The context of rising food prices, an anticipated National Food Security Act (NFSA), submission of reports in the Supreme Court on corruption and inefficiency of Public Distribution System (PDS) has finally brought issues of access to food, food procurement and distribution into discussion in the mainstream media, both print and electronic. The PDS is the most important instrument of the government for ensuring food security and also price stability. In the recent past, the PDS has failed in achieving both these objectives. In analysing the reasons for this, most of the mainstream discussions continue to bark up the wrong tree of PDS administration, whereas the root of the problem is that the PDS is a targeted system, rather than being universal.

The Public Distribution System in India was modified into the targeted public distribution system (TPDS) in 1997, as part of the larger reforms under the new economic policy of the 1990s. The TPDS divided the population of the country into those below the poverty line (BPL) and above the poverty line (APL); with PDS foodgrains being given to those in these two categories at differential prices. In 2002, another category was introduced to reach out to the ‘poorest of the poor’ through the Antyodaya Anna Yojana (AAY) which provides foodgrains at about half the BPL prices. Currently, about 40% of the BPL are in the AAY category getting rice at Rs. 3 per kg and wheat at Rs. 2 per kg. Whether a particular household will be eligible for a BPL card or not depends on two different processes. Firstly, the numbers of BPL households are determined based on the Planning Commission estimates of poverty (from NSS consumption-expenditure surveys) superimposed on the number of households from census data. Secondly, an independent exercise of identification is conducted based on a household census using criteria (proxy indicators) determined by the Ministry of Rural Development (MoRD), with the restriction that the number of poor to be identified by this process should be within the number estimated by the Planning Commission.

It is now well accepted that the official poverty line is more of a destitute line and leaves out many who are indeed poor from the estimates of poverty. To correct this, the Planning Commission set up the Tendulkar Committee which in its report has argued for raising the poverty line (mainly by correcting for price indices) to an extent where the All India poverty ratio would now be around 37%, compared to the official poverty estimates to 26%. It is still to be seen whether this will be accepted by the Government. However, even at this line the average calorie consumption is only 1775 calories which is much less than the officially accepted norms of 2400 calories for rural areas and 2100 calories for urban areas.

It is however argued by some that the purpose of the poverty line is not to provide a number for targeting but only as one of the many indicators of economic well-being that is comparable over time. The earlier 1993 Expert Group on Poverty Estimation even explicitly specified in its report that these poverty lines should not be used for the purpose of targeting public programmes. However, in practice the exercise of setting a poverty line and estimating poverty on the basis of this has very much been linked to determining allocations for public programmes. Another estimate that has been discussed is the Arjun Sengupta committee’s report on unorganized sector which argued that 77% of the population in India lives on less than Rs. 20 a day, and defined this group as being “vulnerable”.

In fact this has been one of the reasons for the problems of inclusion and exclusion reported with the different kinds of identification criteria used. Currently the government uses a 13-point criterion with proxy indicators such as ownership of houses, land, toilets, etc.This method is now being revised as it has proved to be problematic. While there are many arguments for why this particular criteria cannot work in identifying the poor, the point being made here is that whatever the criteria, as long as there are externally given ‘caps’ on number of BPL households, no identification criteria can ensure that there are no exclusion and inclusion errors.

While not going into these different estimates and definitions, what is clear is that the lives of millions of poor in the country cannot be determined by these technical exercises of estimating poverty. Allocations for public programmes must be delinked from the poverty line, which in spite of any number of revisions cannot avoid an element of arbitrariness. Given the fact that we have the highest malnutrition rates in the world, there cannot be an alternative to provision of universal services especially in relation to food along with education, health, employment and social security.

In fact, most state governments (Bihar, Madhya Pradesh, West Bengal, Orissa, Chhattisgarh etc.) have been repeatedly complaining that the quota set by the Planning Commission for BPL population for their respective states is highly inadequate and many deserving poor get left out. Many have in fact expanded the BPL quotas using their own funds and including a much larger number of people in the BPL net (this includes most of the Southern states, Madhya Pradesh, Chhattisgarh, Orissa). Therefore, even if the government manages to arrive at an identification methodology which uses the ‘best’ indicators to identify the poor, many will be left out because the ‘caps’ on how many can be identified is set by a completely different process based on a poverty line that has been arrived at using consumption expenditures.

The experience with the targeted public distribution over the last ten years or so shows that this has failed. Independent surveys show large inclusion and exclusion errors, with a large number of poor being left out. The data from the 61st round of the NSS shows that only 44% if the households in the poorest quintile have BPL cards, 17% of the households in the richest quintile do so. The inclusion errors, expectedly, are lower in states that have a higher coverage of the PDS. States such as Tamil Nadu and even Chhattisgarh which are considered ‘best’ practices in the implementation of PDS have done precisely this. While Tamil Nadu has a universal PDS with the same quotas and prices for all (with a higher quota for those in the AAYcategory), Chhattisgarh has also expanded coverage to about 74% of its population while the central government quotas for these states are 35% and 42% respectively. Along with this, in both states there are have been other reforms in the PDS such as use of technology, making PDS shops viable etc.

While universalisation of the PDS will go a long way in making it more effective, it is not to argue that there are not other reforms required to plug the leakages in the system. The reports of the Supreme Court appointed Wadhwa Committee point out a number of issues that make the PDS a corrupt and inefficient system. Among the issues these reports raise include corruption because of the presence of middle-men at all stages such as private storage agents, transporters, millers and so on, who are in a nexus with the politicians and bureaucracy resulting in the leakage of foodgrains meant for the PDS into the open market even before it reaches the village fair price shop (FPS). To tackle this problem the report rightly suggests that we should move towards direct doorstep delivery of foodgrains to the fair price shop by the government. For this, the government will also have to create the infrastructure for adequate storage and transport facilities at as decentralized a level as possible.

The report also raises the issue of corruption at the FPS level which has been linked to, among other issues, the viability of the FPS, which has taken a hit especially after the introduction of a targeted system which decreased the scale of grains and number of beneficiaries involved. Suggestions such as increasing the commission to the ration dealers, allowing the FPS to sell other items as well have been made which are well worth considering. Further, vigilance committees at the community level as mandated by the PDS control order have to be set up and activated to ensure local accountability of the ration dealer. De-privatising fair price shops and handing them over to gram panchayats, SHGs and co-operatives will also contribute to lower corruption in the PDS.

Another issue, that is reported by the Wadhwa Committee is the use of technology such as bar coded ration cards, use of biometrics, end-to-end automation, toll free help line, sms alerts to panchayats on grain movements, GPS systems for trucks carrying FCI foodgrains and so on, to minimize leakages. Experiences of different states have suggested that these can indeed contribute to increasing the efficiency of the system and resources must be invested into these. However, believing that these innovations (including the UID) can be the panacea to all the problems faced by the PDS, in the absence of deeper structural reforms towards universalisation and a high political priority is gravely misplaced.

There is a need to look at each of the issues raised above in detail and there are also many other that have not been mentioned here. For instance, the role of PDS can also be analysed in terms of its potential to revive Indian agriculture. For this reforms such as increasing procurement from a wider network of states across the country, expanding the items procured (and distributed) to include pulses, coarse cereals and oilseeds, setting up decentralised systems of procurement and distribution etc. need to be pursued.

The National Food Security Act should be seen as an opportunity for pressing for universalisation of PDS (along with administrative reforms) to make the system more effective. We must not allow an Act to remain an entitlement for only a few (as is being proposed), especially because as long as PDS remains targeted even the few who are entitled to it are unlikely to get any benefits.

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