The Union cabinet has extended free foodgrain scheme PMGKAY by five years that will cost the government about Rs 11.80 lakh crore (trillion).

Under the Pradhan Mantri Garib Kalyan Anna Yojana, the government provides five kilogrammes of free foodgrains per month to 81.35 crore beneficiaries.

The extension of the PMGKAY, which was set to end this December, is significant because of the ongoing Assembly polls and the Lok Sabha elections next year.

The move comes days after PM Narendra Modi announced the extension at election rallies in Madhya Pradesh and Chhattisgarh.

Sonal Varma of Nomura said, “The extension of the free food scheme for another five years is likely to have a limited near-term impact, but adds to medium-term risks….while the need for subsidised grains for lower-income households is undeniable, there are risks with announcing free schemes that lead to competitive populism”.

"Keeping in view the welfare of the beneficiaries and to strengthen the food security in terms of accessibility, affordability and availability of foodgrains for the targeted population, and to maintain uniformity across the states, the decision has been taken to continue providing foodgrains, free of cost, under PMGKAY for five years," an official release said.

PMGKAY was introduced in 2020 as a pandemic relief measure, under which 5 kg of free foodgrains per beneficiary per month was provided in addition to the 5 kg of subsidised foodgrains under the National Food Security Act (NFSA).

In December 2022, as PMGKAY came to an end after multiple extensions, it was subsumed under the NFSA providing ration-free for one year.

Under the NFSA, up to 75 per cent of the rural population and 50 per cent of the urban population are being covered under two categories — Antyodaya Anna Yojana (AAY) and priority households.