Tuesday, June 14, 2011


A raging controversy is going on at Delhi regarding the fate of the Public Distribution System (PDS) which was designed and given shape over years of efforts to protect the poor and the impoverished from the scourge of hunger. Though in paper the PDS is one of the marvels of Indian ingenuity, the ground reality tells a different story. With a network of more than 400000 retail outlets popularly known as ration shops, PDS is well placed to deliver food grains to targeted population but is plagued by pilferage to the extent of 60% by grain mafias working with impunity and invariably under the tutelage of corrupt politicians, depriving many of those eligible to receive the state largess. Presently each family belonging to Below Poverty Line (BPL) as defined by the government norms based on economic status is supposed to receive 35 kg of food grains besides sugar and kerosene at subsidized rate. If the system works efficiently and honestly poverty would never be an issue in the country.

There was a time in India's past when every family had a Ration Card (RC) for getting rice, wheat, sugar and kerosene at subsidized rates and RC doubled as an important document for establishing the identity of a family with address. Due to exclusion of middle class families and upper income groups from the purview of PDS the relevance of RC was lost in many states and "targeted delivery" became the norms under which families were divided into below and above poverty line categories. This complicated arrangement has created so much confusion that there are millions of bogus RCs floating in the country and added to this lack of efficient monitoring practices made it a free for all situation with pilferage becoming a norm rather than an exception. While every body including the Planning Commission recognizes this bitter truth, precious little is done to stem this rot and grain looting goes on merrily!

The National Advisory Council ( NAC) which is a parallel center of power at Delhi wanted GOI to radically change the PDS program with a heavy political agenda and according the recent Food Security Bill being drafted by this body, each person will have the entitlement in stead of treating family as a unit and population will be divided into priority and general category beneficiaries. 46% of the rural population and 26% of the urban population will come under priority category while 29% in rural households and 22% in urban households form the general category beneficiaries. While priority beneficiary is entitled to get 7 kg of food grains per month at subsidized price, general category beneficiary will get 3 kg of food grains. The draft bill is vague with respect to many details and it is unlikely to become a law immediately. Probably it is being reserved for the 2014 general election to capture the "aam aadmi" votes!

Interestingly the powerful World Bank (WB) which has always meddled with the economies of many developing countries as a quid pro for disbursing soft loans, has a different agenda on food grain transfer system presently in vogue in India. According to their recent report, India has to wind up its PDS and in stead put in place a "cash transfer" program that will give Rs 1100 for each BPL family in lieu of supply of subsidized food grains. The assumption is that this money will be used by the household to buy its food grain requirement from open market. Though the concept is good on paper, it is doubtful whether this system will work in a country ridden by one financial scam after another and the credibility of the government is at its lowest ebb. If food grains mafia has taken control of the PDS, the cash transfer regime can be expected to create economic mafia with expertise to usurp the "food grants" from the poor beneficiaries through many ingenious ways. Ultimately it is the ability to manage that counts and India has amply demonstrated that it has a long way to go to muster even a "pass" in this area, let alone "distinction"!

The logic in the WB argument is that PDS incurs Rs 45,000 crore every year to supply BPL families wheat, rice, kerosene and sugar of which 60 per cent of grain is looted by the food mafia is understandable. But its remedy in the form of "cash for food grain" alternative is fraught with many implications not understood by this multilateral financial institution. For instance WB is not clear as to how this financial largess will be monitored, or whether the sum suggested is adequate enough to feed a family of at least four members. Is it not interesting that while the NAC is pressurizing GOI for increasing allocation of food grains to the poor under the proposed Food Security Act, the Government seems to be actively considering the WB report. What will be the fate of the existing ration shops? What about the grain procurement and storage functions being carried out by the Food Corporation of India? How will the country manage to insure food security through food reserves as per international norms? If reports are to be believed "cash for grains" program is being tried in Delhi on a pilot basis and eventually GOI may allow options to the states to choose between "grain transfer" and "cash transfer" systems depending on their ability to manage!


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