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- The Union Cabinet’s decision to provide free grain to all beneficiaries of the National Food Security Act (NFSA) for one year may help Tamil Nadu save ₹1,650 crore in food subsidy.
- This figure is premised on the Centre retaining the existing grain allotment (essentially, rice in the context of Tamil Nadu) under the Act and absorbs the cost in full.
- Monthly off-take
- The State’s average monthly off-take is taken as around 2.96 lakh tonnes of the grain, including about 8,530 tonnes of wheat and 2.87 lakh tonnes of rice.
- In fact, in view of wheat shortage this year, the Centre sanctioned an additional quantum of rice to the State. The overall allocation is, in turn, decided by the allotment under three categories — Antyodaya Anna Yojana (AAA), Priority Household (PHH) and ‘tide over.’
- While the issue price of rice for AAA and PHH is ₹3 per kg, it is ₹8.3 for the third category. Over and above the Centre’s allocation under the Act, the State requires at least 20,000 tonnes.
- It is procuring this quantum under the Open Market Sales Scheme (OMSS) of the Food Corporation of India or from private traders.
- The rate fixed by the Union government’s Department of Food and Public Distribution for procurement under the OMSS is ₹23 a kg.
- This year, the Centre suspended the sale of rice through this option, forcing the State to buy from the traders.
- The State’s food subsidy is ₹7,500 crore, according to the budget estimates for the current year.
- As it implements a universal public distribution system and supplies more than what has been stipulated under the Act, its subsidy bill shoots up by ₹3,000 crore-₹4,000 crore. During 2021-22, the original provision was ₹6,500 crore, but the eventual cost was ₹9,324.24 crore.
- The possible relief to the State would likely get neutralised with the expected higher paddy procurement from mid-January, after Pongal.
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB
