Free ration for 800 million people to be extended
There is adequate stock of food grains for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which is the world’s largest food security programme, they said.
The government may continue to provide free dry ration to 800 million of India’s poor for another 3-6 months beyond the September 30 deadline because of high inflation, geopolitical uncertainties and an impending slump in China that may further disrupt global supply chains, two officials aware of the development said.
The scheme, which was launched in April 2020 to shield the poor from a hard lockdown triggered by the Covid-19 pandemic, and extended for the sixth time in March, is due to expire next month. The government is considering extending this “life-support” scheme for the poor as devastating impacts of the pandemic and Ukraine war are yet not over, the officials said, asking not to be named.
There is adequate stock of food grains for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which is the world’s largest food security programme, they said. One of the officials said the government has recently reviewed the stock position, which is said to be more than adequate to support the programme beyond the second quarter of this financial year.
PMGKAY beneficiaries get 5kg free ration per person per month in addition to their normal quota of food grains under the National Food Security Act. Under NFSA, highly subsidised food grains are provided to about 75% rural and 50% urban population of the country.
PMGKAY has helped the economy during a difficult time, a second person mentioned above said. On June 8, citing a report of global consultants KPMG and Kfw, Union finance minister Nirmala Sitharaman said the Pradhan Mantri Garib Kalyan Yojana (PMGKY) reduced the probability of people cutting down consumption of utilities by 75%, food items by 76%, and reduced the probability of borrowing money by 67% during the pandemic. PMGKY schemes launched in March 2020 included free food (PMGKAY), cooking gas and cash subsidies.
The officials said the PMGKAY scheme could be extended for another one or two quarters till inflation subsides further and is brought back to a comfortable level. “A final decision will, however, be taken by the competent authority soon,” the first person said. The Union Cabinet, under the chairmanship of the Prime Minister, decides on the extension of PMGKAY. Email queries sent to the ministry of consumer affairs, food & public distribution, the finance ministry and the Prime Minister’s Office did not elicit any response on this matter.
After hitting a peak of 7.8% in April, India’s retail inflation – measured by the consumer price index (CPI) – gradually moderated to 6.71% in July, but remains higher than the official upper tolerance limit of 6%. The over-dependence on energy imports makes the economy vulnerable to inflation and the spend is a drag on the country’s foreign exchange reserve.
The Union finance ministry’s Monthly Economic Review on Friday said a sustained fall in crude oil prices since June, decline in the inflation rate below 7% and robust growth in tax revenues have contributed to “a significant easing of concerns over growth and inflation” for India, but also cautioned about risks from global factors, including a slowdown in the Chinese economy. China’s growth forecast for 2022 has been downwardly revised by the International Monetary Fund (IMF) from 4.8% in January this year to 3.3% in July 2022 and it is expected to be lowered further. The development would disrupt global supply chains and adversely impact economies.
“There is no shortage of food grains or funds for necessary support to the poor,” the second official said. The government may have to spend about ₹40,000 crore if the scheme is extended for one quarter. So far, the estimated expenditure on the scheme till September 30, 2022 is around ₹3.40 lakh crore.