GOADED by its perceived potential as a vote-winner, the UPA government on Wednesday chose to promulgate an ordinance to give effect to the Food Security Bill, which would give 67% the population the right to 5 kg of grain every month at highly subsidised rates of R1-3 per kg.

The Cabinet decision, which came hardly 20 days before the scheduled start of Parliament?s monsoon session, was flayed by the Opposition for its ?hastiness?and undemocratic nature, while economists warned of the enormous fiscal burden the law could create in the years to come. Farmer groups have also opposed the Bill, termed as historic by the ruling coalition, fearing it could depress the minimum support prices.

The Bill, if made an Act and implemented, will increase the food subsidy by thousands of crores this fiscal and could potentially have a much more stressful impact on the fisc in the years ahead. A team of experts, headed by Commission for Agricultural Costs and Prices chairman Ashok Gulati, had said in a report that the government would have to shell out as much as R6,82,163 crore over three years to implement the Bill, which would also hurt the farm sector in the long run.

The Bill was tabled in the Budget session of Parliament, but a discussion on it couldn?t take place due to pandemonium in the Lok Sabha over Coalgate and other scams.

Even after the ordinance, the Bill will have to be approved by both the Lok Sabha and the Rajya Sabha. The ordinance, which will guarantee 5 kg of rice, wheat and coarse cereals per month per person at a fixed price of R3, R2 and R1, respectively, will come into effect after President Pranab Mukherjee signs it.

The government has budgeted R90,000 crore for food subsidy during 2013-14, but the actual subsidy would touch R1,24,747 crore if the Bill is made an Act and implemented right from the start of the fiscal. The food subsidy in 2012-13 was R85,000 crore, against R75,000 crore originally budgeted.

Importantly, the fiscal deficit in the first two months of 2013-14 hit one-third of the full-year target of R5,42,000 crore, or 4.8% of the gross domestic product, compared with 4.9% a year before.

Analysts believe the fiscal deficit will far exceed the target if the decision is implemented.

?The decision will definitely affect government finances although the impact will be less this fiscal, considering a major part of the year will pass by the time it?s implemented. However, going forward, the implementation will hit the fisc hard. We are expecting the fiscal deficit target to hit 5.1% of the GDP in 2013-14 instead of the government target of 4.8%, and the latest the decision will have a minor contribution to it,? said DK Joshi, chief economist at Crisil.

The costs projected by the experts include not just the food subsidy burden, but the likely expenditure in the farm sector to ramp up production and the cost of establishing a whole set-up as well as storage facilities, among others, to broaden the scope of procurement and distribution.

National Advisory Council member NC Saxena said: ?I am happy the Bill has been issued through an Ordinance but the government is not ready with the beneficiaries list yet. This would delay the implementation of the legislation on the ground.? The Socio-Economic and Caste Census, which is currently being undertaken in rural and urban areas for identifying the households living below the poverty line is yet to be completed in many states while the government?s aims was complete the exercise in 2011-12. ?While states such as Tripura and Haryana have completed the census and these states are expected to roll out implementation of the food bill immediately, bigger states such as Uttar Pradesh and Bihar are yet to complete their census,? Saxena said

Officials said the Ordinance will be presented to the President on Thursday. Once the President signs it, rules will be framed. The programme will be rolled-out from August after state governments prepare the beneficiary list. The scheme could take at least six moths to cover the entire country.

?The Bill has flaws and is anti-farmer. We will oppose the passage of the Bill in Parliament,? Kamal Farooqui, spokesperson, Samajwadi party, said. ?The government has shown contempt for Parliament where such a major legislation should have been discussed and adopted,? Prakash Karat, general secretary, CPI(M) said.

?The Food Security Bill will significantly increase the fiscal deficit, at a time when the Indian economy is not showing any sign of recovery. This will increase the pressure on the government to restrict the minimum support price, while keeping the selling price of subsidised food grains very low. The farmers will get squeezed both by the government procurement price, and by the depressed market price in the short term,? Joshi said.

CRISIL Research said proper implementation of the Food Security Bill would lower spending on foodgrains by below poverty line (BPL) households, and free up resources for spending on other goods and services, in particular health, education, and nutritious food.