Cabinet nod: Free grains scheme under PMGKAY extended till November end; total cost seen at Rs 94,000 crore

In FY21, when the same scheme was run, the federal government spent Rs 1.2 lakh crore on PMGKAY.

The Cupboard on Wednesday authorised extension of free meals grains distribution below the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to over 80 crore individuals for an additional 5 months until finish of November. The scheme that was initially rolled out for 2 months (Could-June) would now entail a complete expenditure of about Rs 94,000 crore for the seven-month interval.

The PMGKAY was re-introduced amid the second wave of the Covid-19 pandemic with the target to minimise the hardships of most weak sections of the society.

The Centre would prolong the validity of the PMGKAY programme until Diwali, Prime Minister Narendra Modi had introduced on June 7. Underneath the scheme, all of the beneficiaries below the Nationwide Meals Safety Act (NFSA) are entitled to obtain similar quantity of rice and wheat – 5 kg per individual per thirty days – further, freed from price. Whereas the PMGKAY expenditure for Could-June was estimated at Rs 26,602 crore, the meals ministry has pegged Rs 67,266 crore to be spent throughout July-November. The entire foodgrains requirement for seven months could also be about 284 lakh tonne.

In FY21, when the same scheme was run, the federal government spent Rs 1.2 lakh crore on PMGKAY.

“No poor household will endure on account of non-availability of food-grains as a result of disruption within the subsequent 5 months. Extra allocation will ameliorate the hardships confronted by poor as a result of financial disruption brought on by coronavirus,” the federal government mentioned in an announcement after cupboard approval.

The extra spending will likely be offset by almost half by the additional quantity of Rs 50,000 crore acquired from the RBI as surplus switch. Within the FY22 Price range, the federal government had factored in clearance of some meals subsidy arrears in FY22, however the precise meals subsidy spend in FY21 was Rs 5.25 lakh crore, Rs 1 lakh crore greater than the revised estimate (RE); the FY21 spend included some a part of arrears which had been earlier deliberate to be cleared in FY22. The meals subsidy allocation for FY22 (BE) is Rs 2.43 lakh crore.

“Due to decrease financial development expectations than what was earlier than the second wave of Covid, there will likely be some influence on tax collections. Nevertheless, wanting on the Could (for April transactions) GST assortment numbers which was over Rs 1 lakh crore and the upper dividend by RBI will assist in bridging the extra funding requirement in FY22. The expenditure reprioritisation could happen this yr additionally if there’s extra deficit,” India Rankings chief economist DK Pant had mentioned. There will likely be restricted influence of this free grains programme’s extension on the federal government’s FY22 borrowing programme.

In Could, the RBI board authorised switch of Rs 99,122 crore to the Union authorities for 9 months ended March 2021 because the central financial institution shifted its accounting yr to April-March from FY21 from July-June earlier.

As a lot as 593 lakh tonne of wheat and 294 lakh tonne of rice (complete 887 lakh tonne of meals grains) can be found below Central Pool as on June 21. The Centre is hopeful of 100% lifting below PMGKAY by finish of this month as states and union territories have already lifted 96% of 80 lakh tonne allotted throughout Could-June.