Pooled grain cost now accounts for nearly 80 per cent of total rice economics, while rising interest and operational expenses add to the fiscal burden of India’s food security system

India’s economic cost of rice is projected to increase to Rs 4,391.1 per quintal in 2026–27 (BE), up 8.8 per cent from the revised estimate of Rs 4,035.9 per quintal in 2025–26, reflecting mounting procurement-linked costs within the country’s food subsidy framework.

The sharp rise is being driven primarily by the pooled cost of grain, estimated at Rs 3,491.5 per quintal, which now constitutes 79.5 per cent of the total economic cost of rice. The component has risen significantly from Rs 1,976.9 per quintal in TE2016–17, underscoring the long-term impact of successive MSP increases and elevated procurement prices.

Procurement incidentals are estimated at Rs 521.9 per quintal in 2026–27, marginally higher than the previous year, although their share in overall economic cost has steadily moderated over time. Statutory and obligatory expenses are projected at Rs 294.2 per quintal, while labour and transport charges are estimated at Rs 67.3 per quintal.

Distribution costs are expected to rise to Rs 377.7 per quintal from Rs 313.2 per quintal a year earlier, driven largely by a sharp increase in interest expenses to Rs 100.7 per quintal. Freight charges are projected to remain relatively stable at Rs 127.3 per quintal, while handling costs are expected to decline marginally.

The latest estimates highlight the growing fiscal intensity of India’s rice procurement and distribution architecture at a time when the government continues to support large-scale food security programmes and MSP-backed procurement operations.

The steady rise in the economic cost of rice could further expand the food subsidy burden unless procurement efficiencies, decentralised sourcing and logistics rationalisation measures are accelerated across the supply chain.