March 25, 2023

Free Foodgrains For Poor For One Year Under NFSA, PMGKAY Relief Withdrawn

By Linus Garg
First publised on 2022-12-27 03:45:28

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With economic activity gaining momentum in 2022 after the Covid-related disruption of nearly two years, the government announced a major shift in policy in providing free foodgrains to the poor. The government was providing 5 kg of foodgrains free to over 81cr people under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) ever since the migrant crisis that erupted during the Covid lockdown resulted in loss of livelihood and distress among the poor in India. This was in addition to the 5 kg of foodgrains the same population was entitled to and receiving at a subsidised rate of Rs 2/3 per kg under the National Food Security Act (NFSA).

From January 1, 2023, the free food grains distributed under PMGKAY will be stopped. Instead, for one year till December 31, 2023, the poor will receive 5 kg foodgrains totally free under the NFSA. This means that they will not have to pay even the subsidized rates and will get their entitlement free from the fair price shops (generally called ration shops). This is a good move by the government as the financial implication will be low and will be mostly set off against the withdrawal of the free scheme under PMGKAY.

This has to be seen under the light of the procurement of foodgrains by the government. As on December 1, the government had 55.46 metric tonnes (mt) of foodgrains in warehouses (the low figure is due to poor crop in the last wheat season). Just 50 mt per year is required to fulfil the entitlement under NFSA. Hence, the government will not need to procure more than 65-70mt every year. The normal procurement is over 90mt which results in overflowing warehouses which in turn results in foodgrains rotting or becoming fodder for rats. But the political pressure of procuring wheat and rice at MSP will always be there and that is why it is urgent to introduce farm sector reforms.