The Petty Allowance of the Free Food Cereal Center

As India experiences a severe second wave of the Covid-19 pandemic, forcing decentralized lockdowns, a crisis of loss of jobs and livelihoods and the resulting hunger are being reported across the country.

A reluctant central government was therefore forced to revive the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), to distribute 5 kg of free food grains per person per month to some 80 million beneficiaries covered by the national law on food security ( NFSA). .

The reluctance is manifested in the decision to only introduce the scheme for a period of two months (May-June 2021) and to ignore requests for a significant increase in the free quota or to remedy the exclusion of a large number who need help. For now, there is no reason to believe that the second wave of the pandemic will completely abate and normalcy will be restored by July 2021. But the government has obviously decided to keep its commitment to free provision. food to a minimum.

According to its own reading, PMGKAY has been the main element of the government’s safety net during this period. In 2020-21, the program was initially announced for three months (PMGKAY-I April-June 2020) and then extended for another five months (PMGKAY-II July-November 2020), although the effects of the economic devastation caused by the pandemic and containment lasted much longer. According to the Ministry of Consumption, Food and Public Distribution, a total of 305 lakh tonnes of food grains (104 lakh tonnes of wheat and 201 lakh tonnes of rice) have been allocated for this purpose in 2020-2021.

Besides the fact that there are many eligible people who are excluded from coverage under the NFSA and some, such as migrant workers, have not been able to access its benefits, survey data suggests that food provided under the PMGKAY did not sufficiently address the hunger resulting from the impact of unemployment and the loss of livelihood that resulted from the severe containment imposed during the first wave of the pandemic.

Many experts had suggested that in addition to the special allowance under the PMGKAY, the government should provide the regular entitlement of subsidized food provided under the NFSA to those covered (35 kg per family per month for beneficiaries of Anyodaya Anna Yojana very poor and 5 kg per person per month for the rest) for free and expand coverage through universal provision. These recommendations were not accepted.

Sufficient food stocks

The free food grain distribution program was not limited in scope by the shortage of physical stocks. As India has benefited from two successive good monsoons, including a third forecast, agricultural production is at record levels. Rice production increased from 109.7 million tonnes in 2016-17 to 112.8 million tonnes in 2017-18, 116.42 million tonnes in 2018-19, 118.9 million tonnes in 2019-20 and around 121.5 million tonnes in 2020-21. The corresponding figures for wheat are 98.5, 98.9, 102.2, 107.9 and 108.8 million tonnes respectively.

The result of this production surge has been an increase in purchases and larger inventories from the government. As shown in Figure 1, the total production of food grains increased from 285 million tonnes in 2017-18 and 2018-19 to 297.5 million tonnes in 2019-20 and to 305.4 million tonnes in 2020- 21.

Purchases of rice and wheat increased from 69 million tonnes in 2017-18 to 93 million tonnes until the end of May of the 2020-21 marketing year, when there were still a few months left in the marketing year. rice marketing. Not only has production increased, but the share of purchased production has increased.

The net result has been an excess of grain in the funds of the CFI and other agencies. Compared to the standard of 13.6 million tonnes of rice and 7.5 million tonnes of wheat required as buffer stocks (operational and strategic) as of April 1 of a year, the actual storage in April 2020, when the pandemic effects began to be felt, was much higher. Rice stocks stood at 44.2 million tonnes and wheat stocks at 35.8 million tonnes.

As shown in Figure 2, food grain stocks fell, as expected, after May 2020 due to allocations under the NFSA and PMGKAY, with rice stock levels reaching their lowest point. in September 2020 and wheat in March 2021.

However, stocks remained well above buffer storage standards and subsequently increased. In October 2020, compared to the buffer requirement of 11.3 million tonnes of rice and 20.5 million tonnes of wheat, stocks stood at 34 million tonnes of rice and 40.3 million tonnes of wheat. It was a month before the end of phases 1 and 2 of PMGKAY. Pre-existing stocks were not wiped out and stock levels were replenished with new purchases.

The fact that the government was not maximizing its access to excess stocks in its stocks was also evident from the trends in the report of allocations under the NFSA and PMGKAY at the stock level.

Figure 3 illustrates the relationship between food grain allocations under the normal NFSA program and PMGKAY to the level of stocks per month. While the allocation / stocks ratio increased, especially in the case of rice, after the launch of PMGKAY, the highest ratio reached was 20.2% for rice in September 2020 and 9.2% for rice. wheat in April 2020.

Possibility of giving more

Between April and November 2020, when the PMGKAY was implemented, this ratio averaged 14.4% in the case of rice and 7.4% in the case of wheat. The comparable figures for the corresponding months of 2019 were 7.8% and 4.8% respectively. In terms of availability of physical stocks, the scope for expanding free services in terms of coverage and quantum was significant.

Part of the explanation for the government’s reluctance to deploy excess stocks through an extensive and universal free grain distribution program is its regressively conservative commitment to cut subsidies, including food subsidies, in its budget. .

The subsidy bill for PMGKAY I is estimated at 46,061 crore and that of PMGKAY II at 76,000 crore, bringing the total subsidy for PMGKAY in 2020-21 to 1.49 crore lakh. This is only 0.8% of the estimated GDP for that year.

The subsidy needed to support the regular allocation under the NFSA and other ongoing programs is 1.80 lakh crore over the year, or 0.9 percent of GDP. If the regular NFSA allocation had also been made free for the entire year, the additional subsidy incurred would not have been significant.

In addition, given that the CFI is grappling with excess inventory, their removal through PMGKAY would have saved the government the portage costs it would otherwise have incurred. Given the crisis, the case for increased subsidies is strong.

But fiscal conservatism and political indifference have meant that the effort to tackle hunger among those deprived of livelihoods in the aftermath of the crisis was and remains woefully inadequate.

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