New Delhi: The proposed food security act could nearly double to as much as $23 billion the food subsidy bill from targeted levels, farm minister Sharad Pawar suggested on Friday, potentially spooking plans to cut the fiscal deficit.
The proposal, to provide cheap foodgrains to the poor, has been backed by the ruling Congress party chief Sonia Gandhi. The government went back to the drawing board after she suggested the entitlements under the law be widened.
Pawar told Parliament the cost of the new welfare scheme could be between Rs76,720 crore ($16.5 billion) and Rs1.07 lakh crore ($23 billion). This compares with the Rs55,578 crore budget target for food subsidies in 2010-11 fiscal year.
The range represents two proposals for the bill, one offering 25 kg of grains each month to poor households and the other giving 35 kg.
Backers say the scheme will protect the over 400 million poor in India from near starvation, but a rise in subsidies could hit India’s roadmap of cutting the fiscal deficit to 4.1% of GDP by 2012-13 from the 5.5% expected this fiscal year.
The law is seen as easing some public anger over stubbornly high inflation and giving the Congress an edge in the eight state elections this year and next and Lok Sabha elections in 2014.