Finance Ministry opposed free food scheme extension, warned Consumer Affairs Ministry of its adverse impact

The extension of India's ongoing free food programme for the poor, which got approved by the federal cabinet earlier on September 28 by another three months, was being opposed by the Ministry of Finance, CNBC-TV18 reported.

The finance ministry opposed the free food scheme extension and had warned the Consumer Affairs Ministry of its adverse impact, according to CNBC-TV18 that cited sources.

India has spent about $43 billion since April 2020 on the programme, known as 'Pradhan Mantri Garib Kalyan Anna Yojana' (PMGKAY) that gives poor families 5 kg of food grain a month.

The free food scheme extension proposal has fiscal implication of Rs 44,762 crore, as per the Finance Ministry.

Also read | Finance ministry denies expenditure department against continuing free foodgrain scheme

According to the sources, the finance ministry cited added pressure due to the Russia-Ukraine war, which has had a severe impact on global food security, reported CNBC-TV18.

Together, Russia and Ukraine export nearly a third of the world’s wheat and barley, more than 70 percent of its sunflower oil and are big suppliers of corn. Russia is also the top global fertilizer producer.

Moreover, the finance ministry also noted that the relief that was provided for the pandemic stress but it doesn't seem prevalent.

According to the sources, the ministry is also concerned that continuation of the scheme for a long period of time may give the impression of indefinite benefit. The continuation of the scheme without an end date in sight may make it difficult to stop, hence termination was advised by the ministry.

Furthermore, it is possible that an adequate quantity of food grain will not be available in the future to extend the free food programme indefinitely. Therefore, the ministry had suggested to at least consider reducing the quantity of grains promised if the scheme is to be carried out continuously.

PMGKAY has been extended five times since 2020. The ongoing sixth phase is due to end on September 30. The seventh phase will require about 120 LMT of food grain, involving about Rs 45,000 crore of additional expenditure, the sources said.