India Extends Free Food Program for 800 Million Until December Amid Inflation Woes
The Modi government unveiled the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) program in 2020 to provide relief for people affected mostly by the coronavirus-induced nationwide lockdown. Despite being a heavy blow to fiscal discipline, the government decided to continue offering aid to help the most vulnerable social groups.
The Indian government approved a three-month extension to what is known as the world’s largest food program on Wednesday, covering 800 million people in the country and adding $5.46 billion in subsidies despite the threat of breaching the fiscal deficit target.
Under the welfare scheme, 5 kg of grain is provided to the most vulnerable citizens per person per month free of charge
“With the additional expenditure of about $5.46 billion for phase-VII of this scheme, the overall expenditure of PMGKAY will be about $49 billion for all the phases,” Minister of Information and Broadcasting Anurag Singh Thakur said.
The free food program will require an outflow of 12.2 million tons of foodgrains, Thakur added.
20 September 2022, 16:20 GMT
India has set a target of reducing its fiscal deficit to 6.4% of GDP for the fiscal year ending in March 2023.
Despite concerns raised by some economists over the rising subsidies and slowing economic growth, the Finance Ministry maintained that increased expenditure would not impact its fiscal deficit plan.
Prime Minister Narendra Modi said that the decision would benefit poor and vulnerable sections of society during the ongoing festival seasons: “They can celebrate with great gaiety and community for festivities,” he said.
The country of 1.3 billion people has been witnessing double-digit food inflation for months, prompting the Reserve Bank of India to hike interest rates by 1.4% three consecutive times.
The government restricted the export of wheat, rice and sugar since May to try to control inflationary pressure.