Recently, the government has decided to implement the ambitious Food Security programme to give nation's two-third population the right to get 5 kgs of foodgrains every month per person at highly subsidised rates of Rs 1-3 per kg, costing around Rs 1,25,000 crore annually for the government to supply around 62 million tonnes of rice, wheat and coarse cereals to 67 percent of the population. The Bill is being studied by the RBI to quantify the implications that it will have on the economy as whole.
The Reserve Bank of India (RBI) governor D Subbarao said that UPA Government's proposed that the Food Security Bill will put pressure on the macro-economic indicators including the fiscal deficit, economic growth and inflation. While addressing the customary post-policy interaction with journalists, Subbarao said that proposed bill carries a hoard of economic consequences including need of excess investment for developing warehousing space for food procurement, increase in subsidy burden on government and will also deteriorate country’s macroeconomic indicators.
The RBI also said that it is too early to definitely comment on the scale of the impact the Bill will have on the macroeconomic backdrop as the numbers are still to be worked out.
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