NEW DELHI: At a time when the government is facing trouble maintaining its fiscal health and is set to add over Rs 1.25 lakh crore to its subsidy bill for providing food security to its poor, the UPA has burdened the exchequer further by exporting wheat at lower than its cost price — incurring an estimated loss of over Rs 1,700 crore.
Sources in the finance ministry said the loss to the exchequer on account of exporting nearly 100 lakh tonnes of wheat at a subsidized rate has been estimated to be in the range of Rs 1,700 crore for 2012-13. The Cabinet had cleared export of wheat with subsidy, as the international prices were lower than the government's cost that includes procurement, storage and transportation.
The export date for wheat has now been extended till June 2013 to facilitate bulk sale as it has no storage space and the new procurement season is just ahead.
In the first tranche, the Cabinet had allowed export of 45 lakh tonnes of wheat. In the second tranche, it has been earmarked at 55 lakh tonnes. Sources said the total subsidy burden on export of the first tranche of 45 lakh tonnes was more than Rs 1,300 crore. The loss has been minimized in the second tranche as the government has now decided to export by inviting tenders from private companies.
After the government decided to invite tenders from private companies, the subsidy burden has come down drastically but the export price is still lower than the cost price. The loss on account of subsidy for the second tranche of exports has been estimated to be around Rs 400 crore, sources said.
In June 2012, the UPA government had decided to allow export of wheat through state trading companies. The PSU companies booked huge losses as it added hefty bills of transportation and storage to its procurement cost.
To lower the subsidy bill, the government later decided to allow private sector companies to export its wheat, picking the consignment directly from FCI godowns. This has, however, brought down the subsidy by nearly a thousand crore for almost a similar quantity of export.
The government is likely to push through the food security legislation in the budget session of Parliament paving the way for subsidized foodgrains to its poor that is estimated to cost the exchequer Rs 1.25 lakh crore in 2013-14.
Last year, the government spent Rs 85,000 crore on subsidy of foodgrains. This was just a shade lower than the subsidy government provides on oil and gas which was Rs 96,000 crore in 2012-13 as per the revised estimates.http://timesofindia.indiatimes.com/...re-loss-to-exchequer/articleshow/19179956.cms
Sources in the finance ministry said the loss to the exchequer on account of exporting nearly 100 lakh tonnes of wheat at a subsidized rate has been estimated to be in the range of Rs 1,700 crore for 2012-13. The Cabinet had cleared export of wheat with subsidy, as the international prices were lower than the government's cost that includes procurement, storage and transportation.
The export date for wheat has now been extended till June 2013 to facilitate bulk sale as it has no storage space and the new procurement season is just ahead.
In the first tranche, the Cabinet had allowed export of 45 lakh tonnes of wheat. In the second tranche, it has been earmarked at 55 lakh tonnes. Sources said the total subsidy burden on export of the first tranche of 45 lakh tonnes was more than Rs 1,300 crore. The loss has been minimized in the second tranche as the government has now decided to export by inviting tenders from private companies.
After the government decided to invite tenders from private companies, the subsidy burden has come down drastically but the export price is still lower than the cost price. The loss on account of subsidy for the second tranche of exports has been estimated to be around Rs 400 crore, sources said.
In June 2012, the UPA government had decided to allow export of wheat through state trading companies. The PSU companies booked huge losses as it added hefty bills of transportation and storage to its procurement cost.
To lower the subsidy bill, the government later decided to allow private sector companies to export its wheat, picking the consignment directly from FCI godowns. This has, however, brought down the subsidy by nearly a thousand crore for almost a similar quantity of export.
The government is likely to push through the food security legislation in the budget session of Parliament paving the way for subsidized foodgrains to its poor that is estimated to cost the exchequer Rs 1.25 lakh crore in 2013-14.
Last year, the government spent Rs 85,000 crore on subsidy of foodgrains. This was just a shade lower than the subsidy government provides on oil and gas which was Rs 96,000 crore in 2012-13 as per the revised estimates.http://timesofindia.indiatimes.com/...re-loss-to-exchequer/articleshow/19179956.cms
