Public Distribution System

Introduction
Public Distribution System commonly known as the food security system is used for the distribution of subsidized food grains for the poor. The goal of the system is to guarantee a market for farmers and secure the right to food for the poor. Over the years, PDS has become an important part of overnment!s policy for management of food economy in the country. PDS is supplemental in nature and is not intended to make available the entire re"uirement of any of the commodities distributed under it to a household or a section of the society. The PDS system is operated under the #oint responsibility of the $entral and the State overnments. The $entral overnment, through %$&, has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State overnments. The operational responsibility including allocation within State, identification of families below the poverty line, issue of 'ation $ards and supervision of the functioning of %PS, rest with the State overnments. (nder the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States)(Ts for distribution. Some States)(Ts also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

*owever, there are several problems with this massive system which includes+ shop owners are notorious for stealing and over,charging the already malnourished beneficiaries of the system often receive poor "uality food grains ration cards are traded for money heavy bureaucratic procedures prevent many poor &ndians from obtaining ration

cards -eyond corruption, the PDS poses various other challenges.

Evolution of PDS in India

.volution of public distribution of grains in &ndia had its origin in the /rationing/ system introduced by the -ritish during the 0orld 0ar &&. &t was really the generation of 0orld 0ar/s own compulsions that forced the then -ritish overnment to introduce the first structured public distribution of cereals in &ndia through the rationing system , sale of a fi1ed "uantity of ration to entitled ration card holders in specified cities)towns. The system was started in 2343 in -ombay and subse"uently e1tended to other cities and towns. -y the end of 2354, 24 cities was brought under the coverage of rationing and by 2356, as many as 772 cities)towns were covered. The Department of %ood under the overnment of &ndia was created in 2358, which helped in food matters getting the serious attention of the government. &n the first five year plan, the system, which was essentially urban based till then was e1tended to all such rural areas which suffered from chronic food shortages. &t was also decided to have two variations of the system Statutory Rationing Areas + %oodgrains availability was supposed to be only through the 'ation Shops Non-Statutory Rationing Areas + 'ation shops would only supplement the open market availability. The system, however, continued to remain an essentially urban oriented activity. PDS, till 2338, was a general entitlement scheme for all consumers without any specific target. 'evamped Public Distribution System 9'PDS: was launched in ;une 2338 in 277< blocks throughout the country.

REVAMPED PUBLIC DISTRIBUTION SYSTEM (RPDS)

The 'evamped Public Distribution System 9'PDS: was launched in ;une, 2338 with a view to strengthen and streamline the PDS as well as to improve its reach in the far,flung, hilly, remote and inaccessible areas where a substantial section of the poor live. &t covered 277< blocks wherein area specific programmes such as the Drought Prone =rea Programme 9DP=P:, &ntegrated Tribal Development Pro#ects 9&TDP:, Desert Development Programme 9DDP: and certain Designated *ill =reas 9D*=: identified in consultation with State overnments for special focus, with respect to improvement of the PDS infrastructure. %ood grains for distribution in 'PDS areas were issued to the States at <> paise below the $entral &ssue Price. The scale of issue was upto 8> kg per card.

The 'PDS included area approach for ensuring effective reach of the PDS commodities, their delivery by State overnments at the doorstep of %PSs in the identified areas, additional ration cards to the left out families, infrastructure re"uirements like additional %air Price Shops, storage capacity, etc. and additional commodities such as tea, salt, pulses, soap, etc. for distribution through PDS outlets.

TARGETED PUBLIC DISTRIBUTION SYSTEM (TPDS)

&n ;une 2337, the overnment of &ndia launched the Targeted Public Distribution System 9TPDS: with focus on the poor. (nder the TPDS, States are re"uired to formulate and implement foolproof arrangements for identification of the poor for delivery of food grains and for its distribution in a transparent and accountable manner at the %PS level. The steps undertaken to strengthen the TDPS system were +

Citizens Charter
= revised $itizens $harter has been issued in ;uly, 8>>7 for adoption and implementation by the State)(T overnments for facilitating its use by citizens as per provisions of 'ight to &nformation =ct, 8>><, in relation to functioning of the TPDS.

PDS ( Control) Order, 2001

&n order to maintain supplies and securing availability and distribution of essential commodities, Public Distribution System 9$ontrol: Order, 8>>2 has been notified on =ugust 42, 8>>2. The Order mainly contains provisions with regard to the following issues+,

Identification of families below the poverty line Ration cards Scale and issue price Distribution of foodgrains Licensing Monitoring

The Order re"uires all State overnments)(Ts to ensure that the -P? families identified are really the poorest of the poor and to to get the lists reviewed every

year for the purpose of deletion of ineligible families and inclusion of eligible families. &t further devolves on the State overnments)(Ts to conduct periodical checking of ration cards to weed out ineligible and bogus ration cards. The State overnments)(Ts are also to ensure issue of (tilization $ertificates confirming that the foodgrains have been lifted and distributed to the intended beneficiaries under the TPDS.

Area Officers Scheme

The =rea Officers@ Scheme was launched on 82st %ebruary 8>>> in the Department of %ood and Public Distribution with the ob#ective to provide a mechanism to coordinate with the State overnments and (T =dministrations for regular and effective review and monitoring of the Targeted Public Distribution System in the States)(Ts. Officers of the rank of Deputy Secretary, Director and e"uivalent are nominated as =rea Officers for different States)(Ts from time to time. The broad features of the Scheme are as follows+ The =rea Officer is re"uired to visit two districts of their allotted territories once in a "uarter and review the functioning of TPDS as per the guidelines and a set of "uestionnaire They are also re"uired to submit their visit report within 2> days, clearly bringing out important issues, findings along with suitable recommendations The report of the =rea Officers are sent to the %ood Secretaries of the concerned States)(Ts for taking remedial action towards smooth functioning of TPDS.

Meetings Conferences
= meeting of all State and (T %ood Secretaries was held under the $hairmanship of (nion %ood Secretary at *yderabad on A.8.8>>A to discuss the measures for reforming PDS. The minutes of said meeting were sent to all concerned for taking necessary action thereon.

Features of PDS
&t is a system of distribution of selected essential goods through the fair price shops 9commonly known as ration shops/ or co,operatives 9owned by the government: which are operated by private dealers under the government/s control and direction. 'ice, wheat and sugar have continued to occupy a predominant position throughout the period. The other important items are kerosene, edible oil etc. The working of the PDS did not in any way hinder the functioning of the free market mechanism e1cept in the limited statutory rationing areas but works along with it. *ence, this could be viewed as a Bdual economyB in the essential commodities. $onsumers are left free either to purchase through %air Price Shops or in the open market.

The re"uired amounts of food grains and other items are obtained by the government through internal procurement and or through imports and a buffer stock is maintained with a view to meet scarcity situation. The government feeds the PDS with supplies, bears the cost of subsidy, decides as to which goods to supply, at what rates, what amount to be sold per head or per family etc.

The aim is to provide atleast a basic minimum "uantity of essential items at reasonable prices specially to the more vulnerable sections/ of population and also to stabilise their open market prices or atleast to prevent an undue rise in such prices under conditions of shortage. The prices charged are usually lower than open market prices and also lower than the procurement and other costs incurred by the government.

&t has been primarily an urban oriented system. &ts genesis as well as growth has been in those sensitive urban areas where a shortage of food grains and other essential commodities could become political liabilities of government.

&dentifying the beneficiaries+ There are problems in determining who "ualifies for this subsidy, given that &ndia has yet to settle on a reasonable poverty line. =nd yet again the $entral government mired itself in controversy by releasing its latest poverty estimates based on the consumption e1penditure survey of the CSSO 9Cational Sample Survey Office: Survey of 8>22,28. The Planning $ommission!s poverty line, using methodology suggested by the Tendulkar $ommittee in 8>2>, is now apparently defined as the spending of 's. 87.8> per capita per day in rural areas and 's.44.5> in urban areas Cot surprisingly, the release of these latest estimates has created a public furore once again, as yet another e1ample of the relative insensitivity of the government. The more obvious solutions to estimating the poverty line are not being suggested. 0hy should the overnment of &ndia, in the second decade of the 82st century, be stuck with definitions of poverty that were developed nearly half a century ago in very different economic circumstancesD 0hy does it not simply take a basket of the essential goods and services that urban and rural residents re"uire to live in a minimally decent manner and estimate their prices to derive the poverty lineD This is the approach followed in many other developing countries, including those with much lower per capita incomes than &ndia. The %ood Security -ill+ Eoving back to the %ood Security -ill, the -ill guarantees < kg of rice, wheat and coarse grains a month at 's.4, 's.8 and 'e.2 a kg respectively to every member of eligible households. *owever, in many States the prices are lower and the population covered is broader than that being proposed in the -ill. The original -ill had stipulated that the centre would identify the households to be covered. ?ater it was decided that the coverage would be determined by each State but in consultation with the $entre. Some EPs felt that the government should have waited for the release of the S.$$ data to identify the beneficiaries with clarity. =s per the provisions of the -ill, 2A States, including Tamil Cadu and Ferala, would get less than what they were already allotted under the normal TPDS. &t has been assured that the normal offtake of these States in the past three years would be protected. *owever, it has not been provided how this would be done. The -ill was seen as violating federal rights as it gave the $entral government the right to notify the date for reforms in the PDS. The cost,sharing ratio of the $entre and the States remains an unresolved matter in the -ill. There is also sustained pressure from civil society groups to include sugar, cooking oil and pulses to the basket of subsidized items. The PDS problems and e1pert comments+ reater productivity has also raised "uestions about the system!s need and efficacy. Over time, &ndia!s food grain stocks have increased, globally ranking ne1t only to $hina. Despite having the capacity to e1port some of the produce, only 5> per cent of food grains reach &ndian homes at the end of the supply chain. Kaushik Basu, former chief economic advisor, once e1claimed, G&ndia is paying the price of an une1pected success H our production of rice and wheat has surged and procurement has

been better than everIThis success is showing up some of the gaps in our policy.J The PDS already costs about K24 billion a year and the cost is set to increase if the bill passes this year. %urthermore, the debate on which mechanism works better L current in,kind transfers or a cash transfer alternative L remains unresolved. Despite these problems, at rowth 0eek 8>28, Reetika Khera, assistant professor at the &ndian &nstitute of Technology 9&&T:, argued that the PDS is worth retaining. =s an activist and proponent of the PDS, she acknowledged the problems of the system but presented results from her cross,sectional study showing that food coverage in &ndia has improved over time, especially in the basket states+ in 8>>5,><, about 7< per cent households were not covered in $hattisgarh, 7A per cent in Orissa, and 35 per cent in ;harkhand. &n 8>>3, 2>, these figures dropped to 48 per cent, 56 per cent, and 74 per cent, respectively. Fhera stressed that even leakage levels had fallen in that period, though there is still scope for improvement. Eoreover, &ndia as a whole saw a reduction in the poverty gap by 27.6 per cent, with Tamil Cadu as the best performer. =s a keen propagator of the current system of in,kind transfers, Fhera cited findings from $urrie and ahvari 98>>7: and showed that people were not interested in cash transfers in areas where the PDS worked. On the other hand, Bharat Ramaswami, professor at the Planning (nit of the &ndian Statistical &nstitute, argued mostly in favour of cash transfers. *e pointed to the problem of e1cess procurement through PDS, which is difficult to constrain due to pressure from farm lobbies and coalition politics and is likely to be augmented with the Cational %ood Security -ill. 'amaswami described the argument for in,kind transfers as Gpaternalistically weakJ. T. Nan a Kumar, member of the Cational Disaster Eanagement =uthority 9CDE=:, summed up the debate. 0hile acknowledging the PDS to be Gscandalously corruptJ, he urged policymakers to concentrate on the core concern of malnutrition and hunger. *e emphasised the challenge of converging the PDS at delivery point and tackling diversion and leakage. Fumar also pointed to the problem of logistics, whereby five or si1 states bear the brunt of producing 6> million tons of food L 2< times the total production of the 0orld %ood Programme L for the benefit of other states. Pun#ab produces one,third of that total, but moving and storage can be problematic, especially since Pun#ab imposes high ta1es on procurement. Therefore, Fumar suggested moving to cash transfers in areas where grains are abundant. 0hile identifying concerns about the PDS, discussants did not make suggestions for a ma#or overhaul of the system. &&T!s Fhera stressed the importance of accounting for transition costs, market variations, access to financial infrastructure, and demographic factors, while 'amaswami highlighted the need for small,scale e1periments on cash transfers to better inform policy. To conclude, CDE=!s Fumar argued for a truly federal policy, which would allow state governments to choose the distribution mechanism that suits them best. This strategy has

not only been e1horted by economists but would also consider the specific conte1ts of different states to determine what works and leave out what does not.