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  1. How PDS can be made effective through better governance

How PDS can be made effective through better governance

The Odisha experience shows that PDS can play a pivotal role in bringing convergence and making India’s two important missions—food and nutrition security—successful in a short time.

New Delhi | Published: December 28, 2017 2:16 AM
PDS, FOOD SUBSIDY, GOVERNANCE, ECONOMY, INDIA The digitisation of beneficiaries’ database and verification of their identities through Aadhaar have resulted in scraping of over 23 million fake ration cards and savings of Rs 14,000 crore of annual food subsidy.

India’s public distribution system (PDS) is the largest food security programme in the world, which covers nearly 60% of the population and costs Rs 1.45 trillion—close to 1.4% of the national income. PDS has often been criticised for its structure, incessant corruption and leakages, and inclusion and exclusion errors in identifying the beneficiaries. The rolling out of the National Food Security Act (NFSA), 2013, and the overhauling of PDS in some states has created an aspiration that the system can be made effectual in making the households not only food secure, but also nutrition secure.

Among the states, Odisha, Tamil Nadu, Rajasthan, Chhattisgarh, Madhya Pradesh, Telangana and Gujarat have intensified reforms in PDS using latest technology and ensuring community participation—they have taken steps such as computerisation of offtake of grains, recording of procurement, storage and distribution, installation of electronic point of sale machines in fair price shops, and regular monitoring at every stage. The digitisation of beneficiaries’ database and verification of their identities through Aadhaar have resulted in scraping of over 23 million fake ration cards and savings of Rs 14,000 crore of annual food subsidy.

Amid serious discussions on replacing the in-kind transfers with cash transfers, with pilots carried out in Chandigarh, Pondicherry, and Dadra and Nagar Haveli, it appears difficult to let go of PDS, at least in the short run. The political sensitivities, complexity in dismantling the massive system built over time, and inadequate infrastructure to transfer money to beneficiaries may act as barriers.
Whether a revamped PDS, undoubtedly backed by strong political will and good governance, would pay off across the country is yet to be seen. We gauge its possibility by looking at the stellar performance of PDS in Odisha—a state marred with high incidence of poverty, hunger and malnutrition.

Odisha: A success story of governance

Odisha began with a state-of-the-art e-PDS from 2004 onwards to cover the entire network for greater transparency and accountability. PDS coverage in terms of population was expanded, grain prices were lowered, and entitlements were simplified and rationalised. The outlets were largely brought under the ambit of community, presently managed by gram panchayats, self-help groups (SHGs), cooperatives and non-governmental organisations, which ensured participatory management and transparency in administration. The entire distribution system was computerised and vans were mobilised to reach distant places that were otherwise disconnected from the mainstream distribution network. The movement of food grains from the warehouses to fair prices shops was monitored and tracked with GPS systems. The weighing scales were digitised, transport agencies were separated from distribution agencies and fixed distribution schedules were introduced. In fact, the overall system was strengthened with provisions for a grievance redressal mechanism.

A remarkable turnaround was visible in due course in terms of better coverage of eligible beneficiaries from 6.4% in 1993-94 to more than 58% in 2011-12, along with minimal targeting errors and plugging grain leakages. Some more statistics from the NSS showed an increase in the contribution of PDS grains in calorie intake from less than 2.4% to over 19.5% during this period, with larger benefits accruing to the rural households (21.3%). The consumption of cereals among weaker sections increased at a much faster rate than that for other privileged social groups. The estimates reveal that PDS contributed 34%, 32% and 26% of cereal consumption of SC, ST and OBC households, respectively, compared to 19% of general caste households. An increased access to subsidised cereals led to a decline in the share of cereal expenditure in total expenditure, which could be used for purchase of other commodities.

The incidence of calorie deficiencies in 2011-12 would have been 48.9% in a business-as-usual scenario, but the turnaround has been able to contain it to 17.2%. In absolute terms, nearly 14 million people could escape the curse of hunger due to revamped PDS. This translates to 31.7% reduction in calorie-deficient population in the state.

Perhaps an increasing divergence between market price and PDS price of grains made the latter more lucrative. The growing price advantage pushed the households to claim their eligibility which created demand-side pressures on the system to function better. The estimated grain leakages were capped to 11.4 % in 2011-12 from a staggering 85.8% in 1993-94 and 73.4% in 2004-05.

The functioning of PDS can be improved further. Firstly, nearly 16% of the below poverty line households were non-beneficiaries as they did not possess ration cards. Such unintended omissions could be minimised by strengthening the identification mechanism. Second, the density of fair price shops is still lower compared to many other states and efforts are needed to widen the distribution network to remote corners to enhance access.

Thirdly, there is still room for minimising wastage and losses resulting from poor handling and storage of grains. Continued research and improvements in logistics throughout the distribution chain is imperative. Lastly, appropriate choice of food including biofortified food, if distributed, can help in addressing recalcitrant micronutrient deficiencies such as vitamin A and anaemia.

The Cabinet has approved the setting up of the National Nutrition Mission (NNM) with a budgetary allocation of `9,046.17 crore for the next three years. NNM will cover all the districts in three years beginning with 315 high-burden districts. The aim is to reduce stunting by 2% annually, anaemia in young children, women and adolescent girls by 3%, and undernutrition and low birth weight among 100 million people.

Since each state has invested heavily in PDS and revamping is already under way, it would be cost-effective to make it as a platform to achieve some of the proposed goals under NNM. The respective states can provide necessary nutrients such as pulses and millets to women along with grains and possibly promote dietary diversification as per the culture, tastes and preferences of people. The ministry of women and child development has advocated bringing convergence with other ministries for the success of this mission. Clearly, PDS can play a pivotal role in bringing convergence and making India’s two important missions—food and nutrition security—successful in a short time.

Anjani Kumar and Seema Bathla are agricultural economists with the International Food Policy Research Institute and Jawaharlal Nehru University, New Delhi.

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