During the current fiscal year, the government's food subsidy bill is predicted to exceed £30 billion, or nearly 50% more than the budget estimate of £20 billion. This is primarily due to the extension of free food grain scheme, PM Garib Kalyan Ann Yojna (PMGKAY) till December. For the roughly 800 million identified recipients who would receive highly subsidised and free food grains, this is expected to be the second greatest subsidy outgo.
Earlier the maximum amount provided in the budget was in 2020-21 of £52 bn. But £34 billion of this fund was utilised towards settling loans availed by the Food Corporation of India from the National Small Savings Fund. This had reduced the interest burden of government owned FCI, which has helped reduce the economic cost of food grains.
The government has extended the PMGKAY for the seventh time till December and officials said this is likely to push the subsidy up by another £12 billion.
Each beneficiary of the PMGKAY programme receives 5 kg of free food grain each month. Additionally, the Center gives each of these beneficiaries 5 kg of highly subsided wheat and rice each month.
In April 2020, the government introduced the PMGKAY to protect the underprivileged from the Covid-19 pandemic. Prior to this, the food ministry had estimated that the overall costs for all seven stages of PMGKAY would be close to £39 billion.
