Government will not make any change in food and fertilizer subsidy, decision taken due to farmer movement

There has been no change in the CIP of wheat and rice since 2013.

There has been no change in the CIP of wheat and rice since 2013.

Now the Finance Ministry will not make any change in food and fertilizer subsidy in view of the agrarian movement. The government has not made any changes in this since 2013. Concerns have been expressed about the increasing burden of both these subsidies in the Economic Survey and the 15th Finance Commission report.

  • News18No
  • Last Updated:February 23, 2021 11:49 AM IS

New Delhi. In view of the farmer movement, now the Finance Ministry has postponed the proposed changes in food and fertilizer subsidy indefinitely. The government is afraid that with this change on food and subsidy, farmers and poor classes will start to protest more. Since 2013, till now the government has not revised the subsidy on food grains under the Public Distribution System (PDS). Apart from this, direct transfer (DBT) of fertilizer subsidy money to farmers’ account has also not moved beyond the pilot project.

In a media report quoting the Finance Ministry official, it said, “We will continue the food and fertilizer subsidy for the financial year 2021-22. However, now it is not in a position to continue in this form. This is not the right time for any reform in these subsidies.

Thousands of farmers of Punjab, Haryana and Uttar Pradesh are opposing the three agricultural laws on the border areas adjacent to Delhi. They demand that these three laws be withdrawn and the government should also get a guarantee of minimum support price i.e. MSP for crops.

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For the financial year 2021-22, the budget has allocated Rs 2.4 lakh crore for food subsidy and Rs 80,000 crore for fertilizer subsidy. Both the Economic Survey and the 15th Finance Commission – report has expressed concern about the increasing burden of food and fertilizer subsidies. In the Economic Survey for the financial year 2021, it was said that food subsidies are still ‘growing unbearably’. It further said, “With increasing commitment to food security, it is difficult to reduce the economic cost of food management. The Central Issue Price (CIP) needs to be revised so that the rising food subsidy bill can be reduced.

How much is the CIP of wheat and rice?
The difference between the economic cost per quintal and the CIP per quintal provides information on food subsidy at every quintal. There has been no change since 2013 in the CIP of wheat and rice for National Food Security Act (NFSA) beneficiaries. It remains at Rs 200 per quintal for wheat and Rs 300 per quintal for rice.

Increase in economic cost per quintal for wheat and rice
On the other hand, for the operation of the Food Corporation of India (FCI) in the financial year 2013-14, the economic cost for each quintal of wheat is Rs 1,908.32. It has reached Rs 2,683.84 per quintal in the financial year 2020-21. Similarly, for rice it has increased from Rs 2,615.51 per quintal in 2013-14 to Rs 3,723.76 in FY 2020-21.

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How is fertilizer subsidy given at present?
In 2016, the Department of Fertilizers had prepared a program to apply the subsidy amount for fertilizer through direct benefit transfer. It was also implemented as a pilot project in 16 districts. Currently, fertilizer subsidies are transferred to the manufacturer based on point of sale device data at retail outlets. After reforming the earlier system, subsidy payment was implemented on the basis of sales data. It is believed that the identification of real beneficiaries is also a reason for delay in direct benefit transfer.

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