Centre extends free foodgrain scheme by 6 months at Rs 80,000-cr extra cost

Centre's decision comes hours after UP government, under CM Yogi Adityanath, decided to continue the free ration scheme for another 3 months

The Modi government on Saturday extended the scheme to provide 5 kg of foodgrains free of cost to the poor by six months till September 30 at a cost of Rs 80,000 crore.

Barely hours after the newly elected Uttar Pradesh government extended its free ration scheme for three months starting from April, the Centre too chipped in by extending the Pradhan Mantri Gareeb Kalyan Ann Yojana (PMGKAY), or free foodgrain scheme, for another six months.

The Centre will incur an additional food subsidy of around Rs 80,000 crore for extending the scheme for another six months, which will be over and above the food subsidy Budget Estimates for FY23, pegged at Rs 2.06 trillion.

Thus, as of now, the total expenditure on food subsidy, after the current extension of PMGKAY, will be Rs 2.86 trillion.

Under the PMGKAY, the Centre gives an additional 5 kilograms of rice or wheat per month to the beneficiaries of the National Food Security Act (NFSA) over and above their usual monthly quota for free.

“This means that every poor household would get nearly double the normal quantity of ration,” an official statement said.

The programme was first started in April 2020, immediately after the nationwide lockdown as a relief measure, and has since continued non-stop barring a minor break in April 2021.

For the six months starting from April 1, 2022, the Centre will need to allocate around 24.4 million tonnes of wheat and rice for PMGKAY over and above the usual allocation for NFSA.

This should not be much of a problem because as on March 1, 2022, the Centre’s foodgrains stocks in the Central pool is estimated to be around 97.08 million tonnes, which includes 44.11 million tonnes of unmilled paddy lying with the millers.

This is far more than the normal stocks required to be maintained at the end of the financial year at around 21.04 million tonnes for meeting the buffer and strategic norms requirement.

That apart, the Centre has fixed a target of purchasing around 44.4 million tonnes of wheat from farmers in FY23.

However, how far and by how much will the target be met remains to be seen considering that wheat prices in open markets are ruling almost Rs 200-Rs 300 per quintal more than the MSP of Rs 2,015 per quintal due to surge in export orders in the aftermath of the Russia-Ukraine crisis.

If the wheat procurement in the next financial year (FY23) drops below the targeted 44.4 million tonnes to, say, around 35 million tonnes, then it remains to be seen how the government manages the stocks.

This is because it needs to provide around 60.3 million tonnes per year to run the usual public distribution system under the National Food Security Act.

Meanwhile, the Centre said in a statement that after today’s extension, the government in total will spend around Rs 3.4 trillion on PMGKAY since its inception in April 2020.

And, it has allocated almost 100.3 million tonnes of foodgrains for free distribution since April 2020, which is over and above the normal ration quota for each household.

“The benefit of this free ration can be availed through portability by any migrant labour or beneficiary under One Nation One Ration Card (ONORC) plan from nearly 500,000 ration shops across the country. So far, over 610 million portability transactions have benefitted the beneficiaries away from their homes,” the government statement added.

It added that even though the Covid pandemic has significantly abated and economic activities are gathering momentum, this PMGKAY extension would ensure that no poor household goes to bed without food during this time of recovery.

Meanwhile, earlier in the day, the UP government in its first cabinet decision under Chief MInister Yogi Adityanath's second term extended the free ration distribution scheme for another three months starting from April .

The state will spend close to Rs 3,500 crore on the scheme. The UP government tops the free rice and wheat with a kilogram of pulses, refined edible oil, salt and sugar free of cost to its almost 150 million ration card holders.

The scheme and its rather corruption-free effective delivery has been touted as one of the main factors that worked in favour of the incumbent Yogi Adityanath government in the just concluded state polls despite all the odds, several political commentators said.