New Delhi: Criticising the Food Security Bill, former RBI governor Bimal Jalan on Thursday said the programme is ill-timed and will further aggravate the economic situation by increasing fiscal stress.
"But given the macroeconomic situation just now, whether we can afford it (food security plan) right now? Timing is not right, timing is an issue," Jalan told a news agency while replying to a query whether the food security plan will increase government`s fiscal stress.
"We should not do this because of electoral considerations. We should do it because it can be done, it needs to be done. And this is a desirable thing to happen," he added.
The Lok Sabha on Monday passed the Food Security Bill, barely eight months ahead of the 2014 General Elections. It will have to be approved by the Rajya Sabha.
The BJP has dubbed food security bill as "vote security bill".
Jalan further said: "Current macroeconomic situation is very distressing as of now. India`s GDP growth is low, CPI is high, current account deficit (CAD) is high, fiscal deficit is high, and you are seeing there is no confidence in the market."
His comments come within days of the RBI in its annual report raising concerns about the viability of the Food Security law.
The passage of the Food Security Bill in Parliament will pave the way to give nation`s two-third population the right to 5 kg of foodgrains every month at highly subsidised rates of Rs 1-3 a kg.
At Rs 1,30,000 crore government support, the food security programme will be the largest in the world. It would require 62 million tonnes of foodgrains.
Finance Minister P Chidambaram on Tuesday said the implementation of the Food Security Bill will not impact the fiscal deficit. He had committed to containing it at 4.8 percent of the GDP.
As the Bill is likely to be implemented in the remaining months of the current fiscal, its impact on government finances will be less in 2013-14, but much more in the years to come, rating agency Moody`s said.
The total food subsidy budgeted in the current fiscal is Rs 90,000 crore, of which Rs 10,000 crore is towards the implementation of the programme.
The former RBI governor, who held office during the time of the Asian crisis of 1997-98, said that RBI will have to take measures which are supportive of investment and confidence boosting.
PTI
