Extension of Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY)

What’s in Today’s Article?

• Why in the News?
• About Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY)
• Salient Features of the Scheme
• News Summary
• Will the Extension Affect Fiscal Deficit Target of the Government?

Why in the News?

• The Union Cabinet announced the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme for another five years, starting from January 1, 2024.

About Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY):

• PM-GKAY is a food security welfare scheme announced by the Central Government in March 2020, during the Covid-19 pandemic.
• It is a part of Pradhan Mantri Garib Kalyan Package (PMGKP) to help the poor fight the battle against Covid-19.
• Objective: To feed the poorest citizens of India by providing grain through the Public Distribution System, to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
  • Launched in 2000, Antyodaya Anna Yojana is a Centrally Sponsored Scheme to provide highly subsidised food to millions of the poorest families.
• Implementing Agency: Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution

Salient Features of the Scheme

• About 81.35 crore beneficiaries are provided 5 kg free wheat/rice per person per month.
  • This is in addition to the 5 kg food grains already provided to the beneficiaries under the National Food Security Act, 2013.
  • The NFSA, 2013 legally entitles up to 75% of the rural population and 50% of the urban population to receive subsidized food grains under Targeted Public Distribution system.
• It is known as the largest food security programme in the world.

News Summary

• The Cabinet led by Prime Minister has decided that the Central government will provide free food grains to about 81.35 crore beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for a period of five years with effect from1st January, 2024.
  • The scheme was set to be discontinued by December-end, 2023.
• It would provide nation-wide uniformity in delivery of food grains free of cost in all States/UTs through a network of over 5 lakh Fair Price Shops under a common logo.
• The approximate food subsidy for five years for distribution of food grains under PMGKAY will be to the tune of 11.80 lakh crore.

Will the Extension Affect Fiscal Deficit Target of the Government?

• Government officials and experts believe the Centre is likely to meet its fiscal deficit target of 5.9 per cent of the GDP for the current financial year.
  • The fiscal deficit is the difference between the government’s expenditure and its revenue.
  • But, for now, buoyant tax revenue and controlled expenditure are expected to cushion the impact of continuing the scheme.
• Between 2020-21 and 2022-23, the Central government has spent a total of Rs 3.91 lakh crore on the PMGKAY.
  • For the one-year period starting January 1, 2023, the likely expenditure on the scheme is Rs 2 lakh crore.
  • In the first six months of the current fiscal, the central government spent Rs 99,243.92 crore on the food subsidy bill.
  • This was about 14.6 per cent lower than the Rs 1.16 lakh crore spent between April and September 2022.
• This is much in line with the Centre’s overall expenditure trend as well, where only 47.1 per cent of the overall expenditure target of Rs 45.03 lakh crore for the fiscal was spent between April and September 2023, with a greater focus on capital expenditure.
• Revenue receipts have been robust at Rs 13.9 lakh crore in the period, or 53 per cent of the Budget Estimates.

Q1) What do you mean by Fiscal Prudence?

At the heart of fiscal prudence is a recognition of the limits to public spending. There are limits to how much spending can be financed through higher taxation, as increasing income-tax rates is both politically unpopular and economically damaging.

 Q2) What do you mean by Tax Buoyancy?

Tax buoyancy explains the relationship between the changes in government's tax revenue growth and the changes in GDP. It refers to the responsiveness of tax revenue growth to changes in GDP. When a tax is buoyant, its revenue increases without increasing the tax rate.

Source: Union Cabinet decides to extend free foodgrains scheme for five years | Business Today