Cost and Impact of Government Food Scheme

The Government Food Scheme is an attempt to help the poor. However, it isn’t free from controversy. Questions of the cost and impact of the scheme have been raised. While the programme is supposed to empower those with low incomes, corruption has been reported in local administrations. Deputy commissioners have been asked to monitor the programme’s implementation.

Budget deficit of 6.4% of GDP
In a normal year, a Budget deficit of 6.4% of GDP would be very high. However, if one assumes buoyancy in tax collections, the deficit will shrink to 5.3%. The GST collections are projected to increase by 20%, or about Rs18-20 lakh crore. However, the FM has not factored in higher revenue estimates, so the fiscal deficit should be at least 6.1%. The continuation of the free food grains regime and the fertilizer subsidy have increased expenditures.

The CBO has published several reports on federal finances, and in the latest one, it predicted that the federal deficit would increase by $3.3 trillion in 2020, or 16.1% of GDP. This is significantly higher than the average deficit of the past 50 years. The CBO has also factored in a pandemic and economic disruptions that may occur in 2020.

Corruption in local administrations
Economic inequality has been shown to be a major cause of corruption in the public sector, and local officials in poorer cities often rely on industries such as drug trades and raw materials to sustain their incomes. Low wages and insecurity can also encourage local officials to take advantage of opportunities that arise. Corruption in local government is also common in poor countries and has been linked to low levels of government funding and efficiency.

While aid is less affected by corruption than local spending, aid-financed contracts may have similar levels of corruption. If aid-financed contracts were affected at the same rate, the $161 billion global aid industry would lose $8 billion to corruption. Senator Paul’s estimate of a $113 billion global loss reflects these findings.

Cost of programme
The Cost of Government Food Scheme is an important part of the food security package for low-income households. However, food prices have skyrocketed in recent years. Eggs, bread, milk and noodles have all gone up by more than 50%, and fruits and vegetables are out of reach for many low-income families. Moreover, transport services – a critical component of food supply – have also skyrocketed. They have gone up by 283% between January 2017 and December 2021 – and this is without the official increase in fuel pump prices.

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