Ensuring food to all through PDS

“The only lasting solution for food price inflation lies in increasing agricultural productivity ... the public distribution system needs to be strengthened...”Manmohan Singh, Prime Minister. The above excerpt from the speech of the Prime Minister Manmohan Singh at the recently concluded Chief Secretary's conference in New Delhi is a reminder of the significant threat that inflation poses to maintaining growth momentum in the economy. Indeed, as Indian experiences post-independence shows maintaining a high rate of growth has become a necessity to take millions of Indian out of abysmally high level of poverty.Nevertheless,the rapid growth rate needs to be combined with adequate welfare policy measures to ensure its inclusiveness for providing benefits to all sections of the society. The most urgent requirement of inclusive growth is to ensure an adequate nutritional standards to all the sections of the Indian society. Despite rapid gains made by the country in food production India continues to lag behind in providing an adequate nutritional level for a large section of its population. The country was lowly placed at 67, two notches behind those in 2009 in the Global Hunger Index prepared on the basis of three leading indicators - prevalence of child malnutrition, rate of child mortality, and the proportion of people who are calorie deficient.Myseries of a large section of India's vulnerable population has been further compounded by the recent surge in food prices for the disproportionately higher burden that it imposes on poor and disadvantaged sections of the society. Indeed implementing a right to food has become an important policy objective for the Indian policy makers that call for a significant revamping and restructuring of the public distribution system in the country.

Public Distribution System

Operated through a network of more than 4.99 lac Fair Price Shops across the country India's Public Distribution System, is the largest distributional network of its kind in the world providing food safety net to more than 400 million people. Conceived initially as a rationing device to overcome war-time shortages during the British rule, Public Distribution System in the country has successfully transformed itself into a public welfare measure post-independence aimed at providing essential consumer goods to vulnerable sections of the population at cheap subsidized prices. The arrangements have been instrumental in attaining higher levels of household food security, nutritional levels and eliminating the threats of famines that characterized the British period. Besides, the Government has also used the Public Distribution system to keep an effective check on open market prices of essential items and in attempting socialization in distribution of essential commodities.

How Does PDS operate

The main objectives of food management in India is procurement of food grains from farmers at remunerative prices, distribution of food grains to consumers, particularly the vulnerable sections of society at affordable prices and maintenance of food buffers for food security and price stability. Public Distribution System in the country works with the aforesaid mentioned objectives under the joint responsibility of the central and the state governments. The responsibility of the Union government involves procurement, storage, maintenance of buffer stocks, transportation and distribution of food grains among the states. Food Corporation of India established in 1965 has been undertaking those operations on behalf of the central government. The government also set up an Agricultural Price Commission in the same year to ensure remunerative prices of food grains to the farmers through the announcement of Minimum Support Prices for major crops like rice and wheat. State governments are responsible for allocating the food grains among the people through the networks of fair price shops, identification of families eligible for allocations, issuance of ration cards and overall monitoring of the system to ensure that intended benefits reach the ultimate beneficiaries.PDS in India till 1992 operated as an universal measure available to all the consumers. To serve better certain regions and people a Revamped Public Distribution System was introduced in drought prone, hilly and remotely located areas in 1992.In order to reduce the burgeoning food subsidy and better targeting the really needy a Targeted Public Distribution System (TPDS) has been operating in the country since 1997.Under the TPDS, food grains are provided to people below the poverty line in every state determined on planning commissions estimate at a highly subsidized price and to those above the poverty line at higher rates, almost equal to the economic costs of the FCI in carrying the procurement and handling of food grains. Initially each poor family under TPDS was entitled to 10 kgs of food grains per month at specially subsidized prices. The quantity has been subsequently raised to 35 kgs. TPDS has also introduced a decentralized procurement system of the food grains, the procurement operations have been delegated to various state governments to encourage coverage of farmers under Minimum Support Price, improving efficiency of the PDS, providing food grains varieties more suited to local tastes and reducing transportation costs. In 2010-11, the central government released a total quantity of 632.46 lakh tones of rice and wheat under the TPDS and the actual off take of food grains by the various state governments have been 328.22 lakh tones. The continuous rises in the procurement prices of rice and wheat with issue prices-the price at which government sells food grains to beneficiaries left unchanged at 2002 level, the total food subsidy incurred by the government has increased to 58,242.45 crore.

Criticisms of the System

Public Distribution System has been the most important constituent of the strategy for poverty eradication and meeting nutritional standards of the people in the country since independence. However, serious criticisms have been labeled against its functioning ever since its inception. A recent World Bank report has categorically pointed that despite spending 1 percent of the country’s GDP, the impact of PDS on poor is very limited in many states, particularly a number of lagging states. Similarly a report by the Planning Commission in 2005 observed that for every Rupee four spent on the poor only Rupee one reaches the poor and fifty-seven percent of the intended food grain does not reach the intended people. Indeed there are many systemic challenges that plague the Public Distribution system of the country the most important being- limited benefit of food subsidies to the poor, high rate of leakages of the food grains to the open market, lack of transparency and accountability in functioning, regional and rural-urban disparities in the working of the system and the high burden of food subsidy that it imposes on the government. According to the National Sample Survey 2004-05 only 41 per cent of the grains released by government reach the intended households, rest of it lost in transportation, storage and diversion to the open markets.The system also appears to have a limited impact on the reduction of poverty in the country and as par some estimates the addition to per capita income due to the Public Distribution System has been Rs 2.01 per month in rural areas and Rs 3.40 per month in urban areas and for the country as a whole, the reduction in poverty due to PDS is hardly two percentage points of the poverty ratio. Operational costs of the public distribution have also been estimated to be too high and total food subsidy bill of the government has increased from Rs.9200 crore in 1999-00 to Rs.58, 242 crore in 2009-10.It has been reported that government has to undertake an total expenditure of Rs.4.27 to transfer one rupee of food and non-food income to the poor. There are also considerable regional disparities in the distribution of PDS benefits across the country-off takes of the food grains from the central pool by Northern poor states have traditionally lagged behind those in the richer Southern states.TPDS was started by the government in 1997 with a special focus on people below the poverty line but it has also failed to produce the desired impact. Apart from conceptual difficulties in determining an adequate measure of poverty in terms of income or nutritional status, there have been reports of large scale corruption in the identification of beneficiaries of the scheme. Dual price system applicable to BPL and APL families under TPDS has reduced the demand of food grains from the APL families putting adverse impact on the viability of fair price shops. Food subsidy bill of the government has further increased with the introduction of Antyodaya Anna Yojna by the Government in 2001 which envisages the supply of wheat and rice at only Rs. 2 and 3 per Kg respectively to one crore poorest of the poor families.

Streamlining the Public Distribution System

In its recently submitted report to Supreme Court the Central Vigilance panel led by retired Justice D P Wadhwa categorically remarked that Public Distribution System in the country is stinking of corruption, hoarding and black marketing. The committee observed that the Subsidized PDS food grain does not reach the poor who desperately need food grain in proper quantity and quality. In the context of the low nutritional status of country’s population, rising food prices, growing hunger and inequality the government has decided to put in place a comprehensive National Food Security act. The act proposes an allocation of 35kgs per household per month at Rs 3,2and 1 for rice, wheat and

millet for priority category households and 20 kgs at half of the Minimum Support Price for General population. The draft bill as circulated by the National Advisory Council intends to cover at least 90 percent and 50 percent of the population in the rural and urban areas with 46 percent and 28 percent covered under the priority categories respectively. Aside from creating new food entitlements, the landmark legislation intends to place the existing food related schemes on a new footing and envisages a new revamped role for the Public Distribution system in setting new standards for transparency and accountability in social programmes.

Aaadhar and the PDS

A wide ranging reform is expected in the Public Distribution of the country with the creation of Unique Identification Authority of India (UIDAI).The authority has been mandated to develop and implement the necessary institutional, technical and legal infrastructure to issue unique identity numbers to Indian residents. The unique identity numbers are expected to work as a single source of identity verification facilitating access to government and private sector services to poor and under-privileged citizens. The over-arching objective of Aadhar is to make public service delivery by Government more efficient ensuring that welfare scheme reach the intended benificiaries.The government is seriously considering the idea of linking the Public Distribution System of the country to Aadhar.The all India database created under the Aadhar programme can be effectively used to improve the coverage of the PDS system and better identification of the beneficiaries leading to better targeting and transparency in the system. The programme will also help in detection of duplicate and bogus ration cards and authentication of actual off take by the beneficiaries’. On more progressive fronts it is being argued that Aadhar numbers printed on the ration cards can be used to provide flexibility to the consumers on the choice of ration shops thus increasing competition among the shop-owners in providing services. The identification numbers issued will also help poor and marginalized people in opening bank accounts and the government can transfer direct food-subsidies to them through cash transfers.

The Way Ahead

Public Distribution System in has been at the center stage of the government’s welfare policies, tied to the implementation of the most rural development programs.However, the system has failed to deliver required benefits both in terms of expenditure involved and intended impact on the benificiaries.The country achieved self sufficiency in food grains production by early 70s but the achievement of food grain security at the national level has not percolated into the food grain security of individual households and level of chronic food in-security still remains high in the country. Despite running one of the most ambitious programmes of public distribution of food and other essential commodities, India continues to house more than 400 million mal-nourished people in the world and Forty- two percent children born in the country are under-weight. Working of the Public Distribution System in the country calls for an urgent reform both at the micro and the macro level. The planned National Food Security act and implementation of Aadhar provides a unique opportunity to reform the Public Distribution System in the country. Recent experiences in some states show how Public distribution system can work effectively when combined with adequate human monitoring, computerization of records, targeting of goods movement through Global Positioning Systems and other e-governance initiatives involving increased transparency and accountability. The charted direction of reforms in the system shall not only aim at making the availability of food-grains and other essential commodities to the people but ensuring an adequate nutritional standard for the citizens.