Centre makes PDS free for 810 mn people; annual outlay likely at Rs 2 trn

In a significant move, the Narendra Modi government on Friday made the distribution of foodgrain through ration shops as part of the National Food Security Act (NFSA) free for the almost 810 million beneficiaries, by merging certain benefits of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) into the Public Distribution System (PDS).

The Antyodaya Anna Yojana (AAY) beneficiaries (who are among the poorest of the poor), who got 35 kg of foodgrain per family per month, would also not have to pay henceforth, officials clarified.

Top sources told Business Standard that the Rs 2-trillion per annum outlay for free foodgrain under the NFSA, 2013, is likely to be the entire food subsidy outlay per year in an ordinary year, without the kind of food supply-chain disruptions and inflation shocks that were seen in FY23.

Officials said PDS beneficiaries used to get 5 kg of grain (either rice, wheat or coarse cereals) — at Rs 3 per kg for rice, Rs 2 per kg for wheat, and Rs 1 per kg for coarse cereals as part of the Act since 2013.

That apart, since Covid, an extra 5 kg was given to the same 810 million beneficiaries free under the PMGKAY. This was over and above their usual monthly quota. Henceforth, while foodgrain under the PDS would be free, the extra grain that beneficiaries got under the PMGKAY would not be available, the sources said.

What will change

• 
  Over 800 million people will get ration for free
• 
  So far, the beneficiaries were charged Rs 3 per kg for rice, Rs 2 per kg for wheat and Rs 1 per kg for coarse cereals
• 
  PDS has been made free for a year for now, but could be extended later

“The PMGKAY has been merged into the food distribution programme,” a senior official said. Hence, it is likely that the budgeted food subsidy outlay for FY23 could be Rs 2 trillion.

After multiple extensions to the PMGKAY, the food subsidy bill for the fiscal year currently stands at Rs 3.3 trillion, against the Budget Estimate of Rs 2.07 trillion.

The bill may further rise by Rs 40,000-50,000 crore in the January-March quarter, as the new scheme comes into implementation with immediate effect.

Union Food Minister Piyush Goyal said the PDS has been made free for one year, starting from December 2022.

“It’s a welcome move to make the PDS free. But, the government could have continued with the additional grain under the PMGKAY as the economic slowdown and employment crisis are still underway. Also, the coverage needs to be expanded in sync with the latest population numbers,” Dipa Sinha, assistant professor at Ambedkar University and prominent member of the Right to Food Campaign, told Business Standard.