Given that the general elections are expected to be held in 2014, Sinhas views may end up putting the BJP in a quandary. Sinha had recently criticised the government for failing to release 70 million tonnes of grain into the market and had observed that the food subsidy would aggravate inflation.
The UPA government has been keen to push through the FSB, which would ensure subsidised grains to 75% of the population with the poor getting a higher subsidy ahead of the general elections.
However, it is not entirely clear yet whether the scheme will be rolled out in a phased manner in 25-50 districts to begin with or launched on a bigger scale. The government is expected to make only a token provision in FY14 with the bulk of the subsidy being provided for in FY15.
According to CACP chairman Ashok Gulati, the scheme could cost around R2 lakh crore or 2% of GDP each year for the first three years of the rollout. The food stocks will be distributed through the existing PDS though the quantum that would need to be handled is more than twice the current volumes.
The finance minister has said the fiscal deficit for the current year would be reined in at 5.3% of GDP. Between April and December 2012, the deficit was R4,04,700 crore or 79% of the Budget estimate. During this period, the total expenditure was R9,91,100 crore, up 10.6% y-o-y and at 67% of the Budget estimate.