The Cabinet on Wednesday, September 28, approved the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) by three months. The additional outlay on the extension is seen over Rs 40,000 crore.
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 COVID-induced lockdowns. The scheme has been extended numerous times and was set to expire on September 30.
The scheme got an extension despite the Finance Ministry not being in favour as it adds pressure on a budget deficit. Sources told CNBC-TV18 that the finance ministry had warned the consumer affairs ministry of an adverse impact.
"The proposal has a substantial fiscal implication of Rs 44,762 crore. There is fiscal pressure due to the Russia-Ukraine war, the effect on fuel prices, rise in other subsidies. The pandemic has abated considerably, and the distress for which relief was given doesn't appear to be prevalent," the finance ministry told the consumer affairs ministry.
The sources said the finance ministry believes the continuation of the scheme over a long period may give an impression of its permanent or indefinite continuation. "There is a possibility that there may not be adequate food grains to continue such distribution indefinitely given the global environment. If the scheme is continued, a reduction in quantity may at least be carried out," the finance ministry has said as per sources.
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. This also did not consider the extra burden of Rs 44,762 crore for the latest three-month extension.
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Anurag Thakur said 122 lakh metric tonne of food grains had been made available under PMGKAY under the latest phase.
An extension of the scheme was expected by many experts as Gujarat and Himachal Pradesh will be going to polls in December.
“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 before the three-month extension. 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, Kumar said.
A brief look at the PMGKAY scheme before the three-month extension
(Edited by : Sapna Das)
First Published: Sept 28, 2022 2:45 PM IST
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