FOOD SUBSIDY (Syllabus: GS Paper 3 – Economy)

Context: The Centre’s subsidy bill on the ‘3 Fs’ — food, fertiliser and fuel — is slated to fall to a five-year-low of Rs 3,81,175 crore in 2024-25, as per the Interim Budget.

Key Points

• Discontinuation: The free, extra 5-kg monthly grain allocation provided to over 80 crore PDS beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana has been discontinued.

oThis supplementary rice or wheat, beyond the regular 5 kg/person/month PDS quota, was offered from April 2020 to December 2022.

• End of Post-Covid Relief Measures: The additional grain allocation, initiated as a post-Covid relief measure, concluded in the last calendar year.
• Reduction in Annual Grain Offtake:The annual grain offtake through PDS and other schemes has declined to 64-65 million tonnes in 2023-24.
• Contrasting with 92.9 mt in 2020-21 and 105.6 mt in 2021-22, this reduction indicates a significant shift in the distribution and consumption patterns.

Food Subsidy

• Establishment: Formed in 1965, the FCI is tasked with the procurement, distribution, and storage of food grains, ensuring economic costs cover procurement, storage, and distribution expenses.
• Nodal Ministry: The Department of Food and Public Distribution operates under the Ministry of Consumer Affairs, Food and Public Distribution, serving as the nodal ministry for food-related matters.
• Components of Food Subsidy:

oSubsidy to FCI: The government supports FCI with subsidies for procuring food grains from farmers at notified prices.

oSubsidy to States: Central government extends food subsidies to states under the decentralised procurement scheme, allowing states to handle procurement, distribution, and storage on behalf of FCI.

oSugar Subsidy: As part of the Antyodaya Anna Yojana, poor families receive a sugar subsidy, providing one kg of sugar per month at a subsidized price to address nutritional needs.