India’s food subsidy to cross Rs 1,00,000 crore

India will spend about Rs 1.12 lakh crore per year if the Food Security Bill is passed in its current shape, KV Thomas, India’s minister for consumer affairs, food & public distribution said. The amount is nearly 10% of what the central government spends in a year.

The number is nearly twice the amount the government spent on food subsidies in 2009-10 and almost five times what it spent on food rationing in 2006-07.

The total food subsidy bill is a sensitive topic among budget planners due to the widely held belief that more than half of the money actually goes to the hands of corrupt officials and grain traders.

India’s public distribution system is seen as one of the most corrupt and leaky in the country, with widespread diversion and substitution of food grains by corrupt officials and merchants. As such, experts have urged the government to plug the holes, instead of sending more cash into the pipeline, to benefit the poor.

Speaking at the All-India Editors’ Conference on Social Sector Issues (ECSSI) in Puducherry today, Thomas said food subsidies are likely to touch Rs 89,000 crore next year, even without implementing the new food bill.

The new food bill drastically increases the coverage of India’s subsidized food distribution scheme, bringing within its fold even relatively well off sections.

Thomas said even if the current scheme is reimplemented according to the 2011 census, the subsidy amount will be close to Rs 1.1 lakh crore.

In comparison, India spends about Rs 1.6 lakh crore on its defence, per year.