The Ministry of Consumer Affairs, Food and Public Distribution has two Departments: (i) Food and Public Distribution, and (ii) Consumer Affairs.  Allocation to the Ministry accounts for 4.3% of the budgeted expenditure of the central government in 2025-26.[i]

The Department of Consumer Affairs is responsible for spreading awareness among consumers about their rights, protecting their interests, implementing standards, and preventing black marketing.[ii]  In 2025-26, the Department has been allocated Rs 4,361 crore, 41% lower as compared to the revised estimate of Rs 7,345 crore in 2024-25.[iii]  This is due to a decrease in the allocation towards the Price Stabilisation Fund.  This Fund is used to maintain a buffer stock of pulses, onions, and potatoes so that they can made available in the market when required.

The Department of Food and Public Distribution is responsible for ensuring food security through procurement, storage, and distribution of food grains, and for regulating the sugar sector.[iv]  In 2025-26, the Department has been allocated Rs 2,11,406 crore, an increase of 3% over the revised estimate of 2024-25.[v]

Table 1: Allocation to the Ministry (in Rs crore)

Department	2023-24 Actuals	2024-25 Revised	2025-26 Budgeted	% change 2025-26 BE over 2024-25 RE
Food & Public Distribution	2,32,223	2,05,475	2,11,406	3%
Consumer Affairs	273	7,345	4,361	-41%
Total	2,32,496	2,12,820	2,15,767	1.4%

Note: BE is budget estimate and RE is revised estimate.
Sources: Expenditure Budget, Union Budget 2025-26; PRS.

This note examines the allocation to the Department of Food and Public Distribution.  It also discusses the broad issues in the sector and key observations and recommendations made in this regard.

Overview of Finances

Food subsidy is the largest expenditure by the Department of Food and Public Distribution.  96% of the Department’s allocation in 2025-26 is towards food subsidy (see Table 6 in the Annexure for more details).  The subsidy is provided to the Food Corporation of India (FCI) and states for procuring food grains from farmers at government notified prices and selling them at lower subsidised prices under the National Food Security Act (NFSA), 2013.  The Act mandates coverage of up to 75% of the population in rural areas and 50% in urban areas.[vi]^,[vii]  Beneficiary households under the Act are divided into Antyodaya Anna Yojana (AAY, i.e., the poorest of poor families) and priority households.  AAY households are eligible to receive 35 kg of foodgrains per month and priority households are eligible to receive 5 kg of foodgrains per person per month at subsidised prices.  

The subsidy also covers the storage cost incurred by FCI in maintaining buffer stocks in order to ensure food security in the country.  The amount of unpaid subsidy to the FCI had steadily increased until 2019-20.  While the central government released less than claimed subsidy, it provided loans to the FCI through the National Small Savings Fund (NSSF).  In 2020-21, the central government made provisions to repay the loans taken from NSSF and clear the past dues of the FCI.  As a result, the expenditure on food subsidy increased sharply in 2020-21.  

Figure 1: Subsidy incurred by FCI vs released by government (Rs crore)
  
Sources: FCI; PRS.

Between 2020-21 and 2022-23, food subsidy also included expenditure on account of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).  Under the scheme, 5 kg additional foodgrains were allocated per person per month free of cost to eligible beneficiaries at an expense of over three lakh crore rupees.[viii]  In December 2022, the Union Cabinet decided to provide foodgrains under NFSA free of cost to the eligible beneficiaries for a one-year period from January 1, 2023.[ix]   This was later extended for five years starting from January 1, 2024.[x]  

Table 2: Break-up of food subsidy (Rs crore)

Subsidy	2023-24   Actuals	2024-25   Revised	2025-26  Budgeted	% change 2025-26 BE over 2024-25 RE
Subsidy to FCI	1,39,661	-	-	-
Subsidy to states (decentralised procurement)	71,733	-	-	-
Sugar subsidy	420	420	420	0%
PMGKAY	-	1,97,000	2,03,000	3%
Total	2,11,814	1,97,420	2,03,420	3%

Sources: Expenditure Budget, Union Budget 2025-26; PRS.

Issues in the Sector

Coverage under NFSA

Under NFSA, subsidised foodgrains are provided to up to 75% of the rural population and up to 50% of the urban population.⁶  This coverage is linked to population estimates as per the latest available census.   It does not provide for a mechanism to revise coverage based on the increase in population between two censuses.  As per the 2011 census, the number of eligible beneficiaries covered under NFSA is around 80 crore (67% of the total population in 2011).     

The next decadal census was due in 2021.   However, due to the COVID-19 pandemic, it has been postponed until further orders.[xi]  In July 2022, the Supreme Court observed that the central government should come with a formula or policy such that the benefits under NFSA are not restricted as per the 2011 census.[xii]   The Court noted that the ‘Right to Food’ is a fundamental right under Article 21 of the Constitution.  It recommended that the central government may use projections of population increase during 2011-2021 to ensure more needy people are covered under NFSA.¹²  As per India’s population projections for March 2025, over 90 crore people could be eligible for getting subsidised foodgrains.  As of June 2020, over six crore state ration cards exist which cover another 25 crore people over and above the NFSA mandate.[xiii]       

However, some experts have found the existing coverage under NFSA to be too high.[xiv]   The High Level Committee on Restructuring of FCI (2015) had recommended that the central government should rethink the coverage of population under NFSA.¹⁴  It noted that allocating 5 kg foodgrains per person to priority households made below poverty line households worse off compared to the earlier framework of targeted PDS under which they were entitled to 7 kg of foodgrains per person.¹⁴  It had recommended reducing the overall coverage for NFSA to around 40% of the population.  At the same time, it recommended increasing the allocation of foodgrains to below poverty line households to 7 kg per person.  In 2022-23, the monthly per capita consumption of cereals in rural areas was 9.6 kg while in urban areas it was 8.1 kg.[xv]   

Central issue price and management of expenditure on food subsidy

Food subsidy is the difference between the central issue price (CIP) and the economic cost of managing foodgrains.[xvi]  It also includes the cost of maintaining buffer stocks and other allocations to state governments.¹⁶  CIP is the rate at which foodgrains are issued by the central government while economic costs include the cost of acquiring and distributing foodgrains.  Over the years, the increase in food subsidy has been driven by non-revision of the CIP despite an increase in the economic costs of foodgrains (see Figure 2 and Figure 3).  In 2002-03, the economic cost of rice was Rs 11.7 per kg and for wheat it was Rs 8.8 per kg.¹⁶  In 2024-25, the economic cost of rice is estimated to be Rs 39.8 per kg while that for wheat is estimated at Rs 27.7 per kg.¹⁶  The NFSA provides that the CIP may be periodically revised by the central government in a manner such that it does not exceed the minimum support price for rice, wheat, and coarse grains.⁶