Finance Ministry cancels free food grain program
The finance ministry said the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) has not been extended beyond September as it is not advised by the expenditure department.
On July 26, Rajya Sabha was asked if the Expenditure Department objected to keeping the free food grain program after September and if he wanted further tax cuts to be announced, which Pankaj Chaudhary, the Minister of Finance, firmly refused.
According to a late June report, PM-GKAY, which was extended for another six months in March, would have a negative effect on the center’s finances.
Under this scheme, the center will spend Rs 80,000 crore to provide free food grains until September.
In fact, the government did not forecast the new spending as the scheme was declared after the FY23 budget was presented.
FY23 food subsidies are expected to total Rs 2.07 lakh crore, down from the revised FY22 estimate of Rs 2.86 lakh crore.
A media report said spending department officials had claimed that any further spending cuts or extension of food subsidies would have negative fiscal consequences.
The report adds that a continuation of the program beyond its current extension is not recommended for food security and fiscal reasons.
Almost two months after the extension was announced, Finance Minister Nirmala Sitharaman announced that excise duty on petrol and diesel would be reduced by Rs 8 and Rs 6 per litre, respectively.
Economists estimate that the center will lose around Rs 85,000 crore in revenue this year as a result of the move.
A fiscal deficit of 6.4% of GDP is expected to be missed for FY23 due to higher-than-expected spending and lower-than-expected revenue.