“It makes sense to extend the scheme, which benefits the poor, for another six months,” an official said, adding that a decision in this regard will likely be taken around December.
Ahead of the general elections in April-May, the Centre is likely to extend the free grains scheme by another six months till June next year, which will benefit 800 million beneficiaries at the bottom of the pyramid covered under the scheme.
The extension will cost the government around Rs 12,500 crore for six months, which it could easily afford. The continuation of the scheme means that the Centre won’t charge the nominal Rs 3/kg for rice and Rs 2/kg for wheat from beneficiaries.
Under the National Food Security Act (NFSA), the government provides 5 kg of wheat/rice per person per month. Also, the families covered under the Antyodaya Anna Yojana (AAY) get 35 kg of food grains per month.
“It makes sense to extend the scheme, which benefits the poor, for another six months,” an official said, adding that a decision in this regard will likely be taken around December.
In December last year, the government decided not to extend (beyond 2022) the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), under which it was giving an additional 5 kg rice/wheat to each of the 800 million beneficiaries. The PMGKAY cost the exchequer about Rs 3.91 trillion since its April 2020 launch in the midst of the first Covid-19 wave.
While discontinuing the extra allocations under the PMGKAY, the government, however, decided to waive the Rs 3/kg for rice and Rs 2/kg for wheat charged to NFSA beneficiaries during 2023.
The move was a fiscally-prudent one, given that the cost of the PMGKAY, under which additional quantities of grains are given to the same sections of people, was a whopping Rs 1.6-1.7 trillion per annum.
On the other hand, the waiver of nominal charges for NFSA beneficiaries would annually cost the exchequer about Rs 25,000 crore, including distribution costs in states.
Accordingly, the food subsidy is estimated to decline by 30% to Rs 1.97 trillion in FY24, compared with Rs 2.81 trillion in FY23.
The Centre’s finances are in a comfortable position to bear the additional Rs 12,500 crore, split equally between FY24 and FY25 if the scheme is extended till June 2024.
Additionally, the government is targeting selling around 5 million tonne of wheat in the open market to cool prices. Since the sale of wheat was not factored into the Budget, receipts from the sale will provide additional resources to the Centre in the current financial year.
Source:financialexpress.com