India to continue with free ration scheme through FY22: Cabinet

The Indian cabinet has extended free supply of 5 kg foodgrains each month under the Pradhan Mantri Garib Anna Yojana till March 2022, saying it is in line with the government’s commitment of ensuring greater public welfare.

Free foodgrains under the Pradhan Mantri Garib Anna Yojana (PMGKAY) scheme, announced in March last year to provide relief to the poor during the Covid pandemic, is over and above the normal quota provided under the NFSA at a highly subsidised rate of Rs 2-3 per kilogramme.

“Today’s Cabinet decision will benefit 80 crore Indians and is in line with our commitment of ensuring greater public welfare,” Prime Minister Modi said on Twitter.

In a bid to support the poor recovering from the Covid pandemic shock, the Centre has decided to further extend the free supply of foodgrains per month under the PMGKAY for four months till March 2022, a decision that will cost an additional Rs 53,344 crore to the exchequer.

The PMGKAY has been extended several times, and the previous extension was valid till November 30. It will require an additional Rs 53,345 crore to run the scheme through March, taking its total budgetary cost in FY22 to a considerable Rs 1.47 lakh crore.

Opposition parties have been demanding extension of the scheme to the weaker sections; elections in five states, including Uttar Pradesh, Uttarakhand and Punjab, which are due in February-March, are also believed to have weighed on the government’s mind.

In FY21, Rs 1.34 lakh crore was spent on PMGKAY. The food subsidy allocation for FY22 (BE) is Rs 2.43 lakh crore. After factoring in savings to the tune of Rs 60,000 crore due to clearing of bills due in FY22 in March 2021 (FY21) itself, the Centre would need to provide Rs 87,000 crore over the BE to cover the cost of the PMGKAY in FY22.

As for the distribution of grains under PMGKAY-IV in July-November period, 94% foodgrain have been lifted. The food subsidy spend in FY21 was Rs 5.25 lakh crore, Rs 1 lakh crore more than the revised estimate (RE). As part of cleaning up its balance sheet, the Centre had paid off huge debt arrears of the Food Corporation of India (FCI) last year, which led to a spike in budgetary food subsidy.

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