New Delhi: Dismissing fears of a sharp spike in fiscal deficit because of the food security programme, Food Minister K V Thomas on Thursday said the additional subsidy burden will only be Rs 10,000 crore spread over the next one year.
While Rs 90,000 crore was provided for in the Budget 2013-14, the programme will be rolled-out over the next few months and additional outgo would be limited.
"My question is that suppose there was no food security bill, will this not happen (to the rupee, which has fallen sharply against the US dollar and other currencies). What is the additional burden, may be Rs 10,000 crore that is spread over a year," Thomas told.
The programme will be implemented over the next 12 months and will not adversely impact the fiscal situation, he said.
The programme entitles two-thirds or 82 crore people in the country to low-cost foodgrains. It guarantees 5 kg of rice, wheat and coarse cereals per month per person at a fixed price of Rs 3, Rs 2 and Re 1 per kg, respectively.
The rupee fall has some impact on the economy, but not the food security programme which has to be implemented in next 12 months, Thomas said.
There have been concerns expressed that the programme to provide cheap food to the needy may impede the government`s efforts to pare budget deficit, which is widest among major emerging countries. The rupee, meanwhile, had fallen to all- time low of Rs 68.85 to a US dollar yesterday.
Moody`s Investors Service said the food security programme was credit negative for India and will exacerbate the government`s weak finances.
"The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2 per cent of GDP per year from an estimated 0.8 per cent currently, exacerbating the government`s weak finances," it said.
The Rs 1,27,000 crore is the outgo estimated for implementation of the scheme in the full financial year but in 2013-14 the subsidy requirement would be only for five months as the scheme will take time to rollout.