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

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.

• 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