The Food Subsidy, and How It Is Delivered

Depart­ment of Food and Pub­lic Dis­tri­b­u­tion#

Almost the whole of the Min­istry's bud­get goes to this depart­ment. In one year's bud­get it was allo­cated Rs 2,42,836 crore, about 99% of the Min­istry's allo­ca­tion and 48% more than its 2019-20 expen­di­ture.

For the Finan­cial Year (FY) 2020-21, the depart­ment was allo­cated a bud­get of more than 1.2 Lakh crore. This was about 6%, or roughly Rs 7,000 crore, higher than the revised esti­mate for 2019-20.

The objec­tives of this depart­ment are to ensure Food secu­rity through the fol­low­ing actions which are listed below.

1. Food pro­cure­ment
2. Food stor­age
3. Dis­tri­b­u­tion of Food Grains
4. Reg­u­lat­ing the sugar sec­tor.

Food sub­sidy: the largest com­po­nent of the depart­men­t's bud­get#

Food sub­sidy is cal­cu­lated as the dif­fer­ence between the eco­nomic cost of procur­ing food grains (includ­ing pro­cure­ment, stock­ing, dis­tri­b­u­tion), and their Cen­tral Issue Price (CIP). Cen­tral Issue Price (Rs/kg) is the price at which the Gov­ern­ment sells the food grains to house­holds belong­ing to Anty­o­daya Anna Yojana (AAY), Below Poverty Line (BPL), and Above Poverty Line (APL).

1. Food sub­sidy is the largest com­po­nent of the Depart­ment of Food and Pub­lic Dis­tri­b­u­tion.
2. Food Sub­sidy accounts for 95% of the total bud­get allo­cated to the Depart­ment of Food and Pub­lic Dis­tri­b­u­tion.
3. Cur­rently, Food Sub­sidy cov­ers 81 crore peo­ple.
4. As per the National Food Secu­rity Act of 2013, food sub­si­dies should cover 50% of the pop­u­la­tion in urban areas and must cover 75% of the pop­u­la­tion in rural areas.
5. Depart­ment of Food and Pub­lic Dis­tri­b­u­tion gives the food sub­sidy to the Food Cor­po­ra­tion of India (FCI) and states. These enti­ties in turn pro­cure food grains from the farm­ers at the Gov­ern­ment noti­fied Min­i­mum Sup­port Prices (MSP).
6. Once the food grains are pro­cured from farm­ers, the Food Cor­po­ra­tion of India (FCI) sells the food grains at lower sub­si­dized prices also known as Cen­tral Issue Prices (CIP). It is sold to peo­ple from eco­nom­i­cally weaker sec­tions of the soci­ety through fair price shops under the pub­lic dis­tri­b­u­tion sys­tem.
7. Food­grains are also given to intended ben­e­fi­cia­ries through mid-day meal schemes.
8. The bud­get allo­cated for food sub­sidy also cov­ers the costs incurred for stor­ing food grains by the Food Cor­po­ra­tion of India.

Food Sub­sidy – 3 Main Com­po­nents#

The 3 ways of spend­ing food sub­sidy by the Depart­ment of Food and Pub­lic Dis­tri­b­u­tion are listed below,

1. The sub­sidy is given to the Food Cor­po­ra­tion of India
2. The sub­sidy given to the states.
3. Sugar sub­sidy

Nutri­tional Require­ments of Poor Peo­ple – Imple­men­ta­tion#

1. Cur­rently, the food items pro­vided by the cen­tral gov­ern­ment for dis­tri­b­u­tion under PDS are rice, wheat, and sugar.
2. 5 kg of food grains is given per per­son per month at sub­sidised prices. This rule is based on the National Food Secu­rity Act, 2013.
3. As per Anty­o­daya Anna Yojana, each of the house­holds belong­ing to the poor­est of the poor sec­tion will be pro­vided 35 kg of food grains per month at sub­si­dized prices.
4. The National Food Secu­rity Act, 2013 requires the cen­tral and state gov­ern­ments to under­take steps to diver­sify com­modi­ties dis­trib­uted under PDS.