CHENNAI: Bank borrowings that funded the state’s Pongal cash gift and special Public Distribution System (PDS), under which pulses and cooking oil are supplied at subsidised rates through ration shops, have saddled the Tamil Nadu Civil Supplies Corporation (TNCSC) with a Rs 27,181 crore debt as of March this year.
Successive state governments have failed to fully reimburse the food subsidy and cash distribution expenditure to the TNCSC, the agency responsible for procuring commodities and raising loans to fund these schemes, revealed the White Paper on Tamil Nadu’s financial position released by the TVK government on Tuesday.
According to the report, a total of Rs 24,023 crore was spent on Pongal cash aid and gift hampers between 2016 and 2026. Of the corporation’s total liabilities, more than 90% is owed by the state government and the rest by the centre.
Sources said when the special PDS scheme was launched in 2007, tur dal was procured at Rs 50/kg and cooking oil at Rs 45/ litre. These commodities were supplied to beneficiaries at subsidised rates of Rs 30 and Rs 25, respectively.
At present, tur dal is purchased at Rs 109/kg and cooking oil at Rs 143/litre. Despite the steep increase in costs, the selling prices have remained unchanged.
As a result, the government’s subsidy burden on these two commodities alone has increased to nearly Rs 4,800 crore annually.
‘Govt yet to pay TNCSC subsidy amount needed to settle borrowings’
Sources said the government has not proportionately increased budgetary allocations and instead directed the TNCSC to bridge the funding gap through borrowings. The outstanding loans of TNCSC increased from Rs 17,500 crore in 2021-22 to Rs 27,181 crore as of March 2026.
“The interest burden has grown from Rs 736 crore in 2021-22 to Rs 1,795 crore in 2025-26. Interest now consumes a significant and rising share of TNCSC’s annual payments — a cost that is entirely unproductive,” said the white paper.
Except in 2015, 2021 and 2025, Pongal cash assistance and gift hampers have been distributed every year. In 2019, the cash component was enhanced from Rs 100 to Rs 1,000. In January 2022, gift packages containing 21 items were distributed.
Cash assistance of Rs 1,000 was provided in both 2023 and 2024. The highest expenditure for the Pongal cash gift was incurred in January 2026, when Rs 6,688 crore was allocated to provide Rs 3,000 each to 2.23 crore ration cardholders ahead of the Assembly elections. Similarly, the distribution of Rs 2,500 to rice ration cardholders in January 2021, also ahead of elections, resulted in an expenditure of Rs 5,560 crore.
An official from the food department told TNIE that TNCSC procures paddy on behalf of the Food Corporation of India, pays farmers within 10 days of procurement and subsequently receives reimbursement from the Union government. “The payments made to farmers are initially financed through borrowings, which are repaid once the reimbursement is received. At times, the centre reimburses only 90 to 95% of the eligible amount, with the balance carried forward to the following year,” the official said.
Similarly, the expenditure incurred by TNCSC towards food subsidy and cash distribution is reimbursed by the state government every year. “In recent years, the state government has not fully compensated the subsidy amount required to settle the corporation’s borrowings.
As a result, the shortfall has been added to the outstanding loan burden each year,” the official explained. Rice, wheat and ragi distributed to 1.17 crore Priority Household (PHH) ration cardholders are fully funded by the centre, while the state bears the subsidy cost for supplies supplied to 1.11 crore Non-Priority Household (NPHH) ration cardholders. During 2025-26, the state government allocated around Rs 17,500 crore to the Food Department, including a food subsidy of Rs 14,300 crore.