In a major decision, the government on Friday decided to provide free ration to 81.35 crore poor people under the National Food Security Act (NFSA) for one year.

Under NFSA, also called the food law, the government currently provides 5 kilogram of food grains per person per month at Rs 2-3 per kg. The families covered under Antyodaya Anna Yojana (AAY) get 35 kg of food grains per month.

Rice is given to poor persons under NFSA at Rs 3 per kg and wheat at Rs 2 per kg.

Briefing reporters about the decision taken by the Union Cabinet, Food Minister Piyush Goyal said the Centre will bear the entire burden of providing free food grains under NFSA.

The annual cost to the exchequer is estimated at Rs 2 lakh crore.

Meanwhile, the government decided not to extend the free ration scheme Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which ends on December 31.

Under PMGKAY, five kilogram of food grains per person per month is provided free to 81.35 crore beneficiaries covered under NFSA.

This is over and above the monthly distribution of highly subsidised food grains under NFSA.

Government officials described the latest Cabinet decision as a "new year gift for the country's poor", saying that over 80 crore people will now get free food grains under NFSA.

The beneficiaries will not have to pay a single rupee to get food grains. The Centre will now spend around Rs 2 lakh crore per year on this scheme, they added.