MUMBAI- India is planning to extend its free food grains program by five years, Prime Minister Narendra Modi said, as the government tries to shield consumers from rising prices of cereals ahead of a general election early next year.
The extension will offer relief to consumers, but it will also lead to higher government spending and require New Delhi to procure more wheat and rice from farmers to sustain the welfare program, which provides free grains to more than 800 million people.
Modi confirmed the move at an election rally in Durg, a city in the central state of Chhattisgarh, where state elections are due this month.
The grains program, estimated to cost the government around 2 trillion rupees ($24.06 billion) this year, was due to expire at the end of the year.
India, the world’s second-largest producer of wheat and rice, has restricted exports of both cereals to curb rising prices at home.
A Mumbai-based dealer with a global trade house said the government would be forced to keep export restrictions in place for a longer period because it needs to purchase from farmers to run the program.