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PMGKAY scheme for extra free ration may be extended for 3-6 months

In March, the Centre extended the PMGKAY scheme by six months till September 30, and this was included in the Budget food subsidy bill. But an six-month extension now will add another Rs 80,000 crore to the already inflated FY23 estimated food subsidy bill of Rs 3.56 lakh crore. The finance ministry is unlikely to be in favour, but the PM office will make the decision.

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By Timsy Jaipuria  Dec 14, 2022 4:50:21 PM IST (Updated)

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The government is likely to extend providing free dry ration by three to six months under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY). The government officials recently reviewed stock situation and said there is adequate stock available to execute the scheme, sources told CNBC-TV18.

A formal decision is likely to be announced soon.
The scheme was launched in March 2020 to provide free 5 kg foodgrains per person per month to around 800 million beneficiaries to cope during lockdowns. The scheme has been extended numerous times and is set to expire on September 30.
According to a report in Bloomberg, the Finance Ministry isn't in favour of extending the programme as it adds pressure on a budget deficit that's just starting to narrow from a record during the pandemic. Recently, Food Secretary Sudhanshu Pandey told reporters "these are big government decisions... the government will take a call" when asked about the extension of the PMGKAY scheme.
India's food subsidy bill has shot up manifolds since 2020 and a key reason has been the PMGKAY scheme. The government spent Rs 2.94 lakh crore on food subsidy in 2021-22 — almost 140 percent more than in 2020-21 and about 267 percent more than in 2019-20.
During the Union Budget in February, Finance Minister Nirmala Sitharaman projected the FY23 food subsidy bill to be at Rs 3.56 lakh crore — but this did not consider the rising prices of wheat and fertilisers due to the Russia-Ukraine war.
The Bloomberg report quoted officials as saying the government is looking at options to keep this and some other schemes on "for at least another quarter until the festival season and local elections run through".
It will be hard for the government to end the scheme now as Gujarat and Himachal Pradesh will be going to polls in December this year. In the last polls, beneficiaries of the scheme voted for the Bharatiya Janata Party in Uttar Pradesh, giving it a second term in the state.
“If you stop these, then it will certainly have some negative impact on people’s voting preferences,” said Sanjay Kumar, a professor at the Centre for the Study of Developing Societies in New Delhi, told Bloomberg. Some other experts believe that even if the government does not discontinue the scheme immediately, it might cut the size of the benefits given.
A brief look at the PMGKAY scheme
  • The PMGKAY scheme was launched under the National Food Security Act (NFSA) during the COVID-19 lockdown period to supplement the usual sales of subsidised grain.
  • The scheme was announced for three months of April, May and June 2020 and was later extended till November 2020.
  • As COVID-19 cases rose in April 2021, the scheme was reintroduced for two months in May and June 2021 and was then extended for another five months from July to November 2021.
  • The scheme was again extended from December 2021 to March 2022 (phase-V). On March 26, the Centre extended the scheme by six months till September 30 for Rs 80,000 crore.
  • The total expenditure under PMGKAY has been nearly Rs 3.40 lakh crore. The free grains are over and above the normal quota provided under the NFSA at a highly subsidised rate of Rs 2-3 per kg.
  • The aggregate allocation of free food grains under the PMGKAY stood at 1,003 lakh tonnes.
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