The Union Cabinet on Tuesday approved extension of free foodgrains scheme—Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)—for the next five years. The scheme is a part of an entitlement under the National Food Security Act (NFSA).

With this, the government will incur an additional ₹14,000-15,000 crore annually for the next five years.

In 2022-23, a total of 513.14 lakh tonnes (lt) of foodgrains were distributed through ration shops under the NFSA, including 341.80 lt of rice and 171.34 lt of wheat.

“When it comes to the PMGKAY, neither there will be a limit on money/funds, nor reduction on foodgrains/ration. During Covid, too, there was no restrictions on distribution of ration and money both. There were no vehicles running on roads, but still we managed to distribute the the same scheme will continue for the next five years for the poor and there won’t be any restrictions on distribution,” Anurag Thakur, Minister of Information and Broadcasting, said while briefing media about the cabinet decision.

The Centre has spent ₹11.80-lakh core in the last five years on this and will spend whatever the amount is for the next five years too, Thakur said. The current PMGKAY scheme is valid till December 31, 2023.

“With the continuation of the PMGKAY, only the money will not come to the government which used to come through the selling prices whereas remaining expenditure on other heads like distribution costs and dealer margins will remain there and that has been increasing every year,” said an official.

With the increase in minimum support prices of wheat and rice, the economic costs of procurement for the government have been rising. Earlier, the food subsidy was calculated by deducting the retail selling prices of rice and wheat through ration shops from the economic costs, whereas now the entire economic costs are the food subsidy.

According to the food ministry data, for current fiscal, the economic cost of rice is ₹39.18/kg and that of wheat is ₹27.03/kg. The government has allocated ₹1,97,350 crore for FY24 against ₹2,87,194 crore in FY23 (RE). It is expected to exceed ₹2-lakh crore in current fiscal.

During the Covid-19 lockdown, the government had introduced PMGKAY by allocating additional foodgrains free of costs, equal to their quantity of entitlement under NFSA. However, as grains stocks with Food Corporation of India depleted, the Centre stopped the additional allocation and renamed the existing NFSA scheme as PMGKAY by making it free of cost.

Under NFSA, each beneficiary is entitled to get 5 kg of rice or wheat or both per month while the beneficiaries under Antodaya Anna Yojana (AAY), which is for poorest of poor, each family receives 35 kg of grains per month.