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Corresponding Author:
Swaha Shome, IBS Business School Mumbai India

Coauthors:
Mala Lalvani, Department of Economics, University of Mumbai, India

India's Burgeoning Food Subsidies: How much can we Blame the Food Corporation of India?

Volume 70 - Issue 3, August 2017
(pp. 353-390)
JEL classification: H23
Keywords: Food Subsidy, Economic Costs, Sales Realisation

Abstract

The Food Subsidy Bill of the Government of India has increased manifold in the past decades. The Food Corporation of India (FCI) is responsible for ensuring that the subsidy reaches both the producers through the support prices and to the consumers through the Public Distribution System (PDS). The high economic costs of the Food Corporation, along with low PDS prices contributes to the rising food subsidy bill. Some parts of this economic costs are within the purview of the FCI while others are completely outside its domain. Hence this paper attempts to ascertain the factors leading to the increasing food subsidy and the extent to which these are attributable to the FCI. We find that, in fact, some of the major components of the economic costs, which are leading to rising food subsidy, are not within the control of the FCI and to that extent, the parastatal can be absolved of the blame. The villain of the piece appears to be the support price policy of the government and some components of the economic cost of FCI, which are outside the purview of the FCI. The paper also delves into analysing the cost components of FCI in an attempt to assess the performance of the parastatal itself.

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India's Burgeoning Food Subsidies: How much can we Blame the Food Corporation of India?

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce