The food subsidy bill for the Central Government in the financial year 2024-25 is expected to exceed Rs 2.25 lakh crore, surpassing the budget estimate by approximately Rs 20,000 crore and being Rs 13,000 crore higher than the revised subsidy for 2023-24.

This increase is primarily attributed to higher costs associated with the storage and maintenance of large rice stockpiles, as well as the raised minimum support prices (MSP) for wheat and paddy.

The Union Finance Ministry had initially projected a food subsidy of Rs 2.04 lakh crore for 2024-25, with over 75% of this amount already released to the Food Corporation of India (FCI) and states operating a decentralized procurement system.

If the government’s rice stockpile does not reduce as quickly as anticipated, the Finance Minister may need to adjust the subsidy allocation for the 2025-26 budget.

Additionally, rising costs for packing, transportation, and storage are further driving the increase in the food subsidy.

The Finance Ministry has been releasing special subsidies promptly to prevent the FCI from resorting to short-term loans, which would incur high interest costs.

These timely releases are also critical for maintaining the FCI’s cash credit limit and supporting provincial agencies.

Currently, the FCI holds 586.20 lakh tonnes of rice, which includes 282.20 lakh tonnes of direct stock and 304 lakh tonnes of paddy, equivalent to rice.