Budget 2023: Thinking beyond free grains

Discontinuation of free foodgrains scheme during pandemic era gives fiscal space for more generous cash support. (Representative Image)

For several years now, budgetary allocations for the social sector have suffered cuts or stagnated. Recently, the government announced the discontinuation of the Pradhan Mantri Gareeb Kalyan Anna Yojana (PMGKAY), a COVID-19 relief measure that provided an additional 5kg per person each month of rice or wheat to the existing National Food Security Act (NFSA) ration cardholders. Concurrently, foodgrain entitlements under the NFSA Act have been made free.

The discontinuation of PMGKAY while providing free grain under NFSA will result in a huge saving for the government to the tune of Rs. 1.5 lakh crore per year. These savings must be used to remedy the neglect of social policy in recent years.  How might one use this fiscal space to reimagine our food policies?  The NFSA provides a broad framework to rework our food budget in better ways.

The Integrated Child Development Services (ICDS) scheme provides supplementary nutrition (including cooked food and take-home rations) and other health services for pregnant and lactating mothers and for children under six. The ICDS has witnessed budget cuts even in nominal terms — in 2021-22, the budget for anganwadis and other schemes was Rs 20,105 crore, lower than the allocation in the previous budget (Rs 20,532 crore) for anganwadis alone.

The Pradhan Mantri Matru Vandana Yojana (PMMVY) is a maternity benefits programme for women in the unorganised sector, providing cash support of Rs 5,000 for the first child. Sadly, the PMMVY has been underfunded since its inception in 2017. To cover all women and births it needs around Rs 14,000 crore (as per the NFSA mandate) whereas the allocations have never crossed Rs 3,000 crore (and have gone down in the past two years).

The Mid-Day Meal (MDM) scheme provides cooked meals to nearly 12 crore government school children. The COVID-19 lockdown dealt a big blow to primary schooling in most states. Several field studies show that little teaching and learning happened online. Learning losses are widespread and once schools reopened in mid-to late-2022, reports point to children's struggles in continuing their studies. A tasty and nutritious MDM menu (with eggs) can act as a glue: It can ensure regular attendance and facilitate learning in schools.

Expanding the food security net

Besides these programmes for women and children, the NFSA includes the Public Distribution System (PDS) that protected people from hunger since the April 2020 lockdown — for the 80 crore people who were fortunate enough to be covered by it. However, the lockdown made it very clear that too many were still excluded from it.

Moreover, PDS coverage has fallen short of the norms set in the NFSA (50 percent in urban areas and 75 percent in rural areas). Ordinarily, the 2021 Census would have led to an upward revision in the population covered by the PDS, but the census has been indefinitely delayed. Our 2020 estimates (Jean Drèze, Meghana Mungikar and Reetika Khera) suggest that roughly 10 crore people are excluded on account of this.

Further, the NFSA only provides foodgrain through the PDS. A handful of states (e.g., Himachal Pradesh and Tamil Nadu) supply pulses and edible oil. It is time to consider adding these items to the PDS basket.

There are, thus, two overarching policy design issues.

One, we need to put in place a mechanism for "automatically" adjusting coverage norms (on account of population increase). As mentioned earlier, the PDS case shows that 10 crore people are suffering as a result of this policy blind spot.

Two, there should be a policy on indexation to account for inflation. For instance, the "dearness allowance" allows salaries to remain constant in real terms. Such a norm does not exist for social policies, and revisions tend to be ad hoc. Per child allocations were last revised in 2020 for MDM, PMMVY hasn't been revised since 2017 and the Centre’s contribution to pensions for the elderly and widows has been frozen at Rs 300 per month since 2006!

A proposal for the budget

As mentioned earlier, the discontinuation of PMGKAY will save the government roughly Rs 1.5 lakh crore.  In fact, savings will accrue to several states (including Tamil Nadu, Odisha and Chhattisgarh) as they will now get NFSA rice free from the central government (for which they paid Rs 3/kg to the Centre, but recouped nothing or less than Rs 3/kg because they provided it free or at a subsidised price to ration card holders).

These savings must be set aside for food security and other social policy measures (including social security pensions, education and health). For instance, recently, 51 economists wrote to the finance minister to increase the central contribution to the old age and widow pension scheme to Rs 500.

I end with a proposal for additions to the central budget for some social security schemes:

- Rs 15,000 crore for eggs in schools and anganwadis (thrice a week),

- Rs 14,000 crore for an NFSA-compliant PMMVY (Rs 6,000 per child),

- Rs 20,000 crore each for increased NFSA-PDS coverage (adjusting for population) and adding 1kg of pulses per ration card each month,

- Approximately Rs 9,000 crore towards increasing central contribution for social security pensions to at least Rs 500.

Altogether this estimate is approximately Rs. 78,000 crore, roughly half of the savings to the central government from ending PMGKAY, leaving some room for other urgent needs such as health and education. This pre-general Election year budget is the government's last chance to shed its 'suit-boot ki sarkar' tag.

Reetika Khera is Narendra and Chandra Singhi Chair Professor of Economics at the Indian Institute of Technology, Delhi. Views are personal and do not represent the stand of this publication.