The PDS monstrosity
Source: By Jaydev Jana: The Statesman
To say that starvation depends ‘not merely’ on food supply but also on its ‘distribution’ would be correct enough, though not remarkably helpful. The important question then would be: what determines distribution of food between different sections of the community? ~ Amartya Sen, Poverty and Famines
Starvation in India is not the outcome of insufficient food. The actual problem is to deliver the food to those who need it. India’s chance of winning the battle against hunger through the implementation of the National Food Security Act (NFSA) depends predominantly on a radical overhaul ~ or, ideally, dismantling ~ of the economic monstrosity that masquerades as the Public Distribution System. The PDS is a leaky sieve. Around 53 per cent of subsidised wheat and 39 per cent of subsidised rice do not reach the targeted beneficiaries. Foodgrain is pilfered or diverted to the open market, as reported to Parliament by the Government of India in September 2011. Apart from diversion or leakages, a substantial amount of buffer stock gets damaged due to poor storage. An estimated 36,000 MT of foodgrain procured by the Food Corporation of India (FCI) for the PDS have rotted since 2008. This is enough to feed around 14 crore people at the rate of 250 grams per capita per day ~ a standard rate of daily consumption , as set by WHO. Waste of foodgrain co-exists with widespread hunger. Despite these systemic inadequacies, the NFSA sees the PDS as a good enough conduit to ensure food security to the hungry. Without a major reform of the system, the promise of making India hunger-free is likely to go haywire.
Besides foodgrain, highly subsidised blue-dyed kerosene is also distributed through PDS. Total diversion / leakage of PDS kerosene was estimated to be as high as 39 per cent of the total sale in 2004 by NCAER on the basis of a comprehensive study in 2005. The Public Distribution System was introduced by the British in Bombay in 1939 to ensure equitable distribution of foodgrain to urban consumers through a chain of subsidised shops. This, it was hoped, would check speculative activities. In the wake of the Great Bengal Famine it took the form of a regular ‘Rationing System’ in Calcutta and its industrial hinterland in 1943. Over the years, it has been downsized from ‘semi-universal’ to ‘Revamped PDS (RPDS)’ for “poor areas” (1992). Subsequently, it was remodelled as ‘Targeted PDS’ (TPDS) in 1997. Presently, with a network of more than 4.62 lakh fair-price shops distributing subsidised foodgrain and kerosene worth more than Rs 30,000 crore annually to about 180 million families, TPDS is perhaps the largest distribution network of its kind in the world.
Regretfully, the system is very badly managed. Genuine persons / households are deprived of their right to be identified as beneficiaries. This is because the errors of exclusion (of the poor) and the errors of inclusion (of the “non-poor”) have marred the method of identification. No wonder the PDS has been trivialised as ‘Public Deprived System’ by critics. The enrolled beneficiaries are not receiving PDS commodities regularly because of large-scale diversion, the extensive circulation of bogus, ‘ghost’, duplicate and ‘misclassified’ cards. Ironically, the operation of the Public Distribution System runs counter to democratic compulsions. To assess the effectiveness of Targeted PDS, the government sponsored evaluation studies by (i) Programme Evaluation Organisation (PEO) of the Planning Commission (March 2005); (ii) ORG-MARG (September 2005); (iii) NCAER (November 2007 and January 2009); and (iv) IIPA (October 2010 and February 2011). The PEO study found that nearly 58 per cent of the subsidized foodgrain issued from the central pool failed to reach the BPL families owing to identification errors, non-transparent operation and unethical practices. It estimated that for one rupee worth of income transfer to the targeted beneficiaries, the Government of India spent Rs. 3.65, indicating that one rupee of budgetary consumer subsidy was worth only 27 paise to the poor.
The study group also classified 16 States. The States were divided into five categories in terms of total leakage of PDS grain ~ States with abnormal leakage (more than 75 per cent): Bihar and Punjab; very high leakage (50 - 75 per cent): Haryana, MP and UP; high leakage (25-50 per cent): Assam, Gujarat, Himachal Pradesh, Karnataka, Maharashtra and Rajasthan; low leakage (less than 25 per cent): AP, Kerala, Odisha, Tamil Nadu and West Bengal. The ORG MARG study reported average diversion of 39 per cent of rice and 53 per cent of wheat. Its report also revealed diversions of wheat in Assam, Arunachal Pradesh, Haryana, and Chhattisgarh to the tune of 100 per cent, 96 per cent, 74 per cent and 71 per cent respectively. Reports of evaluation studies undertaken by the National Council for Applied Economic Research (NCAER) and the IIPA also revealed the dismal performance of Targeted PDS. Targeting/identification of the poor is like a hit-and-miss strategy because of three crucial infirmities. First, is there a method of flawless enumeration of poverty levels? Second, given the diverse socio-economic, cultural and geographical factors, there cannot be a fixed and absolute line dividing the poor and “not-poor”. Third, the existing method to identify the poor is like giving a person a pair of shoes and asking him to wear it regardless of the size. Consequently, TPDS is plagued by huge Exclusion Errors (of BPL) and Inclusion Errors (of APL). However, to minimise inclusion and exclusion errors, some States have moved towards a more inclusive PDS. Tamil Nadu has gone all the way to a universal PDS and other States that have made significant progress towards a universal or quasi-universal PDS (at least in rural areas) are Andhra Pradesh, Chhattisgarh, Himachal Pradesh, Kerala, Odisha, and Rajasthan. The inclusive approach, rather a broad-based PDS, shows better results in terms of general functioning and impact on poverty (NSS data).
In order to reform the PDS, the Central Vigilance Commission under the Chairmanship of Justice (retd.) DP Wadhwa had recommended “least human intervention and end-to-end automation and computerisation of the complete PDS chain”. The expert committee on the National Food Security Bill and the Task Force headed by Nandan Nilekani have also recommended a comprehensive computerisation of PDS and replacement of existing cards by Aadhaar-based/biometric/holographic ration cards to address such problems as leakages, rampant use of bogus cards, and duplicate cards. On the flip side, technology cannot be a silver bullet if there is no working gun to fire from. Technological intervention can on occasion be subverted. The performance of the existing PDS appears to be a typical case of the glass being half full and half empty at the same time. Though corruption is deeply entrenched in the system, it does not mean that the system is irredeemably lost. It would be less than fair to assume that people are like robots that can perform the task flawlessly. Any attempt at reform must examine whether the failure of the system is due to its design or is it because of poor governance. If it is the former, it makes sense to reform or even replace the system. If it is the latter, it is the strong political will that matters most of all. When the political masters firmly direct the bureaucracy to fix a dysfunctional system, things begin to change. Chhattisgarh and Tamil Nadu are two notable examples.
In terms of food security, the government can deliver double the benefit to the poor and at half the cost by reforming the PDS suitably. The money saved out of the calculated cost of implementing the NFSA can be spent on productive activities, such as building human capital, infrastructure etc. Reforming the PDS can open up a wide range of beneficial provisions. As Samuel Johnson had once remarked: “A decent provision for the poor is the true test of civilisation”.
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