Food subsidy

The Indian government provides food subsidies to ensure that essential food grains are affordable for low-income populations. This is achieved through the Public Distribution System (PDS), a network of fair price shops that sell subsidized rice, wheat, and other staples to eligible beneficiaries.

Here's a breakdown of the key points

• Objective: Protects farmers by procuring crops at Minimum Support Prices (MSP) and provides subsidized food for consumers through the Public Distribution System (PDS).

• Legislation: National Food Security Act, 2013 (NFSA) guarantees subsidized food grains to nearly two-thirds of the population.

• Implementation:

  • Food Corporation of India (FCI) procures grains from farmers at MSP.

  • FCI sells these grains to states at subsidized Central Issue Prices (CIP).

  • States distribute subsidized grains through PDS fair price shops.

Financial Outlay

• In 2022, the financial outlay for the food subsidy program was ₹2.06 lakh crore.
• This marked a significant decrease from the all-time peak allocation of ₹5.41 lakh crore in 2020-21.

Benefits

• Reduces hunger and malnutrition.
• Provides price stability for essential food items.
• Supports farmers' income.

Challenges

• High fiscal burden on the government.
• Leakages and inefficiencies in the PDS system.
• Targeting effectiveness - reaching the truly needy.

Recent Trends

The food subsidy bill has fluctuated in recent years. The substantial allocation in 2020-21 was likely due to pandemic-related interventions to ensure food security for vulnerable populations during lockdowns and economic disruptions. The decrease in 2022 suggests a return to pre-pandemic levels or a potential streamlining of the program.

Subsidy for Consumers

• Provides affordable food grains like rice and wheat to a large population.
• Aims to cover roughly 900 million people, or 67% of the estimated population for 2020.
• Delivered through the Public Distribution System (PDS) network of ration shops.
• Recent budget allocated Rs 2.06 lakh crore for the program, most of the Department of Food and Public Distribution's budget.

Conclusion

Food subsidy remains a critical policy tool in India's battle against hunger and ensuring food security for its vast population. It provides a vital safety net for low-income households and safeguards farmer incomes.