By sending a letter to the government on behalf of the Department of Expenditure of the Finance Ministry, it has been warned that if the Central Government continues the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) even after September or any tax If it cuts, it will have an impact on the financial health of the Centre.
The Pradhan Mantri Garib Kalyan Anna Yojana was started by the Central Government in 2020 at the time of the first lockdown due to Corona, after which the government is continuously taking forward this scheme. In March 2022 it has been extended till September. The Economic Times reported that the Center has allocated Rs 2.07 trillion for food subsidies in the current fiscal, while the extension of PMGKAY till September could bring the subsidy bill to around Rs 2.87 lakh crore. At the same time, if the government extends this scheme for the next 6 months, then there will be an additional expenditure of Rs 80000 crores on food subsidy, due to which the food subsidy bill will reach 3.7 lakh crores in the financial year 22-23.
The Department of Expenditure of the Finance Ministry has said in an internal note to the government that more tax cuts or further expansion in food subsidies will have a negative impact on the fiscal deficit, ET reported. It was categorically stated by the department that extending PMGKAY is not justified on financial grounds.
The letter from the department further said that due to the recent decisions to extend the date of free ration, subsidized fertilizers, resumption of subsidy on LPG, reduced excise duty on petrol diesel and reduced import duty on edible oils. There has been a negative impact on the financial position of the government.
The note said that due to the reduction in excise duty on petrol and diesel last month, there will be a reduction of Rs 1 lakh crore in the income of the government. Let us tell you, to give relief to the people from inflation, the excise duty on petrol was reduced by Rs 8 and on diesel by Rs 6 from the central government. At the same time, a subsidy of Rs 200 per cylinder was announced on LPG cylinders by the Center on maximum 12 cylinders in a year.
For the financial year 2022-23, the government estimates that this time the fiscal deficit may be 6.4 percent of the total GDP, while international rating agency Fitch says that due to more subsidies and reduction in taxes, it may even reach 6.8 percent. .