The Hindu : Karnataka News : Food subsidy rate will not help State

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Tuesday, Jul 07, 2009
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Karnataka

Karnataka

Food subsidy rate will not help State

Special Correspondent

Bangalore: The proposal in the Union Budget to provide rice and wheat at Rs. 3 means little to below poverty line (BPL) card-holders in Karnataka in terms of the cost involved because they are already getting rice at this price.

However, it means an increase in the quantum from 20 kg to 25 kg per month.

Key question

What the Union Government’s announcement means to the State exchequer is a crucial question, considering the mismatch between the number identified as BPL in Karnataka and the number for which Centre provides foodgrains at subsidised rates.

Based on the National Sample Survey Organisation, there are 31.6 lakh BPL and AAY (Antyodaya Anna Yojana) families in Karnataka, and the Centre, therefore, releases ration to only these cards at a subsidy.

While Karnataka got rice at Rs. 5.56 and wheat at Rs. 4.15 so far, it will now be reduced to Rs. 3 for the same number.

However, the Karnataka Government buys foodgrains for the rest (called Extra-BPL cards holders), paying a much higher rate and sells it at subsidised rates.

However, there are 78.46 lakh BPL cards in Karnataka, in addition to the temporary BPL cards distributed recently. The new subsidy rates will not affect this expense in any way.

Mismatch

Therefore, though the subsidy now announced might lessen the State’s burden to an extent, the mismatch in the numbers will mean that the State will continue to spend large sums of money on buying foodgrains from the Centre.

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