Poverty and Hunger

The Union Government has announced free food grains to 81 crore poor in the country for one year. This will be under the National Food Security Act (NFSA) but is like an extension of the free food grains scheme announced under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) in March 2020, which provided 5 kg of food grains to each poor person. It was to cover 80 crore people badly impacted by the pandemic and the complete lockdown.

At that time, NFSA was already in existence and providing subsidised food grains to the poor. It covers 75% of the rural population and 50% of the urban population. The number to be covered was estimated to be 81.34 crore. As per the official website of NFSA, 80 crore poor people were getting rice, wheat and coarse grain at Rs 3/Rs 2/Rs 1/ per kg.

Budget documents reveal that the two schemes together led to a food subsidy of Rs 2.9 lakh crore in 2021-22.

In 2019-20, before the PMGKY scheme was launched, the food subsidy was Rs 1.09 lakh crore. Now the two schemes are being merged into the NFSA with 5 kg of food grains provided free to 81 crore poor.

So, the food grains provided under PMGKY will be given to the poor but what they were getting at concessional rates under NFSA will no longer be made available to the poor. Thus, the government will save Rs 1.09 lakh crore of subsidies that went for the cheap food grains under the earlier NFSA.

This will become an additional burden on the poor, and it will be much higher than the subsidy saved by the government. The poor will have to supplement their needs from the free market where the price of food grains is now much higher than the Public Distribution System price. In 2022, due to an early summer, wheat production and procurement declined. Paddy crops also suffered due to late rains in major rice-growing areas and flooding towards the end of the season.

Assuming no leakages, 81 crore people were provided with about 100 million tons of food grains out of a production of 316 million tons. Thus, 60% of the population was getting about 32% of the food grains from the government and had to depend for their balance needs on the free market. The last consumption survey was in 2011-12 which may be outdated.

According to the Economic Survey, the average availability of cereals in 2019-20 (pre-pandemic) was 13.9 kg per month per person. It indicates the average consumption of food grains. The rich supposedly consume less per capita than the poor, but assume that the poor consume the average amount. Then, earlier, the poor had to buy 3.9 kg per person per month from the market and now they will have to buy 8.9 kg per person per month. At the current ruling price of about Rs 2,500 per quintal for wheat, the extra monthly expenditure will be Rs 575 for a family of five.

This does not take into account the lentils that the poor got under PMGKY, which will no longer be supplied.
So, poverty in India will increase. It had already increased due to loss of work and decline in incomes during the pandemic. Importantly, the government has accepted that India has 80 crore poor who need free food grains.

By international standards, more precisely as per World Bank estimates, 90% of Indians are still poor. NFSA, covering 60% of people, actually needs to enlarge its coverage. No, that is not going to happen. The Modi government is asking the poor--daily wage labourers and other vulnerable sections of society to tighten their belts.      


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Vol 55, No. 31, Jan 29 - Feb 4, 2023