Despite fears of low public finances and the still slumping Rupee, the Indian government has assured that it can still afford the food program that it had developed for the nation’s poor people. Called the Food Security Bill, the program was also passed by the lower house of the Parliament recently.
Following this decision, the stock market dipped down by 3.18% and the Indian Rupee hit an all-time low of 66.30 to the dollar. However, Finance Minister P. Chidambaram calmed down investors by reiterating that the government would meet the deficit target set by it even after shelling out a whopping $19 billion (annually) for the food program. Chidambaram has also indicated the total figure mentioned in the food program budget was a confirmed number that would not be exceeded at any cost.
Several economists fear that given the current scenario where the economic growth is just 5% (the slowest in an entire decade), and where the existing investors are pulling out, the food bill could potentially cause more financial burdens for the nation. However, the Finance Minister has maintained his stand by stating that the government could handle the budget for the same.
The sharp slowdown of the Indian economy has also prompted Chidambaram to come up with a 10-points program aimed at revitalizing the economy and restoring the trust and confidence of potential investors. Some of the measures underlined in this program include boosting exports, improving the manufacturing sector, and increasing farm output etc.
In addition to all these measures, the government believes that the food program would wipe out the issue of endemic malnutrition in India where one out of every five children is malnourished.
Accordingly, the program would involve offering subsidized grains to over 800 million people across the nation annually (which would be approximately 5 kilos of grains every month for 2/3rd of the Indian population). The government has allotted a total of 230 billion rupees for the program on an annual basis, bringing the total bill to nearly $19 billion for just 2013-2014 alone.
The Indian government believes that its flagship food program would send out a positive message about the party to the citizens of India as well to the entire world. However, analysts and potential investors believe that the scheme was launched jus to garner extra votes in the next elections which are slated to be held next year. Investors also believe that a corrupt distribution system would make it hard for the food program to become a success, let alone take off properly.