With PMGKAY Set to End, Centre to Provide Free Rations Under NFSA For Next 12 Months

The Union government provides subsidised foodgrains to poor people – rice at Rs 3 per kg, wheat at Rs 2 per kg and coarse grains at Rs 1 per kg – under the NFSA. They will be free during 2023.

New Delhi: The Union government has decided to provide free rations under the National Food Security Act (NFSA) over the next year in a move to couch the poor from the effects of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) ending on December 31, 2022.

Late on Friday, Union food and trade minister Piyush Goyal said the government will stop the PMGKAY free food programme after 28 months as the economic situation has improved since COVID-19 cases and restrictions have eased.

The PMGKAY provided poor families with 5 kg of foodgrains each month in addition to the NFSA entitlement of 5 kg foodgrains at subsidised rates. It started in April 2020 and has cost the government nearly $47 billion.

The pandemic and its impact on the economy, particularly on high food prices, have squeezed India’s hundreds of millions of poor people over the past few years.

“The Central government provides foodgrains to people – rice at Rs 3 per kg, wheat Rs 2 per kg, and coarse grains Rs 1 per kg – under the NFSA. Now, the prime minister has taken a historic decision to provide food security to the poor free of cost across the country,” Goyal said, according to the Indian Express.

The NFSA covers about 81.35 crore people the Union government will bear the entire cost of Rs 2 lakh crore to give rations free for the next 12 months. The PMGKAY has been “merged” with the NFSA, Goyal said, according to the news agency PTI.

“The free portion of that scheme [PMGKAY] has been added to the NFSA. Now, the entire quantity of 5 kg and 35 kg under the NFSA would be available free of cost. There is no need for additional foodgrains,” he said.

The government was also spending 2 trillion rupees ($24.16 billion) under the National Food Security Act to provide highly subsidised food grains to nearly 75% of its rural and 50% of its urban population.

Now the government will make the highly subsidised foodgrain free for the next 12 months, Goyal said. This gives 35 kg of food grain every month to families at the cost of Rs 1 to Rs 3. Millions of poor households benefit while some priority groups get 5 kilograms of food grains per person for the same price.

The government will save at least $20 billion over the next 12 months by ending the pandemic-era free food programme, as they will only spend on one food scheme instead of multiple programmes, according to an official, who did not want to be named told the news agency Reuters.

The Indian government was struggling to manage the wheat stockpile due to additional distribution of wheat and the prices in the local market jumped to the record high.

“The discontinuing scheme means the government can now sell 2 to 3 million tonnes in the open market to calm prices,” a New-Delhi-based dealer with a global trade house told Reuters.

The Union government enacted NFSA in July 2013, giving legal entitlement to 67% of the population (75% in rural areas and 50% in urban areas) to receive highly subsidised foodgrain. The coverage under the Act is based on the population figures of Census 2011.

The PMGKAY was initially launched for three months till June 2020 (phase I) and then extended several times. It is in its final, seventh phase now and will end on December 31.

Recently, in a written reply in the Lok Sabha, Goyal had said that under the PMGKAY, the government has allocated a total of almost 1,118 lakh tonnes of foodgrains to the states/UTs (total allocation from Phase I to Phase VII).

The total sanctioned outlay for food subsidy and central assistance for all phases I-VII is about Rs 3.91 lakh crore, he said.

With the government deciding not to provide extra foodgrains over and above the NFSA quota, experts said the decision will ease the pressure on foodgrain stocks under the central pool.