Garib Kalyan Yojana to clear FCI's bulging stocks, but may hurt finances

FCI already had an outstanding unpaid loan of around Rs 254,000 crore from National Small Savings Fund (NSSF) as on March 31, 2020

The government’s decision to extend free grain distribution under the PM Garib Kalyan Yojana (PMGKY) for another five months will not only provide relief to millions of poor people, but also help clear bulging inventories of the Food Corporation of India (FCI).

However, the subsidy burden is expected to balloon and that could further strain the already stretched finances of the FCI, by increasing its dependency on loans and market borrowings.

This is unless the government decides to increase its budgetary allocation for food subsidy in the current fiscal to pay for the extra grain distribution. But that looks highly improbable in