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Dhaka Tribune

India extends free food program ahead of state elections

The government provides families with 5kg of foodgrains each month under the program

Update : 28 Sep 2022, 11:10 PM

India has extended a free food program for the poor by three months, a move that will add $5.46 billion to the government's costs and make for a bigger challenge to efforts to rein in the fiscal deficit, ahead of key state elections.

The extension of the world's biggest free food program comes ahead of elections in Prime Minister Narendra Modi's home state of Gujarat and Himachal Pradesh due by the year-end, where he faces challenges from emerging regional parties - promising power and other subsidies.

"The free food program has helped India avert hunger during coronavirus lockdowns, but many poor people still need this safety net, and that's why the government has extended the scheme," said Devinder Sharma, an independent farm and food policy expert.

"But it also been extended due to impending state elections," he said.

With the latest extension, India could spend nearly $47 billion in total for the food program that started in April 2020 as Covid-19 relief measure.

The program will now be extended till December, Information Minister Anurag Thakur told a news conference on Wednesday.

Most economists expect India to miss its fiscal deficit target of 6.4% of GDP for the year ending in March 2023, thanks to government measures to fight inflation that could cost more than $20 billion.

"We expect the fiscal deficit to modestly overshoot the budgeted level, following the extension," Aditi Nayar, economist at ICRA, an Indian arm of Moody's Investors Service.

The government provides families with 5kg of foodgrains each month under the program.

The government has restricted rice exports on growing concern about grain stocks, in addition to export curbs on wheat and sugar.

Wheat stockpiles at state-run agencies fell to 24.82 million tons by September 1 from 51.78 million a year ago as government purchases from farmers more than halved this year.

Rice stocks stood at 35.36 million tons at the beginning of this month, down from the last year's 38.73 million.

The free food program is expected to require an outflow of 12.2 million tons of foodgrains, the government has said.

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