Food Security and the PDS in India
The Food Subsidy Bill
Selling grain below cost makes food subsidy a major government expense, often around ₹2 lakh crore a year.
Cheap grain costs the treasury a lot.
Economic cost
The cost of procuring, storing and distributing a kilo of grain is far higher than its issue price.
The gap
The difference is paid by the government as subsidy.
Scale
Food subsidy is among the largest items in the Union Budget.
Debate
Some argue for cash transfers instead of grain, while others say grain protects against price shocks.
A costly kilo
Rice that costs around ₹40 to deliver may be sold to beneficiaries at ₹3 or free.
Treating subsidy as a pure waste
It also serves protection and farm support goals.
Key takeaways
- Delivery cost far exceeds issue price.
- Subsidy is very large.
- Cash versus grain is debated.
- Multiple goals are served.
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