No extension for PMGKAY
The Cabinet on Friday decided not to extend the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY or free ration scheme) beyond December. The government will, however, provide grains under the National Food Security Act (NFSA) free-of-cost to the 813 million beneficiaries during 2023.
The move is a fiscally prudent one, given that the cost of the PMGKAY, under which additional quantities of grains are given to the same sections of people, is much higher than that on making NFSA grains totally free.
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Experts said, considering the economic cost of grains, the additional food subsidy expenditure due to Friday’s decision would be around Rs 25,000 crore. In comparison, had PMGKAY been extended for one year, it would have cost the exchequer Rs 1.6-1.7 trillion.
Under NFSA, the government provides 5 kilogram of food grains per person per month at highly subsidised rates. Rice is given to the beneficiaries under NFSA at Rs3 per kg and wheat at Rs 2 per kg.
Also, the families covered under Antyodaya Anna Yojana (AAY) get 35 kg of food grains per month.
Briefing reporters about the decision, minister for food and public distribution Piyush Goyal said the Centre will bear the entire burden of providing free food grains under NFSA.
The annual cost to the exchequer is estimated at Rs 2 trillion, he said. This will roughly be the total food subsidy expenditure in 2023.
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The free ration scheme has cost the exchequer about Rs 3.91 trillion since its April 2020 launch in the midst of the first Covid-19 wave. Since its launch, the scheme has run continuously with several extensions, except for the period between December 2020 to April 2021. The latest extension was for three months to December 31, 2022.
Under the PMGKAY, 800 million people have been getting 5 kg of food grains free-of-cost every month.
Of course, free grains have been distributed over and above the normal quota provided under NFSA at highly subsidised rates.
The Centre has allocated 111.8 million tonne of foodgrains to states and Union Territories so far under the free ration scheme.
While the fiscal cost of PMGKAY is estimated on the basis of the economic costs of the grains, the actual cash cost will be a fraction of that, after taking into consideration open market sale price of the grains.
The Cabinet decision also addresses concerns over a likely dip in India’s grain stocks, particularly of wheat.
