Weighing on PMGKAY

(MainsGS2: welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes)

Context:

• Recently the government gave extension to the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), a scheme to distribute free foodgrains to the poor, for another three months.

About PMGKAY: 

• Aimed at providing an additional allocation of foodgrains (rice or wheat) from the central pool at five kilograms per person per month free of cost, the PMGKAY benefits cardholders of the Antyodaya Anna Yojana (AAY) and Priority Households (PHH) categories, both falling under the National Food Security Act (NFSA).
• This is over and above the regular monthly quota under the NFSA, i.e.35 kg per month per family for AAY and 5 kg per month per person for PHH.
• The PMGKAY covers even Direct Benefit Transfer (DBT) beneficiaries. After taking into account the estimated outgo of foodgrains — about 122 lakh tonnes during the current phase of extension, the aggregate allocation will be around 1,121 lakh tonnes.
• With the expenditure of ₹44,762 crore for the existing phase, the overall expenditure of the PMGKAY will be approximately ₹3.91 lakh crore.

International monetary fund observation:

• A (International monetary fund) IMF paper titled ‘Pandemic, Poverty, and Inequality: Evidence from India’ says that ‘extreme poverty was maintained below 1% in 2020 due to Pradhan Mantri Garib Kalyan Ann Yojana (PMGKY).
• The paper argues that incorporation of the food subsidy data has helped it conclude that the 'official poverty line' must be moved from (Population living on <$1) PPP $1.9 to $3.2.
• The pandemic shock is largely a 'temporary income shock', thus, by using temporary fiscal policy interventions i.e expanding food distribution, a large part of the shock was absorbed.
• Consumption inequality (with the incorporation of food transfers) has dropped to the lowest level — equal to that observed in 1993-94.
• Consumption growth was found to be higher in 2014-19 as compared to 2004-11.

Problem of diversion:

• To keep the budgetary allocation under control, rules on quota for rice or wheat can be changed suitably.
• While it is all right to provide foodgrains free during the pandemic, the central and State authorities need to ponder over the scheme’s continuance, given the chronic problem of diversion from the Public Distribution System (PDS).
• In the non-pandemic period, the problem of diversion assumes a bigger dimension when a family of five, covered under PHH and living in a congested city, encounters practical difficulties in storing 50 kg rice or wheat a month, of which 25 kg is free.
• In many States, including West Bengal, Kerala and Karnataka, the 50 kg is free. In Tamil Nadu, for over 10 years, rice-drawing card holders, be they PHH or non-PHH, have been getting rice free.

Conclusion:

• The Government have its reasons in extending the Pradhan Mantri Garib Kalyan Anna Yojana scheme, but it cannot delay the commissioning of a study that should help stop the diversion of foodgrains and identify the food needy.