INSUBCONTINENT EXCLUSIVE:
raise the subsidies for the world's biggest food welfare programme by 6.5 per cent for the fiscal year beginning April 1, the smallest
increase in three years, in the nation's interim budget next month, two sources directly involved in the decision told Reuters
The government is set to earmark about Rs 1.8 lakh crore ($25.28 billion) for food subsidies next fiscal year as it tries to contain its
budget deficit ahead of the next general election due by May.Its budget targets for the next two years are already under pressure because of
plans to make various payments to farmers to offset low crop prices.The 6.5 per cent increase in food subsidies might not be adequate to
cover the cost of the mammoth food welfare programme, especially after a sharp increase in the price at which the government buys rice from
domestic farmers, the sources said.The sources didn't wish to be named as the budget discussions were not public.On February 1, Finance
Minister Arun Jaitley, who is currently in the United States for a medical check-up, could make these numbers public while presenting an
interim budget for the 2019/20 fiscal year.Under the National Food Security Act (NFSA), the country's main food welfare plan, the state-run
Food Corp of India (FCI) buys rice and wheat from farmers at a guaranteed price and the state agencies sell the staples to 67 per cent of
1.3 billion people at about one-tenth of the market price.The bulk of the food subsidies go towards covering the cost of buying rice and
wheat from farmers at a higher price and selling these grains to the poor at highly subsidised prices."The finance ministry officials are
struggling to keep the fiscal deficit under check," said the first source, adding more funds could be allocated in the full budget if the
current government is re-elected
That budget is likely to be presented in July.The finance ministry had previously estimated next fiscal year's food subsidies at Rs 1.9 lakh
crore.Since coming to power in 2014, Prime Minister Narendra Modi has raised food subsidies, the central government's biggest spending after
defence, by nearly 47 per cent to Rs 1.69 lakh crore in the current fiscal year.But the allocations for food subsidies are still falling
short, and the FCI, the main grain procurement agency, has been forced to borrow billions of dollars to run the welfare programme.Last
month, the country's top auditor said the arrears of FCI have gone up to Rs 81,300 crore by March 2017, up from Rs 23,400 crore in the
2011/12 fiscal year.Of the Rs 1.69 lakh crore allocated for food subsidies for the year to March 31, the government had spent Rs 1.46 lakh
crore until November.($1 = 71.22 rupees) Find latest news, updates and videos on Budget 2019, Budget expectations, tax and policy
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