Free foodgrains: How Modi rebranded his most successful scheme

If there’s one welfare scheme that almost everyone knows under the Modi government, it’s the Pradhan Mantri Garib Kalyan Anna Yojana.

Under the PMGKAY, about 80 crore poor are entitled to free foodgrains. And judging by interactions on the ground, this initiative has generated significant goodwill for Prime Minister Narendra Modi. 

If this goodwill is indeed a widespread phenomenon, then the PMGKAY needs to make it into marketing textbooks as a case study of successful rebranding. Ironically, the origins of this initiative can be traced to the very demons that Modi came to slay – the ‘andolan jeevis’ and an extravagant maximum government.

In 2013, on the back of a relentless campaign by right-to-food activists, the UPA government passed the National Food Security Act. The law entitled 75 percent of India’s rural population and 50 percent of its urban population to benefit from subsidised foodgrains to ensure that even the neediest had access to food at affordable prices. 

Note that unlike many government welfare schemes, this was enshrined as a law, fundamentally altering the state-citizen equation. Foodgrains were no longer largess to be provided by a benevolent state, but a right that the citizen was entitled to. 

Under the NFSA, families were classified into two categories – the poorest of the poor or Antyodaya Anna Yojana families, and the poor or Priority Households. Under Antyodaya Anna Yojana, beneficiaries are entitled to 35 kg of foodgrains per month per family at Rs 3 per kg for rice, Rs 2 per kg for wheat, and Rs 1 per kg for coarse grains such as millet, bajra and jowar. For Priority Household families, the allocation is five kg per beneficiary at the same prices. The foodgrain distribution happens at a fair price shop, colloquially called a ration shop.

In Modi’s first term, the National Food Security Act – which, to emphasise, was passed by the UPA – was rolled out across the country by states with no real tweaks. 

In 2020, when the Covid pandemic hit, drastic steps were needed to ameliorate the hardships faced by the poor. So, the government doubled the amount of foodgrains provided to both categories of families under the act – and made it all free for eight months. 

By January 1, 2023, most pandemic-related emergency relief measures were scaled back. But the central government decided to continue providing free foodgrains under the original measures mandated under the act. Except it would now use the moniker of PMGKAY, initially for one year starting January 1, 2023 and then for a five-year period starting January 1, 2024.

With this decision, the government also announced that the Antyodaya Anna Yojana and Priority Households schemes had been subsumed as PMGKAY. A less publicly-disclosed decision that was also taken at the time was to reportedly have Modi’s photo printed on all ration bags, lest people forget who was feeding them when they walked into voting booths.

The political implications of PMGKAY are worth discussing. At one level, it seems that the cost savings – of foodgrains now being free – to eligible families are not that high. A family under Antyodaya Anna Yojana stands to save between Rs 70 (for rice) and Rs 105 (for wheat) a month, depending on the quantity of foodgrains they consume. Is this amount enough to generate game-changing goodwill at the ballot box?

This is a nebulous question with no clear answer but interactions on the ground suggest that a chunk of the electorate looks at PMGKAY favourably, and it may be a factor in their supporting a third term for Modi. If true, this is another example of Modi’s political acumen, but it also reveals a sobering truth about the extent of extreme poverty in India, that such a modest amount can influence voting decisions. 

Coverage 

So, how many people benefit from PMGKAY? Let’s look closer at coverage numbers.

At the national level, as of June 30, 2023, around 80.1 crore NFSA beneficiaries were benefiting from the scheme – 8.95 crore Antodaya Anna Yojana beneficiaries and 71.15 crore Priority Household beneficiaries. Clearly the former benefit more than the latter because they get more free grains and live more precariously. Any financial assistance to this segment of the population has an outsized impact.

The state-wise distribution of beneficiaries indicates that most states have achieved near 100 percent coverage for eligible families. This is not surprising because the National Food Security Act was implemented in all states by 2016, so the states had enough time to identify and target eligible beneficiaries. 

Interestingly, Gujarat is the only non-hilly, non-Northeast state which is not close to 100 percent. Food security activists in Gujarat complain that the state government is not proactive enough in identifying new beneficiaries since higher enrollment is a proxy for a higher incidence of poverty.

In eight states – Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Manipur, Odisha and Uttar Pradesh – over 80 percent of the population is identified as a Antyodaya Anna Yojana or Priority Household family. Many of these states are politically very significant, together accounting for roughly one-third of Lok Sabha seats. If free foodgrains translate to votes, for even some beneficiaries, the political implications of this scheme could be significant. 

Cost

How much does this policy pivot – from ‘subsidised’ to ‘free’ foodgrains – cost the government? 

The government reports the cost of procurement, storage and distribution of food grains under the National Food Security Act as ‘food subsidy’ in the union budget. The table below shows spending on food subsidies over the last decade.

When Modi took office in 2014, the government was spending almost six percent of its total expenditure on the National Food Security Act. For the next two years, food subsidies increased, both in nominal terms and as a percentage of total expenditure, likely due to the roll-out of the act in different states. Then, over the next four years, from 2016 to 2020, spending on food subsidies trended down and was just over four percent of total expenditure in 2020. 

During the Covid pandemic, food subsidy spending increased more than five times as the government doubled the food allocations and made it free. Since then, the percentage has tapered down and is below five percent for the most recent fiscal year, lower than the 2014 number.  

The key takeaway here is that the transition from subsidised to free foodgrains has not caused too much fiscal strain since the enrollment numbers and costs have been relatively steady. 

Other changes

Other than switching to free rations, the Modi government has also introduced the “one nation, one ration card” scheme. This is a national ration card portability scheme that enables migrant workers and their family members to get the foodgrains they are entitled to from any fair price shop in the country. 

An accompanying change that enables ONORC is the move to incorporate modern technology into the public distribution system. Digital ration cards, Aadhaar-based authentication, and electronic point-of-sales at the ration shops have been introduced in a technological push termed ‘smart PDS’.

As with other government schemes, this switch to newer tech is not without challenges. Critics argue that some of the changes introduced, especially mandatory Aadhaar-based authentication, have led to the exclusion of the marginalised without effectively solving the problem of fraud, which is the primary reason for end-to-end digitisation. While such criticism is valid and vigilance to safeguard the interests of the marginalised should be welcome, the adoption of modern tech in implementing such massive schemes is inevitable. It brings many benefits once the teething troubles are ironed out. 

Coverage gap

Finally, it must be pointed out that despite serving over 80 crore citizens, the National Food Security Act is potentially ignoring another 10 to 14 crore people.  The original numbers for coverage targets for different states under eligible families came from official documents from the 2011 census, the 2011-12 Household Consumption Survey, and the Tendulkar Committee’s poverty estimates for 2011-12. Since then, these estimates, including the census, have not been updated, resulting in frozen ceilings on enrollment quotas that exclude millions who would otherwise qualify. 

The next government would do well to rectify this glaring omission. It would be the politically savvy thing to do. More importantly,  it would be the right thing to do. 

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