MUMBAI: RBI has weighed in on the ongoing debate on the viability of the proposed Food Security Bill, warning the government would find it difficult to contain spending on the proposal within the budgeted amount even in 2013-14. Further, the central bank, which released its annual report on Thursday, also asserted that the rise in the quantum of subsidies would hamper investments.The Centre plans to spend 90,000 crore on food subsidy in 2013-14, of which 10,000 crore is earmarked for the National Food Security Bill, which aims to provide foodgrain to poor families at subsidised rates. The government issued an Ordinance before the monsoon session, but it is yet to be ratified by Parliament."The impact of the National Food Security Ordinance on food subsidies is manageable for 2013-14, in the years to come it will add to the fiscal pressure," the central bank said. However, it goes on to express doubt on whether the pressure on spending can be managed even in the current fiscal. "Key concern is that it is difficult to contain food subsidies within budgeted amount even in 2013-14 when the Act will just begin to get implemented.""Over the next few years, the growing subsidies could restrict investment opportunities, including those in agriculture sector," it warned.The central bank said the full impact of the rupee's depreciation of about 11% in the first four months of FY14 is incomplete and will put upward pressure as it continues to feed through to domestic prices. "RBI will try to condition the evolution of inflation to a level of 5% by March 2014," says the annual report. The wholesale price index, India's main inflation gauge, rose 5.79% in July from a year earlier, compared with 4.86% in June and at its fastest pace since February.Expressing concern on the widening current account deficit (CAD), which is at 4.5% of GDP, the central bank said the high level of CAD is "unsustainable under the present growth scenario" while suggesting that "there is still a scope for curbing non-essential imports as well as to improve trade balance".The import of oil needs to go down and bottlenecks in the production of coal and iron ore should be addressed to control CAD. "To mitigate external vulnerability, short-term debt needs to be contained, imports of oil and gold need to be moderated and structural impediments need to be removed in areas such as coal and iron ore," it said. Iron ore production has come to a halt in large parts of the country because of the Supreme Court's orders.The central bank also highlighted the fiscal burden facing the government, which will have to inject capital into public sector banks as they gear up to adhere to Basel III norms. RBI estimates show that PSU banks will require Rs 4-4.25 lakh crore of capital by 2018.RBI has also voiced concern over rising stress in the books of banks, particularly on account of loans to infrastructure sector. "Utmost attention is needed to contain financial stability risks that are rising with the deteriorating asset quality of banks. Although the average leverage ratio for the corporate sector remains comfortable, stress is building up in some sectors, especially infrastructure, where firms are finding it hard to raise fresh equity given an already high net debt-to-equity ratio. If infrastructure sector issues are not quickly resolved, it can have a domino effect on the asset quality of banks."RBI data shows that bad loans and restructured standard loans to infrastructure sector stood at 17.3% of the total loan book.The Reserve Bank of India has also called upon state governments to ensure debt restructuring does not become a perpetual feature considering its downside risk to the stability of state finances.