constituted - of Planning Commission

provision for fertilizer subsidy has been kept at `49,998 crore in B.E. 2011-12.Food subsidy is estimated at `60, 573 crore in B.E. 2011-12. In BE 2011-12,petroleum subsidy including the oil marketing companies to compensate forunder recoveries are also provided at `23, 640 crore. It was mentioned that thepresent level of subsidy provision was premised on the assumption that therewould not be major variations in the international market in fertilizer andpetroleum product prices during the entire span of 2011-12. At the same time, itwas also assumed that the allotted quantity outgo under Targeted PublicDistribution System (TPDS) and procurement costs would by and large remainstable during the year. It is further stated that there is a need to focus on furthermeasures and means to ensure the effective utilization of these provisions andcap this expenditure to create further fiscal space for increased investment inphysical and social infrastructure.The projections of the Group are based on the aggregate of individual subsidiesdiscussed below:Food Subsidy: Expenditure on Food Subsidy is projected to increase during theEleventh Plan by 93.35 per cent from `31,328 crore in 2007-08 to `60,573 crorein 2011-12 (BE). During the Tenth Plan period, however, this subsidy remainedmore or less static. While making its estimation on Food subsidy, the ThirteenthFinance Commission stated that the intention behind providing food subsidywas to improve the food security of the vulnerable sections of society. With thisin mind, the Commission allowed for 50 per cent subsidy on the minimumsupport price (MSP) to BPL families and full subsidy for the beneficiaries underAntyodaya Anna Yojna (AAY). These subsidy figures were based on thecalculations of the Department of Food and Public Distribution which assumedMSP to increase 10 per cent annually. On this basis, the average annual growthin food subsidies projected by the Thirteenth Finance Commission is 8.87 percent.Working Group Report on Centre’s Financial ResourcesPage-37