How will the free foodgrain scheme work out?

How will the free foodgrain scheme work out?

Subject : Government schemes

Context:

• The Centre decided to provide 5 kg of free food grains per month for the 81 crore beneficiaries of the National Food Security Act (NFSA) during 2023, rather than charging them a subsidised amount of ₹3 a kg of rice, ₹2 a kg of wheat and ₹1 a kg of coarse cereal as is currently done.

What is the impact of this measure on the food subsidy bill?

• During the pre-Covid years, Centre’s food subsidy bill on account of the NFSA amounted to around ₹2 lakh crore.
• During covid-19 years (2020-2022) the amount has been doubled.
• Now the centre has to spend an additional ₹15,000 crore to ₹16,000 crore on providing free food grains under the NFSA for a year.
• However, the Centre will save around ₹2 lakh crore by ending the PMGKAY scheme.

What does this mean for foodgrain stocks?

• The annual foodgrain requirement for the NFSA is about 520 lakh tonnes, while the PMGKAY required an additional 480 lakh tonnes.
• The difference comes from the fact that the poorest families coming under the Antyodaya Anna Yojana category received 35 kg a family every month under the NFSA, but received 5 kg per person under the PMGKAY.

How will it impact beneficiaries?

• The Right to Food Campaign estimates that poor families will be forced to spend ₹750-₹900 a month to access the current level of ration entitlement.

What is Pradhan Mantri GareebKalyaanAnnadata Yojana (PM-GKAY)?

• About the scheme:
  • PMGKAY is a part of the Pradhan Mantri Garib Kalyan Package (PMGKP) to help the poor fight the battle against Covid-19.
  • The scheme aimed at providing each person who is covered under the National Food Security Act 2013 with an additional 5 kg grains (wheat or rice) for free, in addition to the 5 kg of subsidised foodgrain already provided through the Public Distribution System (PDS).
  • It was initially announced for a three-month period (April, May and June 2020), covering 80 crore ration cardholders. Later it was extended till September 2022.
  • Its nodal Ministry is the Ministry of Finance.
  • The benefit of the free ration can be availed through portability by any migrant labour or beneficiary under the One Nation One Ration Card (ONORC) plan from nearly 5 lakh ration shops across the country.
• Cost: The overall expenditure of PMGKAY will be about Rs. 3.91 lakh crore for all the phases.
• Challenges: The beneficiaries of the National Food Security Act are based on the last census (2011). The number of food-insecure people has increased since then and they remain uncovered.
• Issues:
  • Expensive: It’s very expensive for the government to sustain and increases the need for an abundant supply of cheap grains. In 2022, India has had to restrict exports of wheat and rice after erratic weather hurt harvest, adding to pressure on food prices, and rattling global agricultural markets.
  • Increase Fiscal Deficit: It could pose a risk to the government’s target to further narrow the fiscal deficit to 6.4% of gross domestic product.
  • Inflation: The decision on the program could also affect inflation. The prices of rice and wheat, which make up about 10% of India’s retail inflation, are seeing an uptick due to lower production amid a heatwave and patchy monsoon.

National Food Security Act (NFSA), 2013

• Notified on: 10th September, 2013.
• Objective: To provide for food and nutritional security in the human life cycle approach, by ensuring access to adequate quantities of quality food at affordable prices to people to live a life with dignity.
• Coverage: 75% of the rural population and upto 50% of the urban population for receiving subsidised foodgrains under Targeted Public Distribution System (TPDS).
  • Overall, NFSA caters to 67% of the total population.
• Eligibility:
  • Priority Households to be covered under TPDS, according to guidelines by the State government.
  • Households covered under existing Antyodaya Anna Yojana.
• Provisions:
  • 5 Kgs of foodgrains per person per month at Rs. 3/2/1 per Kg for rice/wheat/coarse grains.
  • The existing AAY household will continue to receive 35 Kgs of foodgrains per household per month.
  • Meal and maternity benefit of not less than Rs. 6,000 to pregnant women and lactating mothers during pregnancy and six months after the child birth.
  • Meals for children upto 14 years of age.
  • Food security allowance to beneficiaries in case of non-supply of entitled foodgrains or meals.
  • Setting up of grievance redressal mechanisms at the district and state level.