Food Subsidy Reforms Will Reduce Inflation In India: Moody's
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International credit rating agency "We expect the recommendations to prompt policies that will improve the efficiency of India's food supply chain, a credit positive because it will reduce inflationary pressures and the government's fiscal deficit, two key constraints on the sovereign's credit quality," as per Moody's Sovereign Risk Group.
It is pertinent to mention here that a government-appointed panel had recommended reforms in food subsidy and its distribution system on January 21. The recommended reforms include decentralisation of grain procurement, providing food and fertiliser subsidies through direct cash transfer scheme and lowering the population to be covered under the National Food Security Act to 40% of the total population from 67% at present.
According to the rating agency, the consumer price index (
“The loss of grain stocks through inefficiency or corruption has raised costs and lowered the socio-economic benefits of the system,” said Moody's.
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Moody’s expressed hope that more transparency and efficiency will help in curbing
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