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Government allocates Rs 74,551.99 crore Food Subsidy for 2012-13

07 Sep 2012 Evaluate

The Government has allocated Rs 74,551.99 crore Food Subsidy for the current year, as per the information provided by KV Thomas, Minister for Consumer Affairs Food and Public Distribution System. The food subsidy allocated by the government during the last three years stood at Rs 58,242.45 crore, Rs 62,929.56 crore and Rs 72,370.90 crore for year 2009-10, 2010-11 and 2011-12 respectively.

On distribution of foodgrains the government releases food subsidy to Food Corporation of India (FCI) and Decentralised Procurement (DCP) States. The difference between cost of foodgrains procured and Central Issue Price (CIP) determines the subsidy which is to be released by the government. Under Decentralised Procurement (DCP) Scheme, the states undertake the responsibility of procurement of foodgrains, its storage and distribution under Targeted Public Distribution System (TPDS). The entire difference between the economic cost of foodgrains and Central Issue Price (CIPs) is reimbursed to these states directly as food subsidy.

Based on estimates given by DCP States an advance subsidy covering 90% of the estimated requirement is released during every quarter as per the current policy. Whereas based on provisional estimates given by states, provisional subsidy at 100% of fixed costs (Minimum Support Price, Bonus and Taxes) and 95% of variable costs (i.e. other remaining procurement incidentals) is released at the end of the quarter. Only upon submitting the final audited statements by DCP states the outstanding actual subsidy is released.

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