45 million tonnes, against the buffer norm of 11 million tones, and that of rice was 15.34 million tonnes, against the required buffer of 5.2 million tonnes on October 1.
The total grain inventory on October 1, 2008, was only 29.88 million tonnes, comprising 22 million tonnes of wheat and 7.8 million tonnes of rice.
As a result of inventory build-up and higher costs, the subsidy on wheat meant for supply to the non-poor through the PDS surged to Rs 8.94 per kg in 2009-10, marking an increase of Rs 1.11 per kg from Rs 7.82 per kg in the previous year.
For the BPL, the subsidy on wheat works out at Rs 10.89, up Rs 1.12 a kg from Rs 9.77 per kg in 2008-09.
In the case of rice meant for the APL, the increase in subsidy came to Rs 1.03 per kg in 2009-10 over the previous year for both non-poor and poor categories. The net per kg subsidy surged to Rs 10.63 a kg for the APL and Rs 13.28 for the BPL in 2009-10. In terms of percentages, the subsidy on wheat for non-poor came to around 60 per cent in 2009-10, against a little over 56 per cent in 2008-09.
For the BPL people, the subsidy was over 72 per cent in 2009-10, against 70 per cent in the previous year. The subsidy on rice, worked out to over 56 per cent in 2009-10 for the APL, against over 53 per cent for the BPL people. The rice subsidy for the BPL came to over 70 per cent in 2009-10, against over 68 per cent in the year before.
