Truth will set you Free
Nadia Stephen Publisher
Reuters 29 Dec 2022
Indian Prime Minister Narendra Modi's move to effectively halve food rations to the poor ahead of state polls next year and a general election in 2024 is fiscally sound, but politically much depends on whether the charismatic leader can sell it to voters.
Subsidized food and other items are key to winning elections in India, where food aid is a legal right and more than 800 million people received an extra 5 kgs of free rice or wheat in the last 28 months as COVID-19 ravaged their finances.
The free food programme, however, cost the government around $47 billion, worsened the fiscal deficit and reduced wheat stocks in government warehouses to multi-year lows.
From January India will end the additional 5 kgs per person of food aid issued during the COVID-19 pandemic and for one year will issue 5 kgs of free food, but reducing populist measures ahead of elections is risky.
Modi's Bharatiya Janata Party (BJP) won a record-breaking victory in his home state Gujarat this month and is widely expected to win the next general election. Analysts say that reality gives him a freer hand to impose fiscal discipline.