After haranguing Opposition-ruled States for distributing freebies to citizens and indulging in populism at the cost of the fisc, the NDA government at the Centre seems to be falling prey to the same malaise. The Prime Minister’s announcement that Pradhan Mantri Garib Kalyan Anna Yojana (which was introduced as a Covid safety net and has been on extensions since), will become a fixed feature for the next five years, smacks of populism too.
The scheme, which has subsumed National Food Security Act and Antyodaya Anna Yojana commitments, envisages the distribution of five kilograms of cereals (mainly rice and wheat) per month to over 81 crore beneficiaries, free of cost. FCI (Food Corporation of India) foots the bill for procuring foodgrains from farmers at Minimum Support Prices (MSPs), storing the produce and relaying it to public distribution outlets across the country. This scheme entailed an outlay of about ₹2-lakh crore in 2023, but this can rise if FCI costs trend higher. The cost of this scheme per se is not the problem. With the Union Budget currently at over ₹45-lakh crore, India can afford to fund schemes that address nutritional needs of the poor. But the PMGKAY in its current form cannot achieve this objective.
The first question is if 81 crore Indians, which is roughly 58 per cent of the population, are so poor as to require government support to buy staples. Think-tanks have shown that India has made significant strides in mitigating extreme poverty. NITI Aayog’s recent report on multi-dimensional poverty estimated that the proportion of multi-dimensionally poor (those deprived of multiple amenities ranging from nutrition to banking access) was 14.9 per cent of the population in 2019-21. This report also estimated that 31.5 per cent of Indians were nutritionally deprived. Redrawing PMGKAY to supply free rations only to the most deserving sections of the population can trim leakages and subsidies. Two, nutritional deficiency and not hunger is the main problem confronting India’s masses, so it is time the policy focus changed to address this. To improve nutritional outcomes, the PDS needs to diversify beyond cereals to proteins in the form of pulses and millets apart from edible oils, which are household essentials. Eventually, community kitchens that provide balanced, cooked meals to the targeted population at subsidised prices may work even better.
The PMGKAY is as much a safety net for farmers as it is for consumers. Prodigious central procurement of paddy and wheat at fixed prices ensures that the MSP for these cereals holds sway in the markets. But with procurement efforts concentrated on two staples, only select farmers in some States get to benefit. Cutting back on procurement of cereals and increasing purchases of other crops may not be a politically easy shift. But it can send the right signals on crop diversification while creating a more functional PDS.