A Supreme Court-appointed panel headed by former apex court judge DP Wadhwa has indicted the public distribution system (PDS) for being ?inefficient and corrupt?. While this is hardly surprising?we have argued the same in these columns in the past?it does once again bring to the fore the need to revamp the whole system, especially in the context of rising food prices and huge food stocks. Food subsidies paid by the central government have more than doubled over the last four years to Rs 56,000 crore in 2009-10, but governments at the Centre and in the states have yet to take any major steps to improve delivery and reduce leakages from this massive assistance. Government audits have time and again found that there is significant potential for improving the efficiency and effectiveness of the PDS. What is most disturbing about the failure of the PDS is its inability to reach out to the really impoverished.
The best evidence of the poor reach of PDS and its inefficient targeting was brought out by a recent report of the National Sample Survey Organisation. The report notes that though the country can boast that ration cards have been delivered to two-thirds of urban households and four-fifths of rural households, the extent of distribution varies substantially across the states. For instance, almost a third of the rural households in poor states like Orissa and Chhattisgarh have yet to get a ration card, and the scenario is worse in urban households in states like Bihar and Assam where more than half the households have yet to get one. And the most damning indictment was the fact that more than half the rural households possessing less than 0.01 hectares of land had no ration card at all while 77-86% of households with larger landed assets held a ration card of some type. This clearly shows that the current PDS system has failed to reach the needy. But having a ration card is only one part of the story, and the more dismal one is the share of PDS grains in actual consumption. The numbers on this show that for the country as a whole, the share of PDS rice in total rice consumption of urban and rural households was in the 11.2-13.2% range while in the case of wheat it was still a lower 3.8-7.3%. The Economic Survey suggested a more practical approach to subsidies through direct cash transfers to the poor who can then buy food at market prices. At least that will remove the inefficiency and waste in the PDS, as it exists today.
