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Tackle Leakage Problem:Revamp Public Distribution System, by Dr. Vinod Mehta,17 May 2007 Print E-mail

Economic Highlights

New Delhi, 17 May 2007

Tackle Leakage Problem

Revamp Public Distribution System

By Dr. Vinod Mehta

India’s Public Distribution System (PDS) as it has grown over the years has become at times ineffective.  One can still read reports about grains not reaching the targeted people, leading to starvation deaths. The implementation of the PDS has not measured up to the public’s expectation. The system does not seem to be working well in many places, especially in the rural North and north-eastern States. Leakages are quite rampant.

At the national level leakages from the PDS amount to nearly 1.5 times the actual amount of grain needed. A Planning Commission report on the PDS states: “In the year 2003-04, out of 14.07 million tonnes of foodgrain issued to 16 States at BPL (below poverty line) prices from the central pool, only around 5.93 million tonnes were delivered to the poor families.”

Some leaders have expressed their concern over peculiar dilemma of excess food and low consumption. In the past one decade, the production of foodgrain has gone up and India has started exporting foodgrains and yet there are many people in certain areas who are reported to have died of hunger. With comfortable grain production there is every reason to ensure that every poor household gets adequate grain at reasonable prices.

The need for PDS was felt when the food production had dropped in 1958. Earlier there was rationing system introduced during the Second World War to manage limited food stock but discontinued in 1943. It was again introduced in 1950 to regulate public distribution of foodgrain as a deliberate social policy. The main idea behind public distribution system was: a) to provide foodgrain and other items of daily necessities to the poorer sections of the society at affordable (subsidized) price; b) to influence the market prices of cereals to keep them under control and c) to ensure equity in the matter of distribution of essential commodities. In other words PDS from rationing evolved into national food security system.

The System was established during the period when India was facing shortages of essential agricultural commodities. For a number of years it served the purpose well for which it was introduced. However, a situation has reached where there is no shortage of foodgrain etc., but still some of the poorer sections of the society are not getting the foodgrain they need. It has been attributed to various factors. Firstly, the PDS itself leaves much to be desired. The grain, though available in godowns, is unable to reach those sections of the society, which need them, the most. The district administration has been found wanting in transporting the grain to the poorest of the people.

Secondly, even after subsidies the price of grain is so high that many poor people in the target group cannot afford to buy it. It is common knowledge that approximately 36% of the population lives below the poverty line, which means that their income is not sufficient to buy adequate quantity of food. About 80% of the poor people live in rural and tribal areas. One reason for the relatively high price of subsidized food is the regular increase in the procurement price of grain as well as rising components of cost of the Food Corporation of India.

Another reason that the poorest sections of the society are not able to meet their food requirements is that our public distribution system concentrates heavily on rice and wheat and leaves out coarse grain like maize, barley, millet, and sorghum. Government’s support to rice and wheat has led to neglect of these grains, which are not only relatively cheaper but staple diet of many of the rural people.  Since there is no support price for them the farmers are shifting to the production of wheat and rice. Hence the situation when the government policy has favoured wheat and rice at the cost of poor peoples’ staple diet.

However, as things stand, there is a surplus of grain but people do not have sufficient purchasing power to meet their requirements from market. The country needs to approach this problem at various levels. Firstly the employment opportunities for these people will have to be increased so that they earn enough to buy their grain requirement from the market. What they need is remunerative employment on a regular basis.  Food for work programme is not enough. It needs to be strengthened. 

Secondly, we should look at the institutional arrangements to distribute the foodgrain directly to the starving people. In such cases there is no need of selling them any grain as they can’t afford to buy but institutions like Panchayat should see to it that these people do not go hungry. The district administration should help Panchayat organize community kitchens and the cost for giving food to them should be borne by the government itself.

Thirdly, the emphasis should be shifted from production of rice and wheat to production of coarse grain, which is cheaper and affordable, by many of the poorer sections of the society. Unlike rice and wheat, coarse grains do not need lot of water and fertilizer and are cheaper to grow in areas of scarce water. PDS based on wheat and rice does not serve the purpose.

In States where wheat is not a staple diet diversion of wheat to channels other than household is quite natural. “Up to 100% of the wheat in six of the eight northeastern states is being diverted from the Public Distribution System (PDS),” admitted the Minister of Agriculture in reply to a question in the Lok Sabha.  A survey has indicated that the average diversion of wheat and rice in India from the PDS scheme is 53% and 39%, respectively.  These leakages need to be plugged.

Since the output of grain has reached comfortable level, one may ask if it is essential to keep large quantities of grain in state godowns  beyond a certain level. The cost of storing so much grain is also responsible for keeping issue prices very high. We may have to think of alternative ways so that costs of storing grains become lower. Keeping in view the costs involved, it is uneconomical to store grain by the state beyond a certain level. One way could be to issue food coupons so that the poorest people may buy their food requirements from the market and the state reimburses the money to the shopkeeper.

But it will be difficult to implement this in tribal and remote areas. However, the nation must find a way out to balance the grain storage requirement of the nation from the security point of view and need of the poorest people to get food. The money saved on storage costs could perhaps be used to give free grain to the poorest people in times of distress. The long term solution however, is to generate jobs and give adequate purchasing power to the poorest of the people so that they can purchase their own food from the market.---INFA

 (Copyright, India News and Feature Alliance)

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