Fiscal impact of free food grain extension unlikely for next 2 years

An analysis by Nomura said the extension reflects the difficulty in withdrawing populist policies, especially ahead of elections but the near-term macro implications should be muted

The extension of the free food grain scheme would not have any impact on the fiscal deficit target for at least the next two financial years, a top Finance Ministry (FinMin) source said on Monday.

The FinMin is also concerned about bogus demand being generated by some states to claim funds under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). According to reports, the Centre recently released Rs 10,000 crore towards urgent assistance for the NREGS .

Prime Minister Narendra Modi on Saturday announced a five-year extension of the free food programme — 5 kg of food grains