Type: Schemes

Central Idea

• The Union government’s Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to provide 5 kg of free foodgrains per month to 81 crore Indians will be extended for another five years.

What is PMGKAY?

• PMGKAY is a food security welfare scheme announced by the GoI in March 2020, during the COVID-19 pandemic in India.
• The program is operated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
• The scale of this welfare scheme makes it the largest food security program in the world.

Targets of the scheme

• To feed the poorest citizens of India by providing grain through the Public Distribution System to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
• PMGKAY provides 5 kg of rice or wheat (according to regional dietary preferences) per person/month and 1 kg of dal to each family holding a ration card.

At what rate are food grains provided under the NFSA?

• NFSA beneficiaries are entitled to receive food grains at highly subsidised rates.
• Under the food law, rice is provided at Rs 3 per kg, wheat at Rs 2 per kg, and coarse grains at Re 1 per kg.

Success

• Pandemic mitigation: It was the first step by the government when pandemic affected India.
• Wide section of beneficiaries: The scheme reached its targeted population feeding almost 80Cr people.
• Support to migrants: It has proven to be more of a safety net to migrant people who had job and livelihood losses.
• Food and Nutrition Security: This has also ensured nutrition security to children of the migrant workers.

Limitations of the scheme

• Corruption: The scheme has been affected by widespread corruption, leakages and failure to distribute grain to the intended recipients.
• Leakages: Out of the 79.25 crore beneficiaries under the National Food Security Act (NFSA), only 55 crore have so far received their 5 kg.
• Inaccessibility: Many people were denied their share due to inability to access ration cards.
• Low consumption: Livelihood losses led to decline in aggregate demand and resulted into lowest ever consumption expenditure by the people owing to scarcity of cash.
• Resale of subsidized grains: This in turn led to selling of the free grains obtained in the local markets for cash.

Back2Basics: National Food Security (NFS) Act

• The NFS Act, of 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
• It was signed into law on 12 September 2013, retroactive to 5 July 2013.
• It converts into legal entitlements for existing food security programmes of the GoI.
• It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
• Further, the NFSA 2013 recognizes maternity entitlements.
• The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
• Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.

Key provisions of NFSA

• The NFSA provides a legal right to persons belonging to “eligible households” to receive food-grains at a subsidised price.
• It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS).
• These are called central issue prices (CIPs).

Central Idea

• Andhra Pradesh’s Guaranteed Pension System (GPS) blends elements from both old and new pension schemes, offering the advantages of a guaranteed pension while not overly straining the state’s finances.
• This innovative system holds the potential to preserve India’s hard-won pension reforms.

What is the Andhra Pension System?

• A Hybrid Approach: The Andhra Pradesh Guaranteed Pension System Bill, 2023, recently approved by the state assembly, introduces a unique blend of the Old Pension Scheme (OPS) and the New Pension Scheme (NPS) implemented in 2004.
• Contributory Guarantee: This system ensures government employees a monthly pension equivalent to 50% of their last-drawn salary, including dearness allowance relief.
• Reason for Introduction: Andhra Pradesh introduced GPS as a response to resistance against NPS, which was viewed by many as inferior to the earlier scheme. The return to OPS was considered fiscally unsustainable, with the potential to drive the state’s fiscal deficit to 8% by 2050.

Breakthrough created

• Long-standing Pension Reforms: India struggled for over a decade to implement pension reforms that led to the introduction of NPS in 2004.
• Growing Discontent: Over time, public sentiment favored those receiving pensions under the old scheme, leading to discontent.
• Political Promises: Political parties capitalized on this discontent, pledging to return to the old scheme if elected.
• Andhra’s Middle Path: Andhra Pradesh’s GPS offers a middle ground, preventing a regressive return to the old scheme while addressing concerns about NPS.

How does the Andhra System work?

• Enhancing Attractiveness: The contributory system guarantees a pension equivalent to 50% of the last drawn salary.
• Balancing Financial Burden: Any shortfall in NPS returns is covered by the government.
• Current NPS Pensions: Presently, NPS pensions amount to around 40% of an employee’s last drawn salary. Therefore, the government only has to fund the remaining balance.

Alternative to NPS

• Contributory Nature: NPS is a contributory scheme, with both employees and employers contributing to a corpus invested for returns.
• Uncertainty: In NPS, the pension amount is not guaranteed, as it depends on corpus returns influenced by market conditions.
• Ignoring Inflation: NPS does not consider inflation or pay commission recommendations.
• Market Dependency: Opposition to NPS is fueled by fears of further reductions in pension due to adverse market conditions.

Why not revert to the Old Pension Scheme?

• Budgetary Constraints: Under OPS, pensions were financed through the budget.
• Unsustainable Growth: Pension liabilities for all states saw a compound annual growth rate of 34% for a 12-year period ending in 2021-22.
• Budgetary Impact: In 2020-21, pension outgo accounted for 29.7% of states’ revenues.
• Development Challenges: A return to OPS would strain government funds, hindering development efforts and operational financing.
• Competitiveness Concerns: Such a shift could negatively impact India’s ease of doing business and overall competitiveness.

Central Idea

• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has faced persistent criticism, with allegations of high corruption rates.
• A critical component meant to address this issue is the social audit units tasked with detecting malpractice within the program.
• However, the recovery of embezzled funds has been notably ineffective.

What is MGNREGS?

Issue of Inadequate Fund Recovery

• Current Recovery Rates: Statistics from the Union Rural Development Ministry for the ongoing financial year indicate that less than 14% of the amount flagged by auditors has been successfully recovered.
• Past Years’ Performance: The recovery figures for previous financial years paint a similarly bleak picture, with poor outcomes:

• 1. 2022-23: ₹86.2 crore was identified as recoverable, but only ₹18 crore (20.8%) was retrieved.
  2. 2021-22: ₹171 crore misappropriation was flagged, but only ₹26 crore (15%) was recovered.

• Social Audit Unit Independence: Section 17 of the MGNREGA Act mandates gram sabhas to monitor work execution, with independent social audit units in each state responsible for uncovering malpractice. However, their scope is limited to flagging issues, leaving recovery actions to state governments.

Fund-Starved Audit Units

• Seminar Insights: A recent Ministry seminar revealed a concerning scenario of underfunded social audit units lacking adequate training and personnel. These units play a crucial role in identifying cases of malpractice.
• Funding Delay Issues: While the Union government funds these audit units to maintain their independence from state authorities, units in some states, such as Karnataka and Bihar, have faced funding delays for nearly two years.

Poor Monitoring and Recovery

• Consistent State Trends: Over the past three years, certain states consistently report “zero number of cases” and “zero recoveries,” casting doubt on the effectiveness of monitoring efforts.
• Examples of Poor Recovery: States like Telangana have active social audit units flagging numerous cases, yet the recovery rates remain dismal. For instance, in the ongoing financial year, auditors identified ₹6.6 crore for recovery, but only ₹2,087 has been recuperated so far.
• Vigilance and Pressure: While the Centre’s vigilance and pressure on states to recover misappropriated funds are appreciated, there are concerns regarding states that identify multiple cases but struggle with recovery. Furthermore, states reporting no cases indicate a lack of effective monitoring.

Conclusion

• Challenging Recovery Landscape: The MGNREGA scheme’s social audit units serve as a crucial mechanism to combat corruption, but the inadequate recovery of embezzled funds threatens their credibility.
• Need for Adequate Resources: To make the audit process effective, it is imperative to ensure that social audit units are adequately funded, trained, and staffed.
• Balancing Act: Balancing scrutiny with recovery actions is vital to enhance the transparency and integrity of the MGNREGA scheme, which plays a pivotal role in rural employment and development.