The Centre will provide foodgrains to states under the National Food Security Act (NFSA) free for one year from Sunday.

Last week, the cabinet had decided to provide grains under NFSA free-of-cost to the 813 million beneficiaries during 2023 while it decided against extending the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY or free ration scheme) beyond Saturday.

Around 55 million tonne of foodgrains was provided to states annually for distribution to NFSA beneficiaries through 0.53 million fair price shops across the country.

Till Saturday, under the food security legislation, the Centre distributed 5 kilogram of foodgrains per person per month at highly subsidised rates of Rs 3 and Rs 2 per kg for rice and wheat, respectively to states. Additionally, the families covered under Antyodaya Anna Yojana got 35 kg of foodgrains per month free.

The estimated economic cost of foodgrain procurement by the Food Corporation of India (FCI), which includes expenses such as Minimum Support Price payment to farmers, procurement, acquisition and distribution costs, etc for rice and wheat, are Rs 36.7/kg and Rs 25.8/kg, respectively, in 2022-23.

Also read: China Covid surge: Industry sees fresh supply-chain issues

The annual cost to the exchequer for providing free grains under NFSA is estimated at `2 trillion for 2023-24.

Meanwhile, through a new integrated scheme which would subsume two current food subsidy schemes – food subsidy provided to FCI for NFSA, and food subsidy provided for decentralised procurement states relating to procurement, allocation and delivery of free foodgrains to the states.

The food ministry has issued an advisory for working out a mechanism to provide dealer’s margin for fair price shops distributing foodgrains to the beneficiaries. Officials said that the cost of dealer’s margin would be shared between Centre and states.

Also read: Core infrastructure sector grows 5.4% in November

Meanwhile, the free ration scheme is likely to cost the exchequer about `3.91 trillion since its April 2020 launch in the midst of the first Covid-19 wave. Since its launch, the scheme has run continuously with several extensions, except for the period between December 2020 to April 2021. The latest extension was for three months to December 31, 2022.

Under the PMGKAY, 800 million people have been getting 5 kg of food grains free-of-cost every month.