{"id":268493,"date":"2023-11-08T20:55:46","date_gmt":"2023-11-08T15:25:46","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=268493"},"modified":"2023-11-09T14:20:13","modified_gmt":"2023-11-09T08:50:13","slug":"on-pmgkay-extension-a-new-poverty-conundrum","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-pmgkay-extension-a-new-poverty-conundrum\/","title":{"rendered":"On PMGKAY extension \u2013 A new poverty conundrum"},"content":{"rendered":"

Source: <\/strong>This post on PMGKAY extension has been created based on the article \u201cA new poverty conundrum\u201d<\/strong> published in Business Standard<\/strong> on 8th<\/sup> November 2023.<\/strong><\/p>\n

UPSC Syllabus Topic: GS Paper 2 Social Justice \u2013 Issues relating to poverty and hunger.<\/strong><\/p>\n

News<\/strong>:\u00a0This article discusses the impact of the recently proposed extension of PMGKAY on India\u2019s food subsidy bill. It also highlights the challenges associated with this extension.<\/p>\n

Recently, the PM announced an extension of the PM Garib Kalyan Anna Yojana (PMGKAY), providing free food grain to 810 million beneficiaries, for 5 more years<\/strong>.<\/p>\n

What is PMGKAY?<\/strong><\/h2>\n

PMGKAY is a free food grain scheme that covers over 57% of India\u2019s population<\/strong>.<\/p>\n

Under PMGKAY, started in April 2020 in the wake of the COVID pandemic, each beneficiary got free 5 kg of food grain per month<\/strong>, in addition to the PDS scheme (an extra 5 kg of food grain per month supplied at a heavily subsidised price).<\/p>\n

Its current annual cost (or food subsidy bill) would be over ~ Rs.<\/strong> 2 trillion (Rs. 2 lakh crore)<\/strong>, and it should increase in the next 5 years.<\/p>\n

What will be the impact of this on India\u2019s food subsidy bill?<\/strong><\/h2>\n

The food subsidy bill is certain to rise due to the following:<\/p>\n

    \n
  1. Downward revision of<\/strong> Central Issue Price: <\/strong>The central issue price<\/strong> was last revised in 2013. With this announcement, the issue price has been abolished.<\/li>\n
  2. Upward revision of MSP:<\/strong> There is continuous pressure to raise the MSP for agricultural crops<\/strong>, raising FCI\u2019s economic costs in procuring grains every year for the central pool.<\/li>\n
  3. Higher procurement by FCI: <\/strong>Even though the annual requirement for the PDS is estimated at 50-60 million tonnes, FCI\u2019s procurement is on the higher side to prevent any supply shortages.<\/li>\n<\/ol>\n

    What are the issues with this extension?<\/strong><\/h2>\n
      \n
    1. Poor Targeting:<\/strong> According to a World Bank report, India\u2019s poverty level declined to 10% <\/strong>in 2019. In contrast, PMGKAY covers 57%<\/strong> of India\u2019s population.<\/li>\n
    2. Leakages and diversions of food: <\/strong>According to the Shanta Kumar Committee, nearly 50% <\/strong>of the foodgrains are siphoned off from PDS system (NSSO, 2011)<\/strong>.<\/li>\n
    3. Issue of freebies: <\/strong>Free schemes once announced do not have a sunset clause (an ending date).<\/li>\n<\/ol>\n

      What should be done?<\/strong><\/h2>\n
        \n
      1. Rectifying inclusion and exclusion errors: <\/strong>The urgent need is to redefine the number of beneficiaries that are truly deserving of a free food grain supply scheme.<\/li>\n
      2. Revision of central issue price: <\/strong>The government must revise the central issue price for food grain, fixed more than 10 years ago. This can decrease the government\u2019s food subsidy bill.<\/li>\n
      3. Explore alternatives: <\/strong>A better option could be a direct cash transfer<\/strong> to the deserving beneficiaries, equivalent to the cost that the government incurs on procuring them.<\/li>\n<\/ol>\n

        Terminology used:<\/strong><\/p>\n

        Central Issue Price: <\/strong>It is the price at which foodgrains under NFSA are being made available to the beneficiaries (Subsidized prices of Rs. 3\/2\/1 per kg for Rice, Wheat and Coarse-grains (Nutria-cereals) respectively).<\/p>\n

        Sunset clause:<\/strong> It is a part of a law or rule that states it will expire on a specific date unless lawmakers decide to keep it going. Many laws don’t have this, so they can last indefinitely.<\/p>\n

        Question for practice:<\/strong><\/p>\n

        Critically examine the recently proposed extension of PMGKAY Scheme, in light of India\u2019s rising food subsidy bill.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Source: This post on PMGKAY extension has been created based on the article \u201cA new poverty conundrum\u201d published in Business Standard on 8th November 2023. UPSC Syllabus Topic: GS Paper 2 Social Justice \u2013 Issues relating to poverty and hunger. News:\u00a0This article discusses the impact of the recently proposed extension of PMGKAY on India\u2019s food… Continue reading On PMGKAY extension \u2013 A new poverty conundrum<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[10503,212,232],"class_list":["post-268493","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-business-standard","tag-gs-paper-2","tag-social-justice","entry"],"jetpack_featured_media_url":"","views":{"total":69,"cached_at":"","cached_date":1702059199},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/268493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=268493"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/268493\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=268493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=268493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=268493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}