CAG says arrears of five years were Rs 2,968 crore more than expenditure in 2016-17
For the first time in the last five years, food subsidy arrears have surpassed the total subsidy expenditure in 2016-17, the latest Comptroller and Auditor General (CAG) report on finance ministry revealed.
According to the CAG report, in 2016-17, foodgrain subsidy arrears rose to Rs 81,303 crore while the expenditure registered Rs 78,335 crore.
In the report tabled in Parliament, the CAG said off-budget financing was being used to defer fertiliser arrears, food subsidy bills and outstanding dues of Food Corporation of India (FCI) through borrowings.
“It is evident that there was an increase of about 350% in carried over subsidy arrears in the five years preceding 2016-17, which require financing from a number of methods, including very high-interest cash credit facility, which increases the actual cost of this subsidy substantially,” CAG said in its audit report tabled in Lok Sabha on Monday.
DNA Money analysed the data obtained from the Food Corporation of India (FCI), which shows that the gap between the released subsidy amount and FCI's claim has gradually widened in the last 14 years. Audited accounts of FCI revealed that the percentage of released subsidy amount of claim came down from 88% to 49% from 2003-04 to 2016-17.
On behalf of the government, FCI procures foodgrain at minimum support price (MSP) to provide it for public distribution system (PDS). The difference between the procurement price and cost of delivering it to the fair price shops works out as subsidy bill. FCI raise this bill to finance ministry via the Ministry of Consumer Affairs, Food and Public Distribution.
The finance ministry responded to CAG that “due to budgetary constraints, it may not be possible to provide the entire amount of food subsidy in a particular year. The off-budget financial arrangement is to meet the working capital requirement of FCI which was being met from banking sources independently.”
Commenting on the issue, V Upadhya, former economics professor of IIT-Delhi, said, “Actually, the government should be clear about the financing policy for such socially relevant subsidy schemes. Fiscal responsibility should not come as bottleneck for these welfare schemes. Some relaxation in fiscal deficit limit may, in fact, be beneficial for the economy if the additional expenditure is done to improve poor people's economic conditions.”
FOOD FOR THOUGHT
- Rs 81,303 cr – foodgrain subsidy arrears in 2016-17
- Rs 78,335 cr – expenditure during the fiscal
- 350% – increase in food subsidy arrears in the last five years
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