Free distribution of food grains: Sobering year end reality

Source: The post is based on the article “Sobering year end reality” published in Business Standard on 31st December 2022. 

Syllabus: GS 3 – Food Security

Relevance: Concerns with the free distribution of food grains. 

News: The government has recently allowed free food grains under NFSA till December 2023 and discontinued PMGKAY. This article discusses the impact of the decision of providing free food grains. 

What are the issues with free distribution of food grains? 

The government already provides subsidised food grains under NFSA but making it free will a) Add more fiscal burden on the government, b) States that were offering free grain will save money because the Centre is now paying the full amount. 

Central subsidies on food, fertiliser, and petroleum together account for 2.5 percent of GDP. Moreover, there are many other major concerns that government needs to address than just distributing free food grains. 

What are the other worrying concerns? 

The issue with Farming: Farmers are provided with subsidized fertiliser, electricity along with MSP. But, a) very little incentive is provided for efficiency in using these scarce or costly inputs, b) Many crops have productivity below international levels and wholesale subsidies are not enough for the agricultural sector, c) Agriculture provides half of the job in the country but wages are very low. 

Issues with Income levels: Around 94% of the workers who have registered on the government’s e-shram portal report monthly incomes of under Rs 10,000. Only 1.5 percent have reported wages above Rs 15,000.

Informal-sector workers account for about 80 percent of the total working population. Out of these, two-thirds are engaged in agriculture getting low wages. Inflation-adjusted farm wages have also fallen in the past five years.

The data on consumption habits and the purchases of consumer durables suggest a broadening middle-class category. 

Therefore, these are major concerns in front of the government and providing free food grains will not bring much change. Instead, it will lead to political competition in providing freebies. 

What measures can be adopted by the government? 

a) Bringing up more manufacturing and services-sector work is required so that fewer people depend on agriculture. b) Programmes like the employment guarantee scheme should be provided along with investments in public health care, school education, and job-oriented training.