The Modi government has started discussions to extend the free foodgrain programme by another six months beyond September. Sources said the officials of the food and finance ministries are in talks on the implications of extending the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme amid concerns of stocks going below buffer norms and higher subsidy burden.

Analysts said the inflationary pressure on the economy could add to the woes of the vulnerable sections of the society if the scheme is not extended. Besides, the extension would be more a political call than economic as seven states are slated to go to polls: Gujarat, Himachal Pradesh, Karnataka, Meghalaya, Nagaland, Tripura and Mizoram.

The Modi government would not like to make price rise as an election issue by withdrawing the free foodgrain scheme, the analysts said. The PMGKAY beneficiaries get 5kg free ration per person per month in addition to their normal quota of food grains under the National Food Security Act. Under the NFSA, the Centre offers highly subsidised food grains to about 75 per cent of the rural and 50 per cent urban population.

According to an internal assessment by the food ministry, if the scheme is extended till March 2023, the rice stock in the central pool may even go below the buffer by 22 lakh tonnes. The buffer stock norm includes operational stocks and strategic reserves.

Such an extension may cost around Rs 90,000 crore to the exchequer in subsidy. The rice stocks with the Food Corporation of India (FCI) as on April 1, 2023, is estimated at around 11.4 million tonnes (mt) against the buffer norm of 13.6mt, if the free foodgrain is extended. The wheat stock may fall to 9mt against the buffer of 7.4mt on April 1. Officials said the assessment showed the wheat stock to be above the buffer as on April 1 even after PMGKAY’sextension. “In case of rice also, there will be no problem as Kharif harvest will be procured from October in the new marketing year (October-September),” an official said, The rice calculations did not consider the kharif harvest. However, less than estimated Kharif sowing could add to the woes.