The subsidy incurred on supply of food grains through PDS at below at FCI economic cost constitutes the subsidy of consumer, while produce subsidy is the direct outcome of the price support based on procuring operation of thus government.The producer subsidy along with cost of maintaining the buffer stock accounts for cost buffer stock operation.There is need for special packages for diversification.(xv) There should be an automatic and transparent policy of variable tariffs both agricultural imports and expect linked to the deviation of spot international prices from their long run trends.
Under the present system it is responsibility of the Central and State governments to ensure smooth flow of foodgrains and other commodities to consumers.
The Food Corporation of India (FCI), on behalf of the Central Government procures transports and stocks the grains in the central godowns (owned or hired).
The PDS was also directed towards combating the evil designs of food grains speculators.
The Government arranged to provide rice, wheat, sugar, edible oil and kerosene at a subsidised price. The PDS covered around 1750 blocks with special emphasis on 164 poverty stricken blocks. The food subsidy offered by the central governments has been increasing.
The FCI along with the State agencies hold and maintain the reserve ratio buffer stocks of foodgrains in addition to the operational stocks of foodgrains in addition to the operational stocks used for distribution.
The quantities of foodgrains allotted to States for distribution by the Central Government are available at all the depots of the FCI at prices, fixed by the government, i.e.Distribution of cereals assumes great importance as it is supposed to provide food security to the poor.The Department of Food and Public Distribution is responsible for the management of food supply in the country.‘issue prices’ which are uniform for specified varieties or qualities of grains all over India.The issue prices are generally lower than the economic costs of the procured grains where economic costs include procurement prices, procurement incidences and distribution incidentals.At this programme rice is available at Rs 3 per kg and wheat at Rs. Reduction of PDS price for BPL and Antyodaya have caused further rise in size of food subsidy.Producers and consumers are major beneficiary within the vulnerable section of the community.The cereals appear to be only way of providing food security to the poor.At present there are 4.74 lakhs fair price shops all over the country.For the protection of poor the subsidy should be continued.This is also a method of transferring income to the poor.