For those pointing out that this is "Govt. distortion of markets", please see Agricultural subsidies offered in the US and Europe, which "distort" markets a lot more.
Personally, I think this is an excellent idea. I really liked the story of the lady who said that her morning had been freed because she did not have to cook breakfast anymore. And for many of those using this place, it would similarly free up their time.
Another important point: unlike the gross fast food that you see in the US, this is actually very nutritious. Lentils are a great source of protein and other essential amino acids. The canteens also provide free drinking water. I can see this more as a public health program than a "wasteful subsidy": save millions of man-hours wasted by poor health by providing a decent amount of healthy food to everyone.
As for the idea of indirect assistance via tokens or food stamps: I would wager this is better since the Government can use economies of scale to provide food at low prices. Not to mention: they have quality control over exactly what is offered to the public.
India grows more than enough food to feed all its citizens. I'm glad to see that schemes to provide nutritious meals at subsidized prices to people are finally coming through.