The Department of Expenditure of the finance ministry has advised the Union government to not extend the Pradhan Mantri Garib Kalyan Anna Yojana, citing financial and food security concerns, The Indian Express reported on Saturday.

The Pradhan Mantri Garib Kalyan Anna Yojana is a free ration distribution scheme that was launched in March 2020 in the wake of the first wave of the coronavirus pandemic. Under the scheme over 80 crore citizens get five kilograms of free ration every month.

It had been launched as a measure to provide relief to citizens whose sources of income got adversely affected due to the countrywide coronavirus lockdown. The scheme has been extended on multiple occasions since then – most recently till September.

In a note to the Centre, the Department of Expenditure has said that the scheme was “beyond the need at a non-pandemic time”.

“The budgeted fiscal deficit at 6.40% of GDP [gross domestic product] was itself extremely high by historical standards, and deterioration therein poses a risk of serious adverse consequences,” the department said. “It is vital that major subsidy increases/tax reductions are not done.”

In her Budget speech, Finance Minister Nirmala Sitharaman had pegged India’s fiscal deficit – the difference between revenues and expenditure – to 6.4% of the country’s GDP for the financial year 2022-’23.

The government has allocated a budget of Rs 2.07 lakh crore for food subsidies for this financial year, according to The Economic Times. The free ration distribution scheme till September is expected to push the subsidy bill to nearly Rs 2.87 lakh crore. If the government extends the scheme by six more months, the bill could climb to about Rs 3.7 lakh crore, according to the newspaper.

The Department of Expenditure note also stated that besides the free ration distribution scheme, the government’s decisions like increasing fertiliser subsidy, reintroducing subsidy on cooking gas, reducing excise duty on petrol and diesel and cutting customs duty on edible oils and various other items have created a serious fiscal situation.

Subsidy on fertilisers is expected to rise from its allocated budget of Rs 1.05 lakh crore for fiscal year 2022-’23 to Rs 2.15 lakh crore, according to The Indian Express.

The cut in excise duty on fuel will cost the government Rs 1 lakh crore, according to Sitharaman. The subsidy on cooking gas would incur a loss of Rs 6,100 crore.