India to spend 6.5 pct more on food subsidies in FY 2019-20 – sources
NEW DELHI, Jan 24, (RTRS): Indian government ministers facing an election in coming months launched a social media campaign on Thursday trumpeting successes in creating jobs just weeks after a leading think tank reported 11 million jobs were lost in the country last year.
The independent Centre for Monitoring Indian Economy (CMIE) had estimated that 83 percent of the job losses occurred in rural areas, where two-thirds of the population lives, and its study put unemployment at a 15-month high in December.
The dismal findings would be damaging for Prime Minister Narendra Modi, whose Hindu nationalist Bharatiya Janata Party (BJP) swept to power in 2014 promising an economy that would grow fast enough to create jobs for the millions of young Indians joining the labour force each year.
Girding for a general election that must be held by May, members of Modi’s cabinet seized on data from a private recruitment agency to present a more rosy picture of the job market. “Proving pessimists wrong, India has seen growth in hiring trend under the leadership of Shri Narendra Modi,” cabinet minister Harsh Vardhan said on social network Twitter. He was just one of several ministers to cite data from jobs portal Naukri.com, which showed hiring activity in December was 8 percent higher than a year ago, based job listings added to the site.
According to Naukri, the information technology and software industry recorded the most hiring, along with construction and engineering – sectors that are all largely concentrated in urban areas. Reuters telephoned and e-mailed an official of the portal’s owner, Info Edge (India) Ltd for comment, but received no response. A senior leader from the main opposition Congress party dismissed the hiring trends publicised by the BJP as “another jumla”, using a colloquial word meaning “false promise”.
“There are some signs of investment revival in certain sectors, and therefore it’s entirely possible that demand for jobs in those sectors will be rising,” said Amitabh Dubey, a political analyst with consultancy TS Lombard. “The important point politically is that it’s the lower-end jobs that matter, because that is where the job destruction had happened since demonetisation,” he said, referring to the government’s overnight removal of high value bank notes from circulation in late 2016 in a bid to curtail the shadow economy and criminal activity. “It’s not clear that Naukri.com would be picking up what’s happening at that level,” Dubey said.
India is poised to raise the subsidies for the world’s biggest food welfare programme by 6.5 percent for the fiscal year beginning April 1, the smallest increase in three years, in the nation’s interim budget next month, two sources directly involved in the decision told Reuters.
The government is set to earmark about 1.8 trillion rupees ($25.28 billion) for food subsidies next fiscal year as it tries to contain its budget deficit ahead of the next general election due by May. Its budget targets for the next two years are already under pressure because of plans to make various payments to farmers to offset low crop prices.
The 6.5 percent increase in food subsidies might not be adequate to cover the cost of the mammoth food welfare programme, especially after a sharp increase in the price at which the government buys rice from domestic farmers, the sources said.
The sources didn’t wish to be named as the budget discussions were not public. On Feb 1, Finance Minister Arun Jaitley, who is currently in the United States for a medical check-up, could make these numbers public while presenting an interim budget for the 2019/20 fiscal year.
Under the National Food Security Act (NFSA), India’s main food welfare plan, the state-run Food Corp of India (FCI) buys rice and wheat from farmers at a guaranteed price and the state agencies sell the staples to 67 percent of India’s 1.3 billion people at about one-tenth of the market price. The bulk of the food subsidies go towards covering the cost of buying rice and wheat from farmers at a higher price and selling these grains to the poor at highly subsidised prices.
“The finance ministry officials are struggling to keep the fiscal deficit under check,” said the first source, adding more funds could be allocated in the full budget if the current government is re-elected. That budget is likely to be presented in July. The finance ministry had previously estimated next fiscal year’s food subsidies at 1.9 trillion rupees. Since coming to power in 2014, Prime Minister Narendra Modi has raised food subsidies, the federal government’s biggest spending after defence, by nearly 47 percent to 1.69 trillion rupees in the current fiscal year.