No decision taken yet on extending free foodgrain scheme beyond September: Govt official

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The Central government is yet to take a call on whether the free foodgrain scheme, the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY), will be extended beyond September, a senior government official has said.

"The availability of fiscal room was not a consideration when the government announced the scheme in 2020 and extended it in 2021," the official said on August 11 on the condition of anonymity.

"If it (some scheme) is necessary, we have to find (fiscal) room for it," the source added.

The comments from the official come after the finance ministry denied in Parliament that its department of expenditure had advised against the extension of the free foodgrain scheme, extended for six months in March, beyond September.

Today, when asked whether the scheme would be continued after next month, the source said: "We will see".

The six-month extension of the PM-GKAY cost the Centre Rs 80,000 crore, a sum it had not budgeted for. The Budget for FY23 pegged the total food subsidy at Rs 2.07 lakh crore, down from the revised estimate of Rs 2.86 lakh crore for FY22. As such, the extra spending - in combination with higher fertiliser subsidy and a hit to tax collections following the cut in excise duty on petrol and diesel announced on May 21 - is expected to adversely impact the government's finances, with the fiscal deficit target for the current financial year set at 6.4 percent of GDP.

Speaking on other aspects of the fiscal situation, the government official quoted above said the government's disinvestment efforts were not slow and were only taking due time and effort.

"We are moving. Divestment is like the Jagannath Ratha Yatra - everything has to be in place. And once it starts, you can't stop it."

The Centre has set itself a divestment target of Rs 65,000 crore for FY23. In April-June, it had achieved 37.8 percent of the full-year target, or Rs 24,559 crore.

The official also said the Centre had "no interest" in keeping money with itself and would pass it on to states as and when it could.

"If the Centre is in a position to give more money to states, it will do it. We are not interested in keeping extra money with us for a single day," the official said.

On August 10, the Centre released Rs 1.17 lakh crore to states as tax devolution, twice the amount it was to transfer this month. The finance ministry said this was in line with its commitment to "strengthen the hands of states to accelerate their capital and developmental expenditure."

For FY23, the Centre should, on average, transfer Rs 58,333 crore every month to states. However, Rs 47,592 crore was transferred to states in each of the first three months of the current financial year, as per data from the Controller General of Accounts.