Food subsidy bill for FY24 to overshoot Budget estimates, breach ₹2 trillion

livemint.com:

NEW DELHI : The Union government’s food subsidy bill for fiscal year 2023-24 is likely to overshoot the budgeted estimate of ₹1.97 trillion, prompting the food department to seek additional funds primarily to support its flagship programme. Revised allocation for the ongoing fiscal year is expected to go up by 3% to ₹2.02 trillion, a top official of the department of food and public distribution told Mint.

The department requires additional funds of nearly ₹5,600 crore for decentralised procurement of foodgrains under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme, and sugar subsidy for families covered under the Antyodaya Anna Yojana programme, this official said, declining to be identified. India’s food subsidy bill is likely to go up next year as well, as the Union government recently extended the PMGKAY scheme, its flagship food welfare programme, for another five years ahead of this year’s general election.

This will require more procurement and storage capacity and a higher state-set minimum or guaranteed price for wheat and rice. Containing spending on food subsidy is crucial for managing India’s fiscal deficit, which the government is targeting at 5.9% of gross domestic product this financial year, with plans to lower it by at least 50 basis points in fiscal year 2024-25.

“In view of a hike in (minimum support price) of crops and other incremental expenses, including the extension to the free food scheme, the food subsidy bill is bound to increase," the official mentioned above said. “Though the (budgeted estimate) is ₹1.97 trillion for food subsidy in FY24, we require a slightly higher budget.