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Is cash the only thing you need to buy food?

By A. Mahendran and S. Indrakant

On the 8th November 2016, while we were standing near a bank in Puducherry, speaking about current headlines in the newspapers, we saw an old woman limping towards us with great difficulty – but she was jubilant. She had opened a bank account (under PMJDY) without any deposit and the government had just deposited Rs. 1322.75 in her Account (under Direct Benefit Transfer (DBT) Scheme in lieu of Public Distribution System (PDS) ration). She planned to withdraw 1000 rupees to buy food and keep the remaining for the proverbial rainy day. She revealed that both her husband and brother were addicted to alcohol and it was her female relatives – with their limited earnings – who took care of the basic needs of eleven members of the family.

On the next day, we happened to meet the same woman again. We asked if she’d bought some food with the cash she withdrew from the bank after having waited in a queue for a long while. She told us she got two 500 rupee notes and when she went home to buy food, no shopkeeper was accepting the notes and the bank was also closed by then. This incident made us think about various dimensions of the policy of introducing the DBT Scheme in the place of the PDS and the demonetisation of 500 and 1000 rupee notes.

The PDS has faced criticism from several quarters – the basic critiques are centred around the loop-holes in procurement of food grains from farmers/millers,  losses in grain storage in FCI godowns,  leakages in transportation of grains from storage points to Fair Price Shops (FPS)  and errors in identifying deserving beneficiaries.

In this background, the utility of running PDS with huge subsidy has become controversial. The Union Government launched the Direct Benefit Transfer (DBT) Scheme as an alternative to PDS and this is being implemented on an experimental basis in Puducherry and Chandigarh from September 2015. Does DBT Scheme help the needy? What is the perception and experience of the households and other stakeholders involved? To seek answers to these questions, we interacted with ration cardholders and other stakeholders in Puducherry and Chandigarh.

Puducherry

The banks and ATMs happen to be a long distance away from their home and they are compelled to take and auto or a bus. They are then forced to wait for days to withdraw cash because the bank is often overcrowded during the beginning of the month.

In Puducherry, we spoke with about 40 cardholders who happened to be homemakers. They expressed their satisfaction with the use of electronic weighing machines in FPS and bio-informatic ration cards and also told us that the PDS material suffices for about 15 days. The respondents also spoke about some of the difficulties they encountered under the DBT scheme. The banks and ATMs happen to be a long distance away from their home and they are compelled to take and auto or a bus. They are then forced to wait for days to withdraw cash because the bank is often overcrowded during the beginning of the month. Further, there is no intimation about the cash deposited in their account and the problem in rural areas is much more severe. Some households do not receive the cash in spite of submitting all the relevant documents and some women respondents complained that the cash deposited in their accounts is forcefully taken away by their alcoholic husbands or brothers.

Bank officials, for their part, told us that in the beginning of the month, their branches have lined up queues of ration shop card-holders heckling among themselves. The FPS dealers complained that in the absence of an alternative source of income, families find it increasingly hard to sustain themselves.

Respondents queue up outside banks and ATMs

Respondents queue up outside banks and ATMs | Photo Courtesy: The Hindu

Chandigarh

The depot-walas obliged the officials since they were given the impression that the DBT Scheme was temporary. It has, however, continued for more than a year now while depot-walas (who solely depend on FPS) are finding it difficult to make both ends meet. 

Our discussions with depot-walas (Fair Price Shop Dealers) and some of the residents was very enlightening. It appears that an opinion survey was conducted for the name’s sake before the introduction of the DBT to justify the implementation of the scheme. About 150 households for every 1000 households in selected sectors (where households didn’t heavily depend on PDS) were selected for the survey.

The survey found that such households are ‘prefer to get ready cash instead of waiting in the queue for a long time to get rations’. To build up opinion in favour of the DBT Scheme, officials took the support of depot-walas to convince the cardholders that they would get a ‘healthy amount’ (i.e. substantial amount) under the DBT Scheme in lieu of rations from PDS but no actual figure was disclosed; they were also instructed to fill in new forms issued under the DBT Scheme to BPL (Below Poverty Line) households. The depot-walas obliged the officials since they were given the impression that the DBT Scheme was temporary. It has, however, continued for more than a year now while depot-walas (who solely depend on FPS) are finding it difficult to make both ends meet. Rallies have been held in Chandigarh against the DBT Scheme by both depot-walas and cardholders.

Our conversations with the cardholders (resident households) were equally revealing. Most of the respondents happen to be women and among them, there was near unanimity in favour of the PDS. They told us that the material supplied under the PDS earlier met their food requirements for 20 days in a month and they only had to depend on the market to meet their demand for remaining 10 days. On the other hand, the cash received under the DBT Scheme is only sufficient enough to buy food for 10 days and even then, this cash is not regularly credited to their account.

Conclusion

The DBT Scheme has been introduced to overcome the deficiencies of PDS.  The success of DBT Scheme crucially depends upon the extent of financial literacy, financial inclusion and physical accessibility of food grains throughout the length and breadth of the country. The response of households and stakeholders in Puducherry and Chandigarh indicate that massive efforts are needed to meet these prerequisites since the scheme has also had unintended consequences for both, the cardholders and FPS dealers.


A. Mahendran is a Ph.D. research scholar at the TATA Institute of Social Sciences, Mumbai.
S. Indrakant is RBI Chair Professor, Council for Social Development, Hyderabad. Views expressed in this article are personal. 
Featured Image Credits: My Gov
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