NFSA and PM’s promise of free foodgrains for five years: what it means and entails

Tags

Top Highlights

• The subsidised prices are specified in Schedule-1 of the NFSA, which the government can change by executive order. Until the end of 2022, NFSA beneficiaries paid Rs 3, Rs 2, and Re 1 per kg of rice, wheat, and nutri-cereals (millets) respectively. These prices were not changed for years, even though the economic cost of foodgrains and the food subsidy bill grew steadily. From this year onwards, the rations were made entirely free. The quantity of grains to which a beneficiary is entitled is also laid down in the law, and cannot be changed without Parliament’s approval. There are two categories of beneficiary households under the NFSA — the Antyodaya Anna Yojana (AAY) households, and the Priority Households (PHs). Each AAY household is entitled to 35 kg of foodgrains every month irrespective of the number of members in the household. PHs are entitled to receive foodgrains according to the number of family members. Each member of a PH is entitled to receive 5 kg of foodgrains every month under the NFSA. So, the bigger a PH family, the greater is the quantity of foodgrains it gets.

• The NFSA was enacted by the UPA-2 government, and came into effect on July 5, 2013. The law guaranteed “access to adequate quantity of quality food at affordable prices” under the Targeted Public Distribution System (TPDS) to 50% of the urban and 75% of the rural population of the country. The overall national coverage of the NFSA is about 67.5% of the population.

• The latest published Census figures are from 2011 — and based on that, about 81.35 crore people can be covered by the NFSA.

• The economic cost of foodgrains has four main components — pooled cost of grain, procurement incidentals, acquisition cost, and distribution cost. All of these have increased over the years.

• The government’s food subsidy bill too, has increased apace. It peaked at Rs 5,41,330.14 crore in 2020-21 before falling to Rs 2,86,469.11 crore in 2021-22. For 2022-23, the government budgeted a subsidy bill of Rs 2,06,831.09 crore, and said that the cost of distributing free foodgrains under the NFSA would be around Rs 2 lakh crore.

• As of the beginning of this calendar year, the government’s expenditure on the PM-GKAY was about Rs 15,000 crore per month. The expenditure until the end of the seventh phase of the scheme was around Rs 3.91 lakh crore. The government’s December 24, 2022 decision to provide foodgrains for free under NFSA was expected to put an additional financial burden of Rs 13,900 crore on the exchequer, and the total food security bill for the 2023 calendar year was estimated to be around Rs 2 lakh crore.

• This meant AAY families cumulatively were estimated to save a total Rs 2,705 crore for the entire year.

• Similarly, for PHHs, the government allocated 423.86 lakh tonnes foodgrains (272.8 lakh tonnes rice, 144.76 lakh tonnes wheat, and 6.3 lakh tonnes nutri-cereals), enabling them to together save about Rs 11,142 crore in the year.

• The NFSA is a rights-based scheme under a law of Parliament, while the PM-GKAY was a scheme announced by the executive as a top-up to the entitlements of beneficiaries covered under the NFSA.

• Finance Minister Nirmala Sitharaman