February 20, 2020
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In Tray

The 10 per cent hike in wheat price is supposedly nominal, but will impact the food subsidy bill "We can't leave the entire marketing operations to the farmers" R.D. Kapur Food secretary

In Tray
Tribhuvan Tiwari
In Tray
This is not the first time the government has not heeded the CACP suggestion not to raise support prices. The CACP is anyway a recommendatory body, and the cabinet is jointly responsible for this decision. And a 10 per cent hike is a very nominal hike, though it will have an impact on the food subsidy by adding to the huge buffer. This fiscal’s subsidy is Rs 21,200 crore, out of which Rs 8,339 crore is the buffer-carrying cost (last year, it was Rs 6,492 crore).

Assuming a 22 mt rabi wheat procurement, the additional financial impact of the price hike, including state government taxes, will be about Rs 270 crore or so. Plus of course, there will be the impact on the buffer-carrying cost. But we cannot scrap the food security arrangement yet, nor can we leave the entire marketing operations to the farmers. We have to protect them against any crash in price. Offtake has been improving too. Till February, total offtake from the central pool was 26 mt and PDS accounted for 45 per cent of it. We also exported over 5 mt of wheat and 1.9 mt of rice so far. So, technically, less than half of the food subsidy is the actual subsidy. Even that is not a high figure for a country with high malnutrition.

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