Extension of Free Ration Scheme Will Not Impact Fiscal Consolidation Path: Finance Secretary

New Delhi: The government expressed confidence in adhering to the 5.9 percent fiscal deficit target set for the current fiscal year. The extension of the free ration scheme, Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), will not affect the fiscal consolidation path, asserted Finance Secretary T V Somanathan.

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Extension of Free Ration Scheme

Somanathan stated that the announcement regarding the extension of PMGKAY does not, in itself, have any implications for the government's fiscal consolidation path. The scheme's extension does not deviate from the committed path of fiscal consolidation. The Union Cabinet, led by Prime Minister Narendra Modi, approved the extension of PMGKAY, ensuring 5 kilograms of free foodgrains per month to 81.35 crore poor people for another five years, incurring an estimated cost of Rs 11.80 lakh crore to the exchequer.

Fiscal Deficit Under Control

As per the data released by the Controller General of Accounts, the fiscal deficit during the April-October period stood at Rs 8.03 lakh crore, which is 45 percent of the full-year budget estimate. For the 2023-24 fiscal, the government has projected the fiscal deficit to be Rs 17.86 lakh crore, or 5.9 percent of the GDP. Chief Economic Advisor V Anantha Nageswaran emphasized that fiscal management remains on track, as evidenced by the fiscal deficit numbers in the first seven months of the fiscal year.

Fiscal Consolidation Roadmap

The government aims to reduce the fiscal deficit to below 4.5 percent by 2025-26 from 6.4 percent of GDP in 2022-23, as per the fiscal consolidation roadmap. The April-October fiscal deficit was 45.6 percent of the full-year budget estimate in the last fiscal. In the preceding five years, the deficit at the end of October used to average around 81.6 percent of the budget estimate.

The government's confidence in adhering to the fiscal deficit target and its commitment to fiscal consolidation are positive indicators for the Indian economy. The extension of the free ration scheme demonstrates the government's focus on social welfare while maintaining fiscal discipline. Continued efforts in fiscal management will contribute to sustainable economic growth and stability.