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The International Monetary Fund (IMF) staff report of 2014 has warned that the fiscal implications of the National Food Security Act could magnify if its implementation leads to providing food to those whose income levels make them ineligible or if beneficiaries are mis-classified or if the current open-ended procurement system continues.
The report estimates that the food subsidy cost could escalate to Rs 140,192 crore in 2014-15 and Rs 157,701 crore in 2015-16, both about 1.1 per cent of Gross Domestic Product against the government estimate of Rs 124,502 crore.
"The Act has been introduced when international experience indicates that conditional cash transfers, rather than physical distribution of subsidised food, have been found to be a more efficient means of achieving food and nutritional security," the IMF paper said.
