The Govt slams freebies and yet extends the free ration scheme for three months

The Government’s move to extend the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) for a further period of three months, from October to December 2022, flies in the face of Prime Minister Narendra Modi’s stand on freebies. The incongruity appears starker against the backdrop of resistance by the Finance Ministry to the extension. Under this scheme, 5 kg of food grain per person per month is provided free of cost for all the beneficiaries covered under the National Food Security Act (NFSA). The PM-GKAY came into being during the first wave of Covid-19 over two years ago to provide food security to the poor, needy, and the vulnerable households. Even after the pandemic subsided and normalcy restored, the Government kept extending the scheme. The Finance Ministry also said that since the pandemic has abated considerably, distress for which relief was given doesn’t appear to be prevalent. Financial implications for the Central Government have been about Rs 3.45 lakh crore so far. The latest extension will cost about Rs 44,762 crore. The official press release announcing the latest extension called it a “welfare scheme.” This may not be a very accurate description, for the economy is back on track with hardly any restrictions on people and businesses. The rationale offered by the Government for the extension is that major festivals like Navratri, Dussehra, Milad-un-nabi, Deepawali, Chhath pooja, Guru Nanak Dev Jayanti, Christmas, etc., are forthcoming. Another extension would help people “celebrate [these festivals] with great gaiety.”

At best, this is a specious justification: the festive season arrives every year, but that doesn’t mean that government, at the Centre or in states, should start distributing one thing or the other for free. The business of government is governance, not distributing freebies, especially when the fiscal situation is strained and when the economy is facing global and domestic headwinds. This is the reason that the Finance Ministry talked about the fiscal pressure due to the Russia-Ukraine War, effect on fuel prices, and rise in other subsidies. The Finance Ministry is also worried that the continuation of the scheme for a long period could give the impression of its permanent or indefinite continuation. FinMin bureaucrats seemed to be echoing great economist Milton Friedman’s famous quote, “Nothing is so permanent as a temporary government programme.” The Finance Ministry has made some very valid points, but are the powers that be listening? The answer may not be very comforting. It seems that all the fuss the Modi Government and the Bharatiya Janata Party have been making about freebies is politics; there may not be any genuine desire to restrain the evidence of freebies. Otherwise, the Government would not have continued with the scheme of free rations for another three months. What was a welfarist measure a couple of years ago has become a freebie. One can only hope that the PM-GKAY doesn’t get another extension.