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What is Food Subsidy?

Last Updated : 23 Nov, 2022
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The food subsidy benefits both consumers and producers. It is used to acquire cereals from producers at quite a rate that makes farming profitable, and afterwards sell the grain to underprivileged households at a lesser price, or for free in some situations. Food security includes three major elements: Food availability, Food accessibility, and Food assimilation. Management and some other operational charges contribute to a percentage of such subsidies.

Subsidiary government programs aim to increase the real purchasing power of all or select sectors of consumers, minimize caloric and nutrient inadequacies in low population density, minimize the production of urban revenues and achieve intellectual growth.
The funding goes to the Food Corporation of India, which is the government tool used for the procurement and distribution of wheat and rice under the TPDS and other social programs, as well as keeping a sufficient inventory of grain production for food and nutrition security as a buffer stock.

Food subsidies are a vital safety net that protects farmers from poor market prices. rates while still customers who shop access accessible and affordable commodities through the welfare schemes.

According to the United Nations, India includes approximately 195 million people who are not getting proper meals, constituting something like a quarter of the world’s largest hunger. The Global Food Security Index (GFSI) ranks India 76th out of 113 countries in 2018, based on four criteria: cost, availability, quality, and safety.

Subsidy on Food:

  • The subsidies on food The Targeted Public Distribution System ensures the agricultural production of the targeted beneficiaries by providing a reduced rate of cereal aid (TPDS). It helps to protect them from the effects of consumer price to price movements. While agricultural support expenses have increased massively, the percentage of people living in poverty has reduced.
  • Implementation of Food subsidy is coordinated by the Ministry of Consumer Affairs, Food, and Public Distribution. The Departments of this Ministry are- the Competition And consumer protection Department and the Department of Food, and Public Distribution.
  • The Department of Food and Public Distribution expects to receive 98% of the Ministry’s budget.
  • Consequently, some components of the food subsidy are often used to pay for the cost of replenishing the food subsidy on the food reserve fund.

A. Subsidies on Food Aid in the Reduction of Poverty in India:

  • India’s economic growth has achieved gradual progress in eliminating unemployment and maintaining food availability for the poor, and it continues to be a priority for the government. 
  • The Indian government has many different projects that have been particularly intended to help those living in extreme poverty.
  • Government subsidies are the essential source of capital for these kinds of initiatives, among the subsidies, the subsidiary government programs would be a significant contributing factor. 

Subsidiary government programs, The Public Distribution System (PDS) is a method that allocates goods to the community Food Subsidies, Administered through the direct public distribution system, account for a significant share of public spending on food security. Mid-day Meal Program “Integrated Child Development Services” (ICDSS) program is a service that assists students.

To achieve food and nutrition security in India, the agricultural management solution and food pricing policy comprise three important roles:

  • Purchase at supportive and considerable prices so you can pay easily.
  • The conservation of excess inventory, as well as the required stuff to maintain easily.
  • The Public Distribution System (PDS) is a system that distributes public goods so they could help people in every aspect.

B. Laws on Food Security 

The National Food Security Act, 2013, was adopted by the Indian Parliament in 2013 to ensure that every person in the state has access to food. This Act, also known as the Right to Food Act, aims to give subsidized food grains to around two-thirds population of India.

Challenges of Food Subsidy in India:

  1. Inadequate Food Distribution: Since the threshold for determining a household’s BPL status is imprecise, people who are eligible for the beneficiaries get excluded as they do not have below poverty line status. 
  2. Corruption: Corruption is a major contribution to the challenges of food security. PDS dealers shift grains to the open market for a higher profit margin via the use of fraudulent cards and have been caught on occasion for committing fraud. In addition, sometimes they sell low-quality grains and open shops inconsistently which makes food availability harder.
  3. Flawed Supervision: Even though the government has a variety of food subsidy programs, they are not adequately executed. There is a lack of coherence in food policy and intersectoral cooperation across multiple ministries.
  4. MSP: The minimum support price is higher than the market price. The government pays MSP for major crops like wheat, paddy, and sugarcane to the farmers.  However, other crops are purchased in low quantities by the government at MSP which demotivates the farmers to grow them. Since the major crops require a lot of water, it puts a massive strain on the water table.
  5. Limited Access to Isolated Areas: People in the rural areas and tribal communities experience substantial economic backwardness as a result of living in remote areas. It’s difficult for them to access different schemes and entitlements due to the unavailability of the right information and education. 
  6. Other Challenges: There is insufficient storage to accommodate the food grains and sometimes it also gets damaged during transit which in turn results in poor quality of food grains.

Some Steps to such kinds of Challenges:

  1. A robust and effective grievance resolution procedure should be set up for both fair pricing retailers and beneficiaries.
  2. Increased participation of gram panchayats in the public distribution system can greatly increase access for the people living in rural areas.
  3. Automation at Fair Price Shops can entail the provision of point-of-sale equipment for beneficiary authentication and computerized transaction capture.
  4. Aadhaar and the use of biometrics can help to get rid of fake ration cards, check for leaks, and guarantee that food grains are delivered more efficiently.
  5. To achieve long-term food security, the state should develop policies addressing disparities in income, food diversity, and the rights of the people. 
  6. Proper food storage interventions are needed.


The food subsidy benefits both consumers and producers. It is used to purchase grains from farmers at a price that makes farming profitable and then sell the grain to needy households at a lower price or for free. Maintenance and other administrative expenditures account for a portion of the subsidy. The central government and the state purchase food grains for distribution through the PDS. The Food Corporation of India (FCI) purchases it for the center under “centralized purchasing.” In contrast, many government agencies purchase it now for their member nations under “decentralized supply chain management.” Subsidiary government programs are beneficial for the public and they help in reducing poverty in our country by providing meals.

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