Finance News

Finance ministry red flags extending premium daily bread scheme

The Department of Finance’s Department of Finance has argued against extending the free food relations scheme beyond September or making any major tax cuts, warning of consequences for the government’s fiscal stance. The government in March extended Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for six months until September.

The government has a budget of ₹ 2.07 lakh crore for food subsidies in FY23, lower than the revised ₹ 2.86 lakh crore for FY22. The PMGKAY extension until September is expected to raise the subsidy bill to around ₹ 2.87 lakh crore. Extending the scheme for a further six months could cost FY23 a further ₹ 80,000 crore, raising the food subsidy to almost ₹ 3.7 lakh crore.

Any further tax cuts or food subsidy extensions to fiscal mathematics could have detrimental consequences, the department said in an internal note seen by ET. “In particular, it is not advisable to continue with the PMGKAY beyond the current extension, on food security and fiscal grounds,” the department said.

The note said that recent decisions such as the quantum – free extension, an increase in the fertilizer subsidy, the reintroduction of the cooking gas subsidy, the reduction of excise duty on petrol and diesel and the imposition of customs duty on various edible oils and inputs. situation. Last month’s reduction in excise duty on petrol and diesel to alleviate inflationary pressures is expected to result in a loss of revenue of around 1 lakh crore.