REFILE-UPDATE-2-India replaces COVID era free food program with cheaper scheme
(Fixes typo in first paragraph, removes extra letter on “end”)
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India will save almost $20 billion in 12 months
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Ending pandemic-era free food programme may cool prices
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India to offer food that is already subsidised in India for free
Rajendra Jadhav and Aftab Ahmed
NEW DELHI (Reuters) – India’s COVID-19 era food program will be ended on Dec. 31, and replaced by a more affordable programme that will help the government save nearly $20 billion over the next twelve months.
Late Friday, India’s Food and Trade Minister PiyushGoyal stated that the government would end the free food program after 28 months because the economic situation has improved following the COVID-19 cases and the restrictions have eased.
The pandemic and its impact on the economy, particularly on high food prices, have squeezed India’s hundreds of millions of poor people over the past few years.
This program gave poor families 5 kg (11 pounds) of foodgrains every month, in addition to other subsidised foodgrains. The government spent nearly $47 billion on the program since it began in April 2020.
In addition, the government was spending 2 trillion rupees ($24.16billion), under the National Food Security Act, to provide highly subsidised foodgrains and services to almost 75% of its rural population as well as 50% of its urban residents.
Goyal announced that for the next 12 mois, the government will stop subsidizing foodgrain. The cost for each month is 1 Indian rupee ($0.0121) or 3 Indian rupees (0.0362). Millions of households in poverty benefit, while priority groups receive 5 kilograms of foodgrains per household for the same price.
According to an unnamed official, the government will be able to save $20 billion by eliminating the pandemic-era food program. Instead of spending on multiple programs, they will instead spend on one food program.
Due to extra distribution of wheat, India’s government was having trouble managing wheat stockpile. Prices in the Indian market rose to a record high.
“The discontinuing scheme means the government can now sell 2 to 3 million tonnes in the open market to calm prices,” said a New-Delhi based dealer with a global trade house. ($1 = 8.27800 Indian rupees) (Additional reporting from Shivam Patel in New Delhi; Editing and editing by Toby Chopra, Josie Kao).