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Food subsidy bill poised to overshoot budget estimate by Rs 22,000 crore
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Tuesday, 09 December, 2025, 14 : 00 PM [IST]
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Our Bureau, New Delhi
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The food subsidy burden for FY26 is forecast to exceed the official Budget Estimate (BE) of Rs 2.03 lakh crore by more than ?22,000 crore, as surplus grain stocks significantly increase storage and procurement costs, according to sources.
The bulk of the subsidy outgo passes through Food Corporation of India (FCI), which has revised its projected expenditure from the original estimate of Rs 1.43 lakh crore to around Rs 1.72 lakh crore for 2025-26. The remainder is routed via states that follow a decentralised procurement system.
Analysts point to the growing cost of storing surplus rice and wheat well beyond buffer norms required for minimum support price (MSP) operations as a major contributor to the surge. The increased burden implies that total subsidy expenditure under the free-ration scheme Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) or similar welfare schemes may exceed Rs 2.25 lakh crore in FY26 the highest level since FY23.
To maintain supplies, the government has already had to provide significant short-term funding: as of late November, FCI reportedly availed a Rs 32,220 crore short-term loan, and the finance ministry sanctioned a wage and means advance of Rs 42,563 crore to address the mismatch between receipts and payments.
With the food subsidy bill set to overrun earlier estimates by a substantial margin, the government is likely to seek additional funding possibly via a supplementary demand during the revised estimates stage in early 2026.
The potential overshoot underscores challenges in stock management, procurement planning, and fiscal burden associated with maintaining buffer stocks well above operational needs a trend that will demand careful oversight ahead of the next Budget cycle.
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