India’s Free Food Politics

What would the extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) till November 2020 mean for the 81 crore beneficiaries of the National Food Security Act (NFSA) 2013, across the country? Prima facie, a prolonged access to free foodgrains at a time when the pandemic and the subsequent lockdown have axed or jeopardised the livelihoods of many. The riders implicit in this extension, however, could be several. For instance, notwithstanding whether the estimated expenditure of `90,000 crore to provide free foodgrains to all beneficiaries of the NFSA for five months is adequate, a more provoking question is: What is this expenditure being incurred as? Food subsidy? Or something else? This, of course, was never clarified in the Prime Minister’s address to the nation on 30 June 2020.

Given such lack of clarity, concerns stem out of various facts: (i) over the past two years, the current government has grossly under-reported its incremental off-budget borrowings from public accounts, which have a bearing on the fiscal deficit ­estimates; (ii) about three-fourths of these borrowings are on account of the underrecoveries in food subsidies of the Food Corporation of India (FCI); and (iii) to cover this up the gov­ernment has been continually rejigging the balance sheet of the FCI to convert food subsidies to credits/borrowings, thereby reversing the course of “obligation” between the state and the parastatal.