Decision to do away with PMGKAY hits the poor hard

On December 23, 2022, the Union government announced that it would discontinue the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from January 1, 2023 and provide ration free of cost. This was hailed as a ‘historic’ decision.

But in reality, this in no way compensates for the huge reduction in the ration entitlement. It simply cuts the ration by 50 percent, that is to nearly 81.3 crores of the poor entitled under the National Food Security Act (NFSA).

Consequently, from January onwards, as the ration entitlement is halved, they will be entitled to only five kgs of ration per person (under regular NFSA) instead of the current 10 kgs of ration per person (NFSA+PMGKAY).

NFSA and PMGKAY ensured a basic food supply of 10 kgs per person which was a lifeline for the millions of daily wagers, unorganised sector workers and construction workers who lost their livelihoods during the COVD-induced pandemic and lockdowns. They continue to suffer since the economic conditions in the country are still bad.

With the prevailing high wholesale and retail inflation and resulting high food prices, dwindling manufacturing and no new jobs, there’s no light at the end of the tunnel for the poor.

Life is becoming harder as prices of many other essential items —vegetables, milk, vegetable oil and cooking gas are increasing.

For example, the consumer price of wheat atta increased by 18 per cent (almost similar to the price rise of rice) between August and October.

However, the bitter pill is sugar coated by the announcement that for one year, starting from January 2023, the food grains under National Food Security Act, 2013, (NFSA) will be provided free of cost.

Many economists associated with the Union government have been shouting from the rooftop to end the food subsidy being provided to poor through the PDS.

Dr Ramesh Chand, Member, NITI Aayog says that there is no justification for extending the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beyond December 2022. Similarly, Dr Surjit Bhalla, in his 2021 IMF Working paper, said that less than one percent of Indians are in extreme poverty (that is they are living on less than purchasing power parity of 1.9 dollar per person per day).

Unfortunately, the prevailing hunger in the country is not visible to these economists and they never question the favours worth lakhs of crore being extended by the Modi govt to its corporate friends.

By combining both schemes (NFSA+PMGKAY) and cutting entitled ration by half, the government is gaining by reducing food subsidy, but also lowers the burden on grain reserves and is saving money.

On the one hand, the government is discouraging FCI grain procurement by paying MSP and on other hand, saving huge budget allocations on food subsidy.

Stopping PMGKAY and making NFSA food grains free would save the government about Rs 1.56 lakh crore a year.