Scheme on the lines of PMGKAY-1 will cost the exchequer addl Rs 26,000 crore in FY22
Food Security Act
With the second Covid-19 wave once again rendering millions of poor jobless and triggering another exodus of migrants, the Central government today decided to distribute 5 kg grains free of cost to all the 800 million beneficiaries of the National Food Security Act over and above their regular quota in May and June 2021.
The scheme which will be along the lines of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) launched during the first Covid wave last year, will cost the Centre Rs 26,000 crore in subsidies over and above its usual PDS subsidy bill of Rs 1.8 trillion in FY22.
Assuming that the offtake of extra free grains in May and June is similar to last year’s level, the additional grain requirement this time around will be about 8 million tonnes over and above the normal PDS distribution in May and June, which should not be of much concern as data shows that food grains stocks the in Central Pool as on April 1 are almost 77.23 million tonnes, or 3.5 times than the buffer requirement.
Not only this, the extra subsidy burden on account of free distribution of grains should not concern the government as much this year as the last, because unlike the end of FY21, FCI does not have any outstanding dues on its books from previous borrowings in Fy-22.
However, unlike the previous Garib Kalyan Anna Yojana, the government this time has not decided to distribute any free pulses along with wheat or rice, as it simply does not have adequate stocks in its warehouses.
According to top government sources, as on April 1, India had pulses stocks of 1.4-1.5 million tonnes in its warehouses, which is lower than the buffer norm of 2 million tonnes.
Last year, when the Centre had decided to distribute 1 kg of free pulses per month to all the 200 million NFSA households, it was sitting on a huge pile of over 3 million tonnes.
However, this year, it so far does not have that luxury when it comes to pulses. Moreover, sources said pulses procurement by Nafed (the main agency that deals in pulses in India) has also not picked up as prices are ruling above the Minimum Support Price.
Dipa Sinha, academician and prominent member of the Right to Food Campaign, while welcoming the government’s decision to distribute additional free food grains, wanted the scheme to be valid for six months at least starting May, as the distress due to Covid is expected to linger for long.
That apart, she also wanted pulses to be distributed along with extra food grains as it helps in addressing nutritional needs.
Most importantly, Singh said the free extra food grains distribution does not address the concern of those who are not part of the National Food Security Act Lists and the problems of exclusion will remain as a lot of eligible poor will be left out of the benefits as was the case in PMGKAY-1.
“The problems of exclusion which we faced last time will remain and the same people whose names are in the list of NFSA will get the extra grains.
Therefore, universalisation remains the only viable option,” Sinha told Business Standard.
In FY21, amid the nationwide lockdown, the Centre launched the PMGKAY-1 in April 2020, initially for three months starting from April, and later extended it to five months as the situation remained fragile.
Under this the Centre distributed 5 kg of wheat or rice per person per month to almost 800 million beneficiaries over and above the normal entitlement under the Food Security Act for free.
In addition, all the eligible families were also distributed 1 kilogram of pulses per month without any charge.
Through two tranches of the PM Garib Kalyan Yojana and one of Atmanirbhar Bharat, the central government distributed around 32 million tonnes (mt) of additional grain in FY21 over and above the usual sale through the public distribution system (PDS) and other welfare schemes of around 55 mt of wheat and rice.
According to the government, the total subsidy for free distribution of grains came to around Rs 46,061 crore for the first three months of April, May and June.
After that the Garib Kalyan Anna Yojana was extended for five more months, it bore an additional subsidy of around Rs 76,000 crore.
Therefore, the total subsidy implication for both the packages of Garib Kalyan came to around Rs 1.49 trillion, which also included subsidy incurred for distribution of pulses and on free distribution of grains to migrants for Atmanirbhar Bharat Package. This was in addition to the Rs 1.80 trillion subsidy borne on regular PDS distribution through ration shops.
Snapshot of the new initiative
- Centre to distribute extra free foodgrains to 800 million Food Act beneficiaries in May and June due to Covid resurgence.
- This will be in addition to their normal PDS entitlement during May and June.
- For this Centre will have to bear an extra financial burden of Rs 26,000 crore.
- Rough estimates show at last year’s level; Centre will require an extra 8 million tonnes of grains.
- This should not be a concern as grain stocks in the Central pool are 3.5 times more than their buffer norm.
- However, unlike last year, no pulses will be distributed free as stocks aren’t adequate this year.
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