FM makes amends on PDS front

New Delhi, Feb 27: After being forced to roll back the increase in issue prices of wheat and rice sold through the Public Distribution Sy...

New Delhi, Feb 27: After being forced to roll back the increase in issue prices of wheat and rice sold through the Public Distribution System PDS for the below the poverty line BPL population owing to sharp criticism from important allies supporting the BJPled government at the Centre last month, Finance Minister Yashwant Sinha has tried to make amends. Unveiling a new scheme Annapoorna- which goes a step further than charging lower prices for BPL beneficiaries 8211; it gives 10 kg of foodgrains per month completely free to senior citizens eligible for old age pensions but are not getting it and whose children do not reside in the same village.

While there were no expectations from the Finance Minister to greatly reduce any of the major subsidies, food or fertiliser, resorting to populist measures was something that it was hoped he would stay away from. The exact subsidy amount for the Annapoorna scheme may be difficult to assess at the outset but the implementation of the scheme may encourage rather thanstem the leakages in the prevalent PDS system.

The total allocation for subsidies in the current Budget has earmarked Rs 22,440 crore on account of food and fertiliser subsidies. The allocation is up by almost 13 per cent over last year8217;s budgeted level.

However, last year8217;s budgeted subsidies on this account were sent into a tailspin almost immediately after the Budget was announced last year with the finance minister being forced to roll back the Rs 1,000 per tonne hike in the prices of urea which he had announced in his Budget last year. The Revised Estimates of the Budget at Rs 21,063 crore were up by 6 per cent owing to the roll back in prices and a modest increase of 10 per cent in the price of urea last month.

This year, the Budget has provided for Rs 8,200 crore for food subsidy, Rs 360 crore for sugar subsidy and Rs 13,250 on account of fertiliser subsidy. Of the 13,250 crore earmarked for fertiliser subsidy, Rs 8,000 crore has been set aside for domestically produced urea for which Rs 7,360crore were set aside last year. Rs 750 crore have been allocated for imported urea which accounted for only Rs 238 crore in 1998-99 as against a Budget provision of rs 983 crose. The lower subsidy outflow in the case of imported urea was mainly due to lower than anticipated imports and also due to lower international prices of the fertiliser subsidy.