Centre’s Food Subsidy to Hit a New High of 3.94 lakh crore This Fiscal

Official estimates show that the Centre's food subsidy bill will hit a new high of 3.94 lakh crore this fiscal year, owing largely to the Pradhan Mantri Garib Kalyan Anna Yojana, a Covid-relief scheme that will provide 5 kg of free grains every month to about 800 million National Food Security Act beneficiaries.

As a result of the pandemic relief measures, the Centre's food subsidy has increased dramatically since 2020. In 2021-22, total expenditure was 2.94 lakh crore, which was 140 percent higher than the subsidy amount in 2020-21 and 267 percent higher than in 2019-20.

According to an official who asked to remain anonymous, the Union Budget forecast the Centre's total subsidy bill for FY23 at 3.56 lakh crore, but this is likely to increase due to the Cabinet's decision to extend the free-food program and rising foreign fertilizer prices.

The free food scheme has cost the government 2.60 lakh crore so far. According to the official, another 80,000 crores will be invested over the next six months, bringing the total food subsidy under the PMGKAY to about 3.40 lakh crore.

The free food programme, which was originally introduced for a quarter but has now been extended until September 2022, has protected the poor from hunger and price fluctuations.

"Nearly 80% of all households received at least one social protection benefit from a government scheme," according to a World Bank working paper led by writers Shrayana Bhattacharya and Sutirtha Sinha Roy on the government's pandemic relief measures. The relief measures were "pro-poor and broad-based in outreach," but there were "state-level variations in benefit delivery," according to their analysis, which drew on one of India's largest panel surveys of households" and "approximately 40% of all poor households reported receiving both food and cash assistance."

Under the PMGKAY, the Centre had allocated roughly 75.9 million tonnes of free food grains until March. The current extension added another 24.4 million tonnes of free food grains, bringing the total allocation of free food grains to 100.3 million tonnes.

During the first wave of the pandemic in 2020, the government declared 5kg of free food grains every person per month, in addition to the food security Act's rights of 5kg of wheat or rice at Rs 2 and Rs 3 per kg.