Extending free foodgrains under the National Food Security Act (NFSA) 

(MainsGS3:Public Distribution System-objectives, functioning, limitations, revamping; issues of buffer stocks and food security)

Context:

• Recently, the Union Cabinet decided to provide free foodgrains to all 81 crore beneficiaries covered under the National Food Security Act (NFSA) for one year. 
• The beneficiary families which used to pay ₹1 for coarse cereals, ₹2 for wheat and ₹3 for rice per kg will now get 35kg of foodgrains free for the next one year and others will get 5kg for free in a month till December 2023.

Relief for stressed foodgrain stocks:

• Experts point out that the move will be more of a relief for stressed foodgrain stocks as the annual foodgrain requirement for the NFSA is about 520 lakh tonnes, while the PMGKAY required an additional 480 lakh tonnes, according to Food Ministry officials.
• Earlier, India’s wheat stocks in particular, have dipped dangerously close to the required buffer stock levels, with the Centre resorting to a ban on exports to ensure food security for the domestic market.
• It has also been forced to substantially reduce wheat allocations under the Public Distribution System, and substitute wheat supply with rice in States such as Uttar Pradesh and Bihar. 
• Thus, continuing the PMGKAY would have been unsustainable without further increasing procurement levels.

Impact on beneficiaries:

• Ration card holders who have received 10 kg of grains a person every month for the past two years will see their entitlement abruptly halved but their expenditure on their NFSA entitlement will also come down.
•  For example, someone spending ₹8 for four kg of wheat and ₹3 for a kg of rice under NFSA will now get those grains free, saving ₹11 a month. 
• However, that is dwarfed by the additional ₹150-₹175 they will need to spend to buy the 5 kg previously provided free under the PMGKAY in the open market (estimating market prices for rice and wheat at around ₹30-₹35 per kg).

Conclusion:

• The decision has not only enabled basic food security but has also acted as income transfers for the poor by allowing them to buy other commodities that they could not have afforded if not for the benefits.