Food subsidy may drop 30% to ₹3.72 lakh cr in FY 2021-22 – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/economy/food-subsidy-may-drop-30-to-372-lakh-cr-in-fy-2021-22/article38071583.ece

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Food secretary says cooking oil prices reduced by 15-20 % after govt intervention in cutting import duties

The Centre’s food subsidy is set to fall 30 per cent to ₹3.72 lakh crore in 2021-22 fiscal from ₹5.29 lakh crore in FY21, food secretary Sudhanshu Pandey said on Thursday. The current year’s subsidy also includes about ₹1.47 lakh crore to be spent only on the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), he said.

A major chunk of last year’s subsidy went to clear the arrear accumulated over the years, as the Food Corporation of India (FCI) used to get loans from the National Small Savings Fund while the government was provisioning in the Budget the interest component and a part of the subsidy requirement.

Under PMGKAY scheme, in which all 80 crore ration card holders are entitled to receive additional same amount of grains they get under the National Food Security Act (NFSA) free of cost, the government’s expenditure has already crossed ₹1.93 lakh crore since the programme started in April 2020, said S Jagannathan, a joint secretary in the food ministry. In a week, it will touch ₹2 lakh crore against an estimated expenditure of ₹2.6 lakh crore during two years of its implementation, he added.

So far, 56 million tonnes (mt) of rice and wheat have been distributed under PMGKAY with the off take of 93-94 per cent against allocation. The scheme will end on March 31, 2022.

Costly edible oils

On the prevailing high prices of edible oils, Pandey said the government has been closely monitoring prices of essential commodities in its inter-ministerial meetings on a weekly basis. “We can expect a higher mustard seed crop in coming months, which surely will have a softening effect on the prices,” he said.

Highlighting that some companies have already reduced the selling prices of their cooking oils by 15-20 per cent after government’s intervention in cutting import duties, the food secretary said domestic prices are influenced by international prices as the country is dependent on imports for almost 60 per cent of requirement.

Global effect

Global prices have gone up due to a drop in oil palm production in Malaysia, diversion to biodiesel in Indonesia and lower crop output of sunflower in Ukraine and of soyabean in Argentina, he said.

Commenting on the open market sale scheme (OMSS), FCI Chairman Atish Chandra said the after the policy was “liberalised” in 2021-22 with the objective to offload the surplus stocks of wheat and ease out storage crunch, the off take has increased. Total offtake of both wheat and rice under OMSS was 7.14 mt as of December 29 since April 1, 2021, as against 2.07 mt in the year-ago period.

Grain reserves

FCI’s wheat and rice stock position should be 21.41 mt (buffer norm and strategic reserve) as of January 1, whereas it is likely to be over 60 mt in 2022. As on December 1, FCI had 59.2 mt of both rice and wheat, besides additional 35.9 mt in form of paddy.

To provide the benefit of subsidised foodgrains to homeless and destitute without ration cards, the Centre is developing a system to capture their data. All ration card holders get wheat at Rs 2/kg and rice at Rs 3/kg at five kg per person per month under NFSA.

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