Central issue price
Also called: CIP · Topic: Agricultural Marketing, MSP, Buffer Stocks and PDS · NCERT: Beyond NCERT
Meaning
The central issue price (CIP) is the price at which the Centre sells central-pool foodgrains to states for distribution through the PDS. It is kept far below the grain's economic cost, which is MSP plus procurement and distribution costs. The gap is the food subsidy:
Food subsidy = (Economic cost − CIP) × quantity issued + cost of carrying buffer stocks
Example
Under NFSA, the CIP was ₹3 per kg for rice, ₹2 for wheat and ₹1 for coarse grains. Since 1 January 2023, NFSA grain has been free (merged into PMGKAY, extended to 2028). So the CIP is now zero, and the whole economic cost of NFSA grain is subsidy.
Don't confuse with
- Economic cost: economic cost is what the grain actually costs FCI to procure, store and move. CIP is the much lower price at which it is issued.
Related concepts
- Public distribution system
- Fair price shop
- Targeted PDS
- Universal PDS
- Leakages in PDS
- Ration card portability
- Food security
- Nutrition security
- Hidden hunger
- Biofortification