Extending PM-GKAY beyond September not advisable on fiscal ground: Expenditure Dept.

It said the high food security cover has already "created a serious fiscal situation" and is not needed in non-pandemic times.

The free food grain for poor scheme PM-GKAY should not be extended beyond September as it could strain government finances, the Expenditure Department has said.

The Department also said the high food security cover has already "created a serious fiscal situation" and is not needed in non-pandemic times.

In March, the government extended the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) scheme for another six months i.e., till September 2022.

The government has spent approximately ₹2.60 lakh crore till March and another ₹80,000 crore will be spent till September 2022, taking the total expenditure under PM-GKAY to nearly ₹3.40 lakh crore. The scheme covers nearly 80 crore beneficiaries.

In its monthly report, the Department cited the adverse financial position of the Centre and said that recent decisions on continuation of PMGKAY, a huge increase in fertiliser subsidy burden (both urea and non-urea), re-introduction of subsidy on cooking gas, reduction of excise duty on petrol and diesel and customs duty on various products have created a serious fiscal situation.

"It is vital that major subsidy increase/tax reductions are not done. In particular, it is not advisable to continue the PMGKAY beyond its present extension, both on grounds of food security and on fiscal grounds. As it is each family is getting 50 kg of grains, 25 kg at a nominal price of Rs.2/Rs.3, and 25 kg free. This is far beyond the need at a non-pandemic time," the report said.

The Expenditure Department further said that the budgeted fiscal deficit at 6.4% of GDP for this fiscal was itself extremely high by historical standards, and deterioration therein poses a risk of serious adverse consequences.