With the second one Covid-19 wave once again rendering millions of bad jobless and triggering another exodus of migrants, the Central government today made up our minds to hand out 5 kg grains free of cost to the entire 800 million beneficiaries of the National Food Security Act over and above their steady quota in May and June 2021.
The scheme which will be along the lines of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) launched throughout the first Covid wave final year, will cost the Centre Rs 26,000 crore in subsidies over and above its usual PDS subsidy invoice of Rs 1.8 trillion in FY22.
Assuming that the offtake of additional free grains in May and June is very similar to final year’s level, the extra grain requirement this time around will be approximately 8 million tonnes over and above the normal PDS distribution in May and June, which will have to not be of much concern as data shows that food grains stocks the in Central Pool as on April 1 are nearly 77.23 million tonnes, or 3.5 times than the buffer requirement.
Not only this, the additional subsidy burden as a result of free distribution of grains will have to not concern the government as much this year as the final, because unlike the end of FY21, FCI does not have any outstanding dues on its books from preceding borrowings in Fy-22.
Alternatively, unlike the preceding Garib Kalyan Anna Yojana, the government this time has not made up our minds to hand out any free pulses at the side of 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.
Final year, when the Centre had made up our minds to hand out 1 kg of free pulses per month to the entire 200 million NFSA households, it used to be sitting on a immense pile of over 3 million tonnes.
Alternatively, this year, it so far does not have that luxury relating to pulses. In addition, 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 Beef up Price.
Dipa Sinha, academician and prominent member of the Correct to Food Crusade, while welcoming the government’s decision to hand out extra free food grains, wanted the scheme to be legal for six months a minimum of starting May, as the misery because of Covid is expected to linger for long.
That apart, she also wanted pulses to be distributed at the side of additional food grains as it helps in addressing nutritional needs.
Most importantly, Sinha said the free additional food grains distribution does not address the concern of those who don’t seem to be a part of the National Food Security Act Lists and the problems of exclusion will remain as a large number of eligible bad will be left out of the advantages as used to be the case in PMGKAY-1.
“The problems of exclusion which we faced final time will remain and the same people whose names are in the list of NFSA will get the additional grains.
Due to this fact, universalisation remains the only viable option,” Sinha told Trade Standard.
In FY21, amid the nationwide lockdown, the Centre launched the PMGKAY-1 in April 2020, to begin with for three months starting from April, and later extended it to five months as the situation remained delicate.
Under this the Centre distributed 5 kg of wheat or rice per person per month to nearly 800 million beneficiaries over and above the normal entitlement under the Food Security Act for free.
Moreover, the entire 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 extra grain in FY21 over and above the standard sale through the public distribution system (PDS) and other welfare schemes of around 55 mt of wheat and rice.
According to the government, the complete 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 used to be extended for five more months, it bore an extra subsidy of around Rs 76,000 crore.
Due to this fact, the complete 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 used to be along with the Rs 1.80 trillion subsidy borne on steady PDS distribution through ration shops.
Snapshot of the new initiative
Centre to hand out additional free foodgrains to 800 million Food Act beneficiaries in May and June because of Covid resurgence. This will be along with their normal PDS entitlement throughout May and June. For this Centre should bear an additional financial burden of Rs 26,000 crore. Rough estimates show at final year’s level; Centre will require an additional 8 million tonnes of grains. This will have to not be a concern as grain stocks in the Central pool are 3.5 times more than their buffer norm. Alternatively, unlike final year, no pulses will be distributed free as stocks aren’t adequate this year.