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Debt of Expenditure warns against extending the free food scheme: Report

Published on June 25, 2022
Current Context: Finance ministry's Department of Expenditure has warned against extending the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beyond September leads to an increased country's fiscal position.
Debt of Expenditure warns against extending the free food scheme: Report
  • Recently the government in March extended the PMGKAY, the free food ration scheme for six months till September.
  • The Centre has allocated Rs 2.07 trillion for food subsidies in the current fiscal year.
  • But the extension of PMGKAY till September is expected to increase the subsidy bill to nearly Rs 2.87 trillion.
  • More tax cuts or food subsidy extensions would adversely hit the fiscal position of India.
  • Besides the Centre's recent decisions to, hike fertilizer subsidy, reintroduce cooking gas subsidy, excise duty cut on petrol, diesel and cut in customs duty on edible oils have already created a serious fiscal situation.
  • For FY23, the government has budgeted a fiscal deficit of 6.4% of GDP, As per Fitch Ratings, it is expected to be 6.8% due to higher subsidies and revenue loss due to duty cuts.

MCQs

Ques: 1. As per the recent report, an extension of PMGKAY till September is expected to increase the subsidy bill to nearly _______Trillion
A. 3.13 Trillion
B. 2.81 Trillion
C. 2.45 Trillion
D. 4.1 Trillion
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