New Delhi: Short of storage space in the monsoon season, the government on Tuesday decided to offload eight million tonnes of foodgrains to BPL families and bulk users at subsidised rates, costing Rs 10,000 crore to the exchequer.
The decision was taken by an Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, in the face of severe shortage of storage capacity for foodgrains.
The situation may become grave once monsoon picks up in wheat growing north Indian states.
Against the total storage capacity of 63 million tonnes, the foodgrains stock with the government has reached a record 82 million tonnes as on June 1.
"The EGoM has agreed to allocate additional 5 million tonnes of foodgrains to BPL (Below poverty line) families. It has also agreed to allow 3 million tonnes of wheat through OMSS (Open Market Sale Scheme)," Food Minister K V Thomas told reporters after the meeting.
Under public distribution system, BPL families get 35 kg of wheat and rice per month at Rs 4.15 per kg and Rs 5.65 per kg, respectively.
The decision would also mean a windfall gain for bulk consumers such as flour millers and biscuit makers.
Against the procurement price plus other costs of Rs 1822 per quintal of wheat, the EGoM has fixed a price of Rs 1170 per quintal under the OMSS. On top of it, the government will bear freight cost, according to Food Ministry officials.
The extra allocation of foodgrains to BPL families will cost the government Rs 8,500 crore, while the sale of wheat to bulk users will have an extra burden of Rs 1,900 crore this year, they said.
The Food Ministry had proposed an extra supply of eight million tonnes to BPL families as recommended by the PMEAC Chairman C Rangarajan.
However, sources said the EGoM felt that supply of eight million tonnes at highly subsidised rates would have huge subsidy implication and allowed only 5 million tonnes.
Thomas said, "The EGOM said it will allow more quantity for BPL families if lifting by states is satisfactory."
For APL families, the minister said that the EGoM did not approve the proposal to allocate additional 2 million tonnes of foodgrains to APL (above poverty line) families as the last year's allocation was not lifted completely.
"Last fiscal, we had allocated additional two million tonnes of foodgrains to APL families, but only 50 percent were lifted by states. The EGoM allowed supply of the remaining one million tonnes for this year," Thomas added.
He said that the government is taking steps to add storage capacity and expressed confidence that it would be able to manage the situation.
To offload surplus stock, the government had allocated 5 million tonnes of foodgrains each for BPL and APL families in 2011-12 fiscal.
That apart, the Centre had allowed wheat and rice export in September last year. India has so far shipped 1 million tonnes of wheat and 5 million tonnes of non-basmati rice.
The government's foodgrains inventory has risen due to a record rice and wheat production in the 2011-12 crop year (July-June) which led to bumper procurement.
First Published: Tuesday, June 19, 2012, 22:50