Rajya Sabha too passes food bill, but is the economy ready?

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New Delhi, Sept 3: The UPA succeeded in passing the Food Security Bill, a pet project of its chairperson Sonia Gandhi, through the Rajya Sabha on Monday. The Lok Sabha has already passed it last week and it will now go to the President for his formal assent.

The passing of the bill will mean the Indian government will provide cheap food grain to 67 per cent of the population. It is considered a major game-changer for the Congress-led central government in the upcoming polls, but at the same time, financial experts are feeling worried that it will also lead to widening of the fiscal deficit. The country's economy is passing through a gloomy phase and the food security scheme will burden it more, they feel.

Arun Jaitley said the new food bill is just a repackaging of the old bills

Earlier on Monday, Leader of the Opposition in the Lok Sabha Arun Jaitley said the latest bill is just a repackaging and said the amount allocated for the BPL families was reduced in it. CPI(M)'s Sitaram Yechury, on the other hand, sought that the bill should be made universal and not just for 67 per cent of the population.

Union Food Minister K V Thomas defended the decision to allocate Rs 25 kilograms of foodgrain per family other than antyodaya, who would get 35 kilograms of foodgrain. He said the states were providing lower amount to include more people, adding that they were aiming to cover 82 crore people, which is more than the states.

He also remarked that the Centre's subsidy component exceeded than the states while replying to an argument that many states ruled by opposition parties had better schemes.

But is the economy ready?

Financial experts have argued that the said bill will put huge burden on the state coffers and rating agency like Moody's has also questioned the timing of the bill, for the Indian rupee is witnessing a steady slump at the moment.

The finance authorities have been assuring that the cost of the scheme will not be high for the economy but there is no explanation on how an infrastructure will be in place to support the massive food security scheme. Even the procurement costs will be gigantic.

Is the decision to put more burden on the economy through subsidisation instead of increasing the poor people's buying capacity a wise one?

OneIndia News

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