India's FY10 food subsidy bill up a whopping 65 per cent

India's food subsidy bill has crossed Rs72,000 crore in the 2009-10 fiscal, a 65 per cent jump over the previous year, due largely to higher procurement and rising cost of foodgrains, estimates show.

The central government extends subsidy to procurement agencies like the Food Corporation of India (FCI) to cover the buying-selling price differential.

Government procurement agencies buy at a higher cost and sell cheap in order to ensure that the farmer gets a good price for his produce - the minimum support price. At the same time, the government also makes the same foodgrains available to the poor at below market rates by footing the subsidy bill.

According to a senior government official, the requirement of food supply for the 2009-10 fiscal is Rs72,234.98 crore as against the budgetary provision of Rs58,228 crore.
 
For the 2008-09 fiscal, the centre shelled out Rs43,668 crore for the food subsidy.

The official added that the 65 per cent rise was mainly due to the record foodgrain procurement, to ensure increased supplies for distribution through the public distribution system at controlled rates.

Procurement of rice and wheat in 2009-10 totaled 59 million tonnes.