Re-verification of beneficiaries
A communication by the food ministry to state governments last month stressed the need to ‘re-verify’ the nearly 800 million-odd people, who are currently entitled to receive 5 kg each of rice or wheat every month free of cost. Simultaneously, the government intends to add new beneficiaries under PMGKAY which is run under the National Food Security Act (NFSA), 2013.
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Open-ended nature of NFSA – prime minister Narendra Modi had in 2023 extended the PMGKAY by five years — is seen to be a big fiscal burden by many analysts. When NFSA was enacted by the UPA-II government at the fag end of its tenure in 2023, it was stated that “issue prices” to the beneficiarties will be revised in tune with the economic cost, which includes MSP procurement expenses as well as storage, transportation and distribution costs. Since this revision never occurred, the gap between the economic cost and issue prices has widened, and the subsidy amounts surged.
While a Rs 1.25 lakh crore project under way to to create modern grain storage facilities in the cooperative sector and the plan to seamlessly integrate primary agricultural credit societies’ godowns with the food grain supply chain, could enable savings at each stage, issue price revision and reassessment of beneficiary eligibility are crucial to cut costs.
States begin weeding out ineligible cards
“As these beneficiary lists were prepared by states a decade back, there is a need to reverify the eligibility of people who are covered under the PMGKAY and include new beneficiaries,” an official said. He, however, ruled out any sudden big reduction of coverage under the free ration scheme.
The department of food and public distribution, earlier had undertaken a ‘comprehensive exercise’ to further strengthen rightful targeting by matching the database of ration card management management system (RCMS) of the ministry with databases of Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs, ministry of corporate affairs, ministry of road transport and highways and PM Kisan Smman Nidhi.
Sources said that 10% of the existing 800 million odd beneficiaries under the PMGKAY after inter-ministerial data convergence have been found to appear in one or more of the databases and may not qualify as per eligibility norms prescribed by the respective states.
Several states including Rajasthan, Odisha and Madhya Pradesh have initiated steps to weed out ‘ineligible’ ration cards.
An official said in some cases single member households under the poorest of the poor category – Antyoday Anna Yojana (AAY) –who receive 35 kg of grain monthly, while several households are headed by a single member below the age of 18.
Many beneficiaries who receive free foodgrains were taxpayers, car owners and directors of companies, while between 6 – 10 million beneficiaries did not lift their share of grains over several months under PMGKAY.
NFSA mandates coverage of 75% of rural and 50% of urban population. This includes about 20 million AAY households who get 35 kg of foodgrains per family per month while members of priority households are entitled to 5 kg of rice or wheat each per month.
Sources said e-KYCs of 83% of over 809 million people registered NFSA beneficiaries have been completed using their Aadhaar authentication. The food ministry has completed Aadhar seeding of 204 million household ration cards.
Currently 56-58 million tonnes of foodgrains are distributed under free ration scheme annually and the government has budgeted Rs 2.03 lakh crore as food subsidy for FY26.
In a communication to state chief secretaries last month, Sanjeev Chopra, secretary, department of food and public distribution had urged the states to undertake necessary field verification of ration cards and identify ineligible beneficiaries under the PMGKAY so that free foodgrain is directed towards the eligible households.
“Cleansing the database of ineligible beneficiaries will enable any left-out deserving individuals and families to be included in the system, thus reinforcing the equity and integrity of the public distribution system,” Chopra stated in the communication.
Under the relevant section of NFSA, 2013 states have the responsibility to identify the eligible households, issuing ration cards and distribution of free foodgrains to eligible households through 0.5 million fair price shops.
Recently, Punjab Chief Minister Bhagwant had accused the Centre of ‘hatching a conspiracy’ to stop free ration to 5.5 million people in the state.
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However, Union food minister Prahalad Joshi had stated that the mandatory eKYC of beneficiaries was directed by the Supreme court. “Punjab has 1.41 crore beneficiaries under the NFSA 2013, and as per the act, it is the responsibility of the state government to identify eligible beneficiaries based on their own exclusion and inclusion criteria, central government has no role in it,”.
“I think this is a bold move in the right direction. Charging some price to others can save at least Rs 1 lakh crore. This can be spent on agri-R&D, irrigation, for making agri- value chains more efficient, and focusing on nutri-crops. Reforms of food and fertiliser subsidies can be the biggest reform in the agri-food space,” Ashok Gulati, agricultural economist, said.
Meanwhile after several directors of farmer producer organisations (FPOs) resigned from their post after they received notice to prove their eligibility for ration cards, the agriculture ministry has also communicated to the food ministry to initiate measures for farmers collective inclusion under the free ration scheme that are verified on merits.
Before January 2023, marginal prices were paid by the NFSA beneficiaries, and the shift to a regime of completely free supply of grains raised the cost by 3-4%.