The government should discontinue Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) which has been extended till December 31, 2022 and instead liquidate the grain allocated for the free ration scheme in the open market to cool prices, Niti Aayog member, Ramesh Chand has said.

“Once the economic activities have come back to normal level there is no justification in continuing with the PMGKAY,” Chand told FE. He has suggested that 4 million tonne (MT) of rice and wheat allocated monthly for implementation of the scheme could be liquidated to tame inflation and reduce the pressure on the Reserve Bank of India to further tighten monetary policy.

Inflation in cereals was 12.08% in October, up from 11.55% in September.

Wheat prices rose by 17.6% in October 2022.Wheat output in the 2021-22 crop year (July-June), as per the agriculture ministry, has declined by around 3% on year to 106.8 MT because of heat waves during the flowering stage of the crop in March.

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In May, 2022, India banned wheat exports for ensuring domestic supplies.

Rice price also increased by 10.2% in October, 2022 while prices rose by 9.2% in the previous month.

Chand said the scheme was aimed at giving relief to vulnerable sections of population impacted by stagnation in non-agricultural growth during the pandemic. “Things have come back to normal level and financial resources for the free ration scheme could be used for better things,” he said.

Under the scheme launched in April 2020, 5 kg foodgrains per person per month is provided to more than 800 million beneficiaries free along with an equal quantity of highly subsidised foodgrains under National Food Security Act.

The government had extended PMGKAY for the seventh time till December 31, 2022. The food subsidy expenditure on free ration scheme since its launch is currently estimated at Rs 3.16 trillion, which is likely to cross Rs 3.5 trillion by December 31, 2022.

Sources said that 94 MT of rice and wheat has been supplied to beneficiaries under the scheme so far while total foodgrain allocation would cross 1000 MT by end of this month.

Also Read: No decision yet on extending PMGKAY beyond Dec: Food subsidy to cross Rs 3 trillion this fiscal

Initially, the free ration scheme was announced only for a period of three months – April-June, 2022. However the scheme has been extended since with the exception of period between December, 2020 and April, 2021.

The estimated economic cost of food grains procurement by the Food Corporation of India, which includes expenses such as Minimum Support Price payment to farmers, procurement, acquisition and distribution costs, etc for rice and wheat are Rs 3,670.04 and Rs 2,588.70 per quintal, respectively, in 2022-23.

The finance ministry had earlier stated that there may not be adequate food grains to continue with distribution of foodgrains under PMGKAY indefinitely as the global environment of food stocks has considerably tightened in the wake of the war in Ukraine.

“Continuation of this over a long period of time may give an impression of its permanent or indefinite continuation and make it difficult to stop,” the finance ministry had stated.

India’s rice production in the current kharif season for the 2022-23 crop year (July-June) is expected to decline by around 6% to 104.99 MT against 111.76 mt in 2021-22, according to the first advance estimate of foodgrain production released by the agriculture ministry recently.