The government is likely to account for the National Food Security Bill in the upcoming general budget for 2012-13, food minister KV Thomas told HT — a move that will set the ball rolling on the much-anticipated welfare legislation of the ruling coalition.
According to financial projections, India's expenses on food handouts will likely rise by 2.2%, much lower than analysts have projected, Thomas said.
The food minister held a meeting with PM Manmohan Singh on Wednesday, where he is understood to have discussed the final estimates of the food security bill's cost analysis.
India currently spends Rs 60,572 crore for an existing food supply programme under the "Targeted Public Distribution System" for the needy. Food handouts are currently pegged to the 1993-94 poverty estimates and in line with population figures of the 2000 census.
Since the government will have to apply the 2011 census and updated poverty estimates — currently being finalised — for all future entitlements, the food subsidy will rise to Rs 1,09,795 crore even without the food security law, Thomas said.
To implement the bill, which expands food entitlements to 63.5% of the population, or about 800 million Indians, the country will have to spend nearly Rs 1,12,205 crore.
In absolute terms, the country will have to spend about Rs 2,410 crore more on food, or a 2.2% rise, under the food security law. "There is no huge additional subsidy burden," he said.
The government is likely to crimp other handouts, such as subsidies on fuel, to finance the bill, which stems from a poll promise of the ruling Sonia Gandhi-led Congress party.
The food bill, which seeks to cover 75% of rural households and 50% of urban dwellers, can boost the Congress's ratings. Analysts hold an assured job programme for rural Indians, unveiled during the previous term of the UPA government, responsible for its good showing in the last elections.