Free grain scheme needs to be backed by imports to cushion wheat prices

Source: The post is based on the article “Free grain scheme needs to be backed by imports to cushion wheat prices” published in the Indian Express on 3^rd October 2022.

Syllabus: GS 3: Indian economy.

Relevance: About extending PMGKAY.

News: Recently, the government has extended the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY-Phase VII) for a further period of 3 months i.e. October to December 2022.

What is Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)?

What are the advantages of extending PMGKAY?

Higher all-India average retail price: the all-India average retail price of wheat is now about Rs 31/kg, compared to Rs 27 last year at this time. Prices of atta and rice have, likewise, risen from Rs 30 to Rs 36 and from Rs 35 to Rs 38 per kg, respectively. This is due to a failed wheat crop and uncertainty over the Kharif rice about to be harvested.

What are the concerns associated with extending PMGKAY?

Low rice and wheat stocks: Public rice and wheat stocks, at just over 60 million tonnes on September 1. This is a five-year-low and two-thirds of their level a year ago. This is as against the annual average of 62.5 mt during 2013-14 to 2019-20.

Godowns are no longer overflowing: The PDS turned out to be the only effective social safety net during the pandemic, which also provided an opportunity for disposing of the excess grain lying in government warehouses. But now that situation is changed.

What can be done?

Since the government has extended the scheme, the government must seriously consider importing wheat. Wheat from Russia can be imported at a low cost to supply for the scheme.

India’s own wheat crop will not be ready before March end. Having 2-3 mt of imported wheat in reserve will help to keep market prices under control till then.