India have eradicated ‘extreme poverty’ via PMGKY: IMF paper

A new (International monetary fund) IMF paper titled ‘Pandemic, Poverty, and Inequality: Evidence from India’ reveals that extreme poverty was maintained below 1% in 2020 due to Pradhan Mantri Garib Kalyan Ann Yojana (PMGKY).

Author

• Surjit Bhalla, Executive Director, IMF for India, Bangladesh, Bhutan and Sri Lanka and former part-time member of Prime Minister’s Economic Advisory Council; New York-based economist Karan Bhasin; and Arvind Virmani, former Chief Economic Adviser to the Government of India.

Findings

• The pandemic shock is largely a 'temporary income shock'. By using temporary fiscal policy interventions i.e expanding food distribution, a large part of the shock was absorbed.
• Consumption inequality (with the incorporation of food transfers) has dropped to the lowest level - equal to that observed in 1993-94.
• Consumption growth was found to be higher in 2014-19 as compared to 2004-11
• Extreme poverty has been eradicated in India
• Extreme poverty was as low as 0.8 per cent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020.
  • Extreme poverty by World Bank: share of people living under $1.9 every day as per 2011 purchasing power parity terms.
• The low level of extreme poverty– around 0.8 % in both 2019 (0.76 %) and 2020 (0.86 %) – is suggestive of the need for the official poverty line to now be PPP of $3.2.
• Real inequality, as measured by the Gini coefficient, has declined to near its lowest level reached in the last forty years.

India’s food distribution during the COVID pandemic

• Under the PMGKY, free ration distribution was initially announced from April to June 2020 and was later extended till November 2021.
• Under it, 5 kg of free food grains were offered to all beneficiaries over and above the normal quota under National Food Security Act.
• Apart from wheat and rice, each family member was also given 1 kg of Chana Dal monthly for free.
• The scheme is also included in the Centre's 'One Nation One Ration card' (ONORC) drive to allow all National Food Security Act (NFSA) migrant beneficiaries to avail of sufficient food grains from any fair price shop, anywhere in the country by using their existing ration card with biometric authentication.
• The Centre claims that 69 crore NFSA beneficiaries, i.e. 86% NFSA population have been brought under the ONORC plan by December 2020.

Pradhan Mantri Garib Kalyan Anna Yojana

• PMGKAY is a part of Pradhan Mantri Garib Kalyan Package (PMGKP) to help the poor fight the battle against Covid-19.
• Nodal Ministry: Ministry of Finance.
• It was initially announced for a three month period (April, May and June 2020), covering 80 crore ration cardholders. Later it was extended till November 2020.
• Phase-I and Phase-II of this scheme were operational from April to June 2020 and July to November 2020 respectively.
• Phase III of the scheme was operational from May to June 2021.
• Phase IV of the scheme is currently operational for July-November, 2021 months.
• The scheme aimed at providing each person who is covered under the NFSA (National Food Security Act 2013) with an additional 5 kg of grains (wheat or rice) for free, in addition to the 5 kg of subsidised food grain already provided through the Public Distribution System (PDS).
• The new version of the PMGKAY lacks one of its important components which was there in 2020 PMGKAY i:e free-of-cost 1 kg pulses per month to each household covered under the NFSA.

National Food Security Act (NFSA), 2013:

• Objective: provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity.

Key features:

• Coverage and entitlement under Targeted Public Distribution System (TPDS): covers 50% of the urban population and 75% of the rural population, with a uniform entitlement of 5 kg per person per month.
  • However, the poorest of the poor households will continue to receive 35 kg of foodgrains per household per month under Antyodaya Anna Yojana (AAY).
• Subsidised prices under TPDS and their revision: For a period of three years from the date of commencement of the Act, Foodgrains under TPDS will be made available at subsidised prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains.
• Identification of Households: by States/UTs under TDPS determined for each State.
• Nutritional Support to women and children: Children in the age group of 6 months to 14 years and pregnant women and lactating mothers will be entitled to meals as per prescribed nutritional norms under Integrated Child Development Services (ICDS) and Mid-Day Meal (MDM) schemes. Malnourished children up to the age of 6 have been prescribed higher nutritional norms.
• Maternity Benefit: Pregnant women and lactating mothers will also be receiving a maternity benefit of Rs. 6,000.
• Women Empowerment: For the purpose of issuing ration cards, the eldest woman of the household age 18 years or above is to be the head of the household.
• Grievance Redressal Mechanism: The grievance redressal mechanism is available at the District and State levels.
• Cost of transportation & handling of food grains and Fair Price Shop (FPS) Dealers’ margin: Will be provided by the Central Government to meet the above expenditure.
• Transparency and Accountability: In order to ensure transparency and accountability, provisions have been made for the disclosure of records relating to PDS, social audits and the setting up of Vigilance Committees.
• Food Security Allowance: In case of non-supply of entitled foodgrains or meals, there is a provision for food security allowance to entitled beneficiaries.
• Penalty: If the public servant or authority fails to comply with the relief recommended by the District Grievance Redressal Officer, the penalty will be imposed by the State Food Commission according to the provision.

Exam track

Prelims take away

• National Food Security Act (NFSA), 2013
• Pradhan Mantri Garib Kalyan Anna Yojana
• Pradhan Mantri Garib Kalyan Package (PMGKP)
• IMF
• Poverty - How it is measured, poverty line etc.

Mains track

Q. COVID-19 pandemic has accelerated class inequalities and poverty in India. Discuss.