Extension of free foodgrain scheme may cost the Centre ₹81,000 cr

There is no problem of availability of foodgrains in the Central pool stock if the government wants to extend the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for another six months after its due expiry date in September. However, the main concern is its financial implication, as ₹81,000 crore will be needed for the extension of the scheme.

Stock in the pool

According to an internal assessment by the Food Ministry, the wheat stock will be 90-95 lakh tonnes (lt) and rice will be 125-130 lt (from the current level) if the free foodgrain scheme is extended until March 2023, official sources said. The buffer norm and strategic reserves for wheat and rice are 74.6 lt and 135.8 lt, respectively.

“The wheat stock will be definitely above buffer norm as on April 1 even after PMGKAY’s extension. In case of rice also, there will be no problem as kharif harvest will be procured from October in the new marketing year (October-September),” an official said, adding that rice stock calculation as on April 1 has not considered the additional volume to be procured. The rice procurement plan for the 2022-23 marketing year will be firmed up next month at the meeting with States, he said.

For the six months during October-March, about 43 lt of wheat and about 196 lt of rice will be required for PMGKAY, sources said. There is also an assessment made on the stock to be consumed if PMGKAY is continued during the festival period, particularly between October and December, they added. The government is also considering to release some wheat under the open market sale scheme (OMSS) if PMGKAY is extended for three months due to adequate availability, the sources said.

“Whether OMSS or PMGKAY, both will increase open market availability, but the government will take a call at the highest level,” the official said.

Revised allocation

The government had estimated ₹80,850.67 crore as expenses towards PMGKAY for six months (April-September) of the current fiscal when it was announced. However, in May, the government revised the allocation by replacing 11.09 lt of wheat with rice every month after procurement dropped. It may marginally increase the budget by nearly ₹6,000 crore since the estimated difference between economic costs of wheat and rice is ₹1,081.34/quintal.

In reply to a question in Rajya Sabha last week on whether there has been a rethink about continuing the scheme beyond September on fiscal grounds, Minister of State for Food, Sadhvi Niranjan Jyoti, said: “The scheme is reviewed from time to time for appropriate decision.”

She added that until July 31, a total of 824 lt free foodgrains have been distributed under PMGKAY, with a total subsidy outlay of around ₹2.79-lakh crore since its launch. In the wake of Covid-19 outbreak, the Centre, in April 2020, announced the distribution of ‘additional’ and ‘free-of-cost’ foodgrains (rice/wheat) to around 80 crore beneficiaries of the National Food Security Act (NFSA) in the country under PMGKAY.

Published on

August 08, 2022

Leave a Comment