Rs 2.97 lakh cr more food subsidy to be released this fiscal: Ministry

New Delhi: The government will release nearly Rs 3 lakh crore more food subsidy in the remaining two months of the current fiscal as it looks to clear all previous backlogs, the food ministry said on Friday, adding that states such as Punjab and Haryana will compulsorily have to use electronic modes to pay crop price (MSP) to farmers.

While the usage of electronic modes to transfer the minimum support price (MSP) to farmers is to check diversion and avoid delays, the new system would not end the current practice of crop procurement through mandis and middle-men called Arthiyas, the ministry said.

The government sells foodgrains at huge subsidy under the National Food Security Act (NFSA) and other welfare schemes. Under the food law, the Centre provides 5 kg of wheat and rice per month per person to over 80 crore people at Rs 2-3 per kg.

"Government has released a record Rs 1,25,217.62 crore this year and Rs 2,97,196.52 crore more will be released during this financial year towards food subsidy of which Rs 1,16,653.96 crore is reflected in PFMS towards Punjab," the statement said.

PFMS refers to the Public Financial Module System.

About Rs 24,841.56 crore is reflected towards Haryana.

According to the recent Budget paper, food subsidy rose sharply to Rs 4,22,618.14 crore in the Revised Estimate (RE) of 2020-21 fiscal from Rs 1,15,569.68 crore in the Budget Estimate, as the Centre distributed additional foodgrains free of cost to help poor mitigate the impact of COVID-19 pandemic.

For the next fiscal, food subsidy is estimated at Rs 2,42,836 crore.

"Government of India has no intention to eliminate Arthiyas in Punjab and Haryana and no directions have been issued to eliminate Arthiyas from the mandi system," the ministry added.

The government said that electronic mode of payment ensures that all participants including farmers, Arthiyas and mandis receive their payments directly online in order to ensure transparency and trail of payments.

"This is not a replacement of the current APMC system. It only strengthens transparency and elimination of leakages," it added.

Stating that e-mode of MSP payment is already in force across India, the ministry said the Centre has been trying to ensure the same in Punjab and Haryana at least since 2015-16.

"The central government is regularly pursuing with Punjab and Haryana governments for ensuring direct online payment into farmer's accounts since 2015-16. However, both the state governments have been routinely approaching the Centre for granting exemption/seeking time for implementation of direct online payment initiative.

"The government of India has therefore, directed State Government of Punjab and Haryana to ensure online payment to farmers through e-mode from upcoming season and that no further relaxation on this account will be accorded," the ministry said.

The ministry informed that e-mode of payment has already been adopted partially by Haryana and Punjab. A part of payment for this paddy procurement was done through the e-mode only.

"Direct online payment to farmers predates the three farm laws. In Punjab, payment of MSP was paid to the farmers through Arthiyas and in Haryana, FCI made payment of MSP directly to farmer's bank accounts through online mode, whereas state agencies made payment of MSP to the farmers partly through Arthiya and partly directly to farmer's account through online mode as per option given by the farmers in e-Kharid portal," the statement said.