By Manthan, Organised by the Citizens for Accountable Governance
- An ADB study suggests that only 10% of poor receive intended benefits on the subsidies offered by the Public Distribution System (PDS) in Indiai.
- A Planning Commission estimate suggests that 61% of households are excluded from the Below Poverty Line (BPL) net and 25% of households become unintended beneficiaries.
- Around 23% of all Fair Price Shops (FPS) are not viable and survive solely due to leakages and diversions.
- On an average the central government spends Rs. 15.70 per kg of food grain as subsidy while the intended cost is only Rs. 5.02 per kg.
- A report suggests that the PDS Corruption estimate is around Rs. 20747 Crores.
The Public Distribution System (PDS) in India is the worlds largest food distribution system supplying essential commodities to around 18 million families. The PDS predominantly covers four commodities, namely – rice, wheat, kerosene and sugar. PDS serves the two-fold goal of guaranteeing a stable selling price for the farmers and providing essential commodities to the poor at affordable prices. Role of the PDS is set to expand with the introduction of the National Food Security Ordinance.
The Central and the State governments are jointly responsible for the functioning of the PDS. Central government, through the Food Corporation of India (FCI) is responsible for procuring, storing, transporting and allocating the food grains to the State Governments. The State governments are responsible for identification of families below the poverty line, allocation of ration through the Fair Price Shops (FPS), issuing ration cards and supervision.
In its current form, the benefits of PDS are given to families in the following categories 1.) Below Poverty Line (BPL), 2.) Above Poverty Line (APL) and 3.) Antodaya Anna Yojana (AAY). The allocation of food grains is such that families which fall under BPL and AAY categories are eligible to receive around 35 kg per month while the allocation for APL families vary between
15 to 35kg per month depending on availability. While, PDS makes grain available to BPL and APL families at differential prices, the AAY families can buy grain at Rs. 2/kg for wheat and Rs. 3/kg for rice.
SOME CHALLENGES
- The problem of identifying beneficiaries leads to high exclusion and inclusion errors. High exclusion errors lead to low coverage of BPL households. High inclusion errors lead to APL families receiving excessive food grain which increases the burden on the governments. There is also the added burden of ghost cards. According to the Planning Commission, there are 10 crore ration cards for 6.5 crore BPL families.
- Another challenge relating to the Public Distribution of India is that of leakages either during transportation or due to the existence of ghost cards. 48.3% of the food which was to be distributed by PDS was leaked via the ration shops. Leakage at various levels of the distribution chain leads to increased subsidy cost. The unintended subsidy cost is way higher than the intended cost. In Bihar, the total central subsidy for offtake by the BPL households is Rs. 50.98 per kg while the intended subsidy cost was Rs. 4.52 per kg.
- As of June 2011, there were around 5 lakh fair price shops (FPS) in the country. Issues relating to the viability of FPSs have been raised by various experts. Some of the issues include delay in receiving the goods, losses due to shortage of goods, unequal distribution of ration cards between APL and BPL holders, increasing transportation cost, low commission and blockage of working capital. Only 23% of ration shops were deemed to be viable by the expert committee.
THE NEXT STEPS
The National Food Security Ordinance builds on the Public Distribution System in India and expands its scope. For India to achieve food security, it becomes essential to address the challenges in the existing system with pioneering solutions.
Manthan calls for innovative policy solutions from young enthusiasts.
Manthan is a National level competition organised by the Citizens for Accountable Governance. The competition seeks to bring together India’s youth to present innovative and effective solutions to the top 14 problems facing the Indian economy and society in general. The winners of the competition will get an opportunity to present their recommendations to the top leadership of the two principal national political parties and thought leaders from other domains.
About 7,500 students from across the country, the top leadership of the two principal national political parties and thought leaders from other domains come together at the Thyagaraj Sports Complex, New Delhi on 2nd October, 2013. We believe that Manthan will be a unique opportunity for the youth to help set the agenda for the 2014 General Elections.