PM-GKAY: Eradication of Extreme Poverty
This post has been authored by Hrishikesh Tembe, the Research Analyst Intern at Arthashastra Intelligence.
In the wake of COVID-19 outbreak in the country in early 2020, the government announced the distribution of additional free-of-cost food-grains (rice/wheat) to all 80 crore beneficiaries of National Food Security Act covered under both categories of NFSA, namely Antyodaya Anna Yojana (AAY) and Priority Householders (PHH) at the scale of 5 kg per person per month over and above NFSA allocations under Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY). The scale of this welfare scheme makes it the largest food security program in the world.
The objective of the PM-GKAY programme is that – no poor/vulnerable beneficiary or household should suffer due to non-availability of food-grains during the COVID-19 crisis and the consequential disruptions in economic activity caused by the pandemic.
Initially the scheme was announced for the months of Apr-June 2020 (Phase-I). However, considering the continuous need for the food security of the poor and the needy, the scheme was extended for 4 more phases till March 2022. Accordingly, for the implementation of PM-GKAY phases I to V, the government have allocated a total of almost 759 lakhs MT food-grains to the states and the union territories equivalent to about Rs. 2.6 lakhs crores in food subsidy. For these 5 phases Government incurred the expenses of approximately Rs. 42,000 cr., Rs. 67,000 cr., Rs. 29,000 cr., Rs. 69,000 cr., Rs. 54,000 cr. respectively.
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It can be observed from the graphs that the level of distribution of the food-grains almost matches with the level of allocation of the food-grains. Statistically speaking, Phases I to V observed 98%, 94%, 98%, 97% and 96% successful distribution respectively. Thus, in total, in the span of 2 years government distributed 730.29 out of 759 Lakhs MTs (96%) quantity of food-grains (Rice and Wheat) to registered ration card holders under National Food Security Act. It must be noted that, the data related to the distribution of the latest phase is of only 17 days and of the entire phase as the 6th phase is into its first month only.
An IMF working paper titled ‘Pandemic, Poverty and Inequality: Evidence from India’ was published in April 2022 which stated that in pre-pandemic year i.e. in 2019, India reported extreme poverty rate as low as 0.8%. Extreme poverty is referred to an income below the international poverty line of $1.9 per day in terms of purchasing power parity (PPP). Another survey of IMF concluded that India has almost totally eradicated extreme poverty. The above mentioned paper also talks about the significance of such in-kind food subsidy scheme towards poverty and inequality. Post-food subsidy inequality at .294 is now very close to its lowest level 0.284 observed in 1993/94. Thus, the lifting of almost 96% of the food-grains has helped India to at least maintain the low level of extreme poverty at 0.8%.
This scheme was not only targeted towards poor but also the migrants. India observed high scale migration during the pandemic. However, PM-GKAY was supported by another scheme i.e. One Nation One Ration Card (ONORC) in this crisis. It was difficult to work through the database as a result of the migration. ONORC scheme allows the registered members to take the benefits of the having a ration card across the country solving the problem of disturbed databases.
5th phase of the PM-GKAY ended in March 2022 and now the government has announced that the scheme will be extended till September 2022 and will mature into its 6th phase. Government has planned to spend further Rs. 80,000 crores on this scheme which will take the total expenditure to approximately Rs.3.4 lakhs crores. In first 5 phases this scheme has helped poor people and it continues to do so as consumer debt is not going to be paid off anytime soon due to lack of unemployment and decrease in salaries of general public as a result of the pandemic.