Grain subsidies in India have reached 33 billion
2022.12.07 05:44
Grain subsidies in India have reached 33 billion
Budrigannews.com – According to a government official and a document reviewed by Reuters, India’s spending on subsidized foodgrain for the poor may rise to 2.7 trillion rupees ($32.74 billion) this fiscal year as the government continues to support the poor at least until December.
The official, who spoke on condition of anonymity because discussions are confidential, stated that the estimated 2.07 trillion rupees ($25.14 billion) in food subsidies from the federal government will probably be increased by 30%.
Despite the government’s strong tax collections this year, increased subsidies for foodgrain and fertilizer are likely to put pressure on the budget. According to Reuters, this could cause it to reduce other costs in order to close the budgeted fiscal gap of 6.4% of GDP.
According to a government document seen by Reuters, the Department of Expenditure has already distributed foodgrain subsidies worth approximately 1.5 trillion rupees to the state-run Food Corporation of India and states as of the end of November.
Since the government of India announced in April 2020 a plan to provide free rice or wheat to approximately 800 million people to alleviate the COVID-19 pandemic’s impact on household incomes, India’s foodgrain subsidy bill has increased significantly.
The plan was supposed to run from April 2020 to December 2022, spending 47.25 billion rupees ($3.9 trillion) all together.
An extension of the measures has been opposed by India’s finance ministry due to financial pressure on the government.
But if the government extends the program beyond December 31, when it is supposed to end, the costs could go up even more.
The official added that the cost would rise to nearly 3.1 trillion rupees—the second highest ever—if the scheme was extended until March 2023.
In the years 2021/22, when the government’s free food grain distribution scheme was in effect throughout the year, India’s foodgrain subsidy bill totaled 2.9 trillion rupees.
The government spent approximately 5.3 trillion rupees on foodgrain subsidies in 2020/21, which was partially due to its decision to settle the Food Corporation of India’s previous borrowings.
Reuters sent inquiries via email, but neither the Ministry of Finance nor the Ministry of Consumer Affairs, Food, and Public Distribution responded immediately.
For 2022/23, it is anticipated that India’s federal government will spend a total of 39.4 trillion dollars.
Due to the war in Ukraine, which has resulted in an increase in prices, the government is also facing a large bill for fertiliser subsidies—more than the estimated 1.05 trillion rupees in the budget.
