Although Finance Minister P. Chidambaram has pledged an additional amount of Rs. 10,000 crore to meet the requirement of providing concessional foodgrains to only identified beneficiaries under the proposed National Food Security Bill, it appears that he has garnered this sum by curtailing the annual budgeted Public Distribution System food subsidy requirement of the Department of Food.

The food subsidy budgeted for 2013-14 is Rs. 80,000 crore, and compared with the Rs. 85,000 crore projected in the revised estimates for 2012-13, this indicates a reduction of Rs. 5000 crore.

Having made this reduction, the Minister has, therefore, allocated only an additional Rs. 5000 crore for the food subsidy bill. According to informed sources, the annual budgeted subsidy estimate of the ministry for 2013-14 was around Rs. 90,000 crore. As against this, the allocation is for Rs. 80,000 crore.

The estimated requirement of food subsidy in the government’s National Food Security Bill was Rs. 1,17,000 crore for distribution of 7 kg of foodgrains per person per month.

Subsidy demand

The Parliamentary Standing Committee, to which the Bill was referred, projected a subsidy demand of Rs. 1,12,000 crore for the distribution of 5 kg foodgrains per person per month. They suggested coverage of 67 per cent of the population.

By all accounts, the food bill subsidy allocation should be between ideally Rs. 20,000 to Rs. 30,000 crore, unless the government intends to reduce the number of beneficiaries.