Govt may extend foodgrain subsidy beyond December

Concerned about fresh inflationary pressures due to deteriorating global geopolitical situation, the government may extend its free foodgrain scheme beyond the December deadline and take pre-emptive steps to shield the poor from sudden spike in food and fuel rates ahead of crucial elections, three people aware of the development said.

- Rajeev Jayaswal, Smriti Kak Ramachandran

Already elevated global food and fuel prices are expected to become more volatile if the war in West Asia following Hamas' attack on Israel escalates to a scale where it disrupt supplies, hampering recent efforts of the government and the Reserve Bank of India (RBI) to contain retail inflation, they said requesting anonymity.

Aditi Nayar, chief economist and head, research and outreach at ICRA Ltd said, "The extent of the duration of the conflict, and its impact on fuel prices and supply chains for food and other inputs will influence the impact on inflation metrics."