Targeted Public Distribution System (TPDS)

Targeted Public Distribution System (TPDS)

A. INTRODUCTION B. EVOLUTION OF PUBLIC DISTRIBUTION SYSTEM C. REVAMPED PUBLIC DISTRIBUTION SYSTEM (RPDS) D. TARGETTED PUBLIC DISTRIBUTION SYSTEM (TPDS) E. IDENTIFICATION OF BPL FAMILIES UNDER TPDS F. ANTYODAYA ANNA YOJANA (AAY) G. SCALE OF ISSUE OF FOOD-GRAINS UNDER TPDS H. CENTRAL ISSUE PRICE (CIP) I. ACHIEVEMENTS OF TPDS J. STREAMLINING OF TPDS K. MEASURES TAKEN TO STRENGTHEN TPDS INTRODUCTION 1.1 The Public Distribution System (PDS) evolved as a system of

management of scarcity and for distribution of food grains at affordable prices. Over the years, PDS has become an important part of Governments policy for management of food economy in the country. PDS is supplemental in nature and is not intended to make available the entire requirement of any of the commodities distributed under it to a household or a section of the society. 1.2 PDS is operated under the joint responsibility of the Central and the

State Governments. The Central government, through FCI, has assumed the responsibility for procurement, storage, transportation and bulk

allocation of food grains to the State Governments. The operational responsibility including allocation within State, identification of families below the poverty line, issue of Ration Cards and supervision of the functioning of FPS, rest with the State Governments. Under the PDS,

presently the commodities namely wheat, rice, sugar and kerosene, are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as cloth, exercise books, pulses, salt and tea, etc. EVOLUTION OF PUBLIC DISTRIBUTION SYSTEM 2.1 Public Distribution of essential commodities had been in existence

in India during the inter-war period. PDS, with its focus on distribution of food grains in urban scarcity areas, had emanated from the critical food shortages of 1960. PDS had substantially contributed to the containment of rise in food grains prices and ensured access of food to urban consumers. As the national agricultural production had grown in the aftermath of Green Revolution, the outreach of PDS was extended to tribal blocks and areas of high incidence of poverty in the 1970s and 1980s. 2.2 PDS, till 1992, was a general entitlement scheme for all

consumers without any specific target. Revamped Public Distribution System (RPDS) was launched in June 1992 in 1775 blocks throughout the country. 2.3 The Targeted Public Distribution System (TPDS) was introduced

with effect from June 1997. REVAMPED PUBLIC DISTRIBUTION SYSTEM (RPDS) 3.1 The Revamped Public Distribution System (RPDS) was launched in

June, 1992 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. It covered 1775 blocks wherein area specific programmes such as the Drought Prone Area Programme (DPAP), Integrated Tribal Development Projects (ITDP), Desert Development Programme (DDP) and certain Designated Hill Areas (DHA) identified in consultation with State Governments for special focus, with respect to improvement of the PDS infrastructure. Food grains for distribution in RPDS areas were issued to the States at 50 paise below the Central Issue Price. The scale of issue was up to 20 kg per card. 3.2 The RPDS included area approach for ensuring effective reach of

the PDS commodities, their delivery by State Governments at the doorstep of FPSs in the identified areas, additional ration cards to the left out families, infrastructure requirements like additional Fair Price Shops, storage capacity, etc. and additional commodities such as tea, salt, pulses, soap, etc.. for distribution through PDS outlets. TARGETTED PUBLIC DISTRIBUTION SYSTEM (TPDS) 4.1 In June 1997, the Government of India launched the Targeted

Public Distribution System (TPDS) with focus on the poor. Under the TPDS, States are required 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 FPS level. 4.2 The scheme, when introduced, was intended to benefit about 6

crore poor families for whom a quantity of about 72 lakh tonnes of food grains was earmarked annually. The identification of the poor under the scheme is done by the States as per State-wise poverty estimates of the

Planning

Commission for 1993-94 based on the methodology of the

Expert Group on estimation of proportion and number of poor chaired by Late Prof Lakdawala. The allocation of food grains to the States/UTs was made on the basis of average of introduction of TPDS. 4.3 The quantum of food grains in excess of the requirement of BPL Over consumption in the past i.e. average annual off-take of food grains under the PDS during the past ten years at the time

families was provided to the State as transitory allocation for which a quantum of 103 lakh tonnes of food grains was earmarked annually. and above the TPDS allocation, additional allocation to States was also given. The transitory allocation was intended for continuation of benefit of subsidized food grains to the population Above the Poverty Line (APL) as any sudden withdrawal of benefits existing under PDS from them was not considered desirable. The transitory allocation was issued at prices, which were subsidized but were higher than the prices for the BPL quota of food grains. 4.4 Keeping in view the consensus on increasing the allocation of food

grains to BPL families, and to better target the food subsidy, Government of India increased the allocation to BPL families from 10 kg. to 20 kg of food grains per family per month at 50% of the economic cost and allocation to APL families at economic cost w.e.f. 1.4.2000. The allocation of APL families was retained at the same level as at the time of introduction of TPDS but the Central Issue Prices (CIP) for APL were fixed at 100% of economic cost from that date so that the entire consumer subsidy could be directed to the benefit of the BPL population. However, the CIPs fixed in July and December, 2000 for BPL & AAY respectively and in July, 2002 for APL, have not been revised since then even though procurement costs have gone up considerably.

4.5

The number of BPL families has been increased w.e.f. 1.12.2000 by

shifting the base to the population projections of the Registrar General as on 1.3.2000 instead of the earlier population projections of 1995. With this increase the total number of BPL families is 652.03 lakh as against 596.23 lakh families originally estimated when TPDS was introduced in June 1997. 4.6 The end retail price is fixed by the States/UTs after taking into

account margins for wholesalers/retailers, transportations charges, levies, local taxes etc. Under the TPDS, the States were requested to issue foodgrains at a difference of not more than 50 paise per kg over and above the CIP for BPL families. Flexibility to States/UTs. has been given in the matter of fixing the retail issue prices by removing the restriction of 50 paise per kg over and above the CIP for distribution of food grains under TPDS except with respect to Antyodaya Anna Yojana where the end retail price is to be retained at Rs. 2/ a Kg. for wheat and Rs. 3/ a Kg. for rice. IDENTIFICATION OF BPL FAMILIES UNDER TPDS 5. To work out the population below the poverty line under the TPDS,

there was a general consensus at the Food Ministers conference held in August 1996, for adopting the methodology used by the expert groups set up by the Planning Commission under the Chairmanship of Late Prof. Lakadawala. The BPL households were determined on the basis of population projections of the Registrar General of India for 1995 and the State wise poverty estimates of the Planning Commission for 1993-94. The total number of BPL households so determined was 596.23 lakh. Guidelines for implementing the TPDS were issued in which the State Governments had been advised to identify the BPL families by involving the Gram Panchayats and Nagar Palikas. While doing so the thrust should be to

include the really poor and vulnerable sections of the society such as landless agricultural labourers, marginal farmers, rural artisans/craftsmen such as potters, tappers, weavers, black-smith, carpenters etc. in the rural areas and slum dwellers and persons earning their livelihood on daily basis in the informal sector like potters, rickshaw-pullers, cart-pullers, fruit and flower sellers on the pavement etc. in urban areas. The Gram Panchayats and Gram-Sabhas should also be involved in the identification of eligible families. The number of BPL families has been increased w.e.f. 1.12.2000 by shifting the base to the population projections of the Registrar General of India as on 1.3.2000 instead of the earlier population projections of 1995. With this increase the total number of BPL families in the country is 652.03 lakh as against 596.23 lakh families originally estimated when TPDS was introduced in June 1997. ANTYODAYA ANNA YOJANA (AAY) 6.1 AAY is a step in the direction of making TPDS aim at reducing the poorest segments of the BPL population. A National

hunger among

Sample Survey Exercise points towards the fact that about 5 % of the total population in the country sleeps without two square meals a day. This section of the population can be called as hungry. In order to make TPDS more focused and targeted towards this category of population, the Antyodaya Anna Yojana (AAY) was launched in December, 2000 for one crore poorest of the poor families.

& nbsp;

6.2

AAY contemplates

identification of one crore poorest of the poor families from amongst the number of BPL families covered under TPDS within the States and providing them food grains at a highly subsidized rate of Rs.2/ per kg. for wheat and Rs. 3/ per kg for rice. The States/UTs are required to bear the distribution cost, including margin to dealers and retailers as well as the transportation cost. Thus the entire food subsidy is being passed on to the consumers under the scheme. 6.3 2002. FIRST EXPANSION OF AAY 7. The AAY Scheme has been expanded in 2003-2004 by adding The scale of issue that was initially 25 kg per family per month has

been increased to 35 kg per family per month with effect from 1st April

another 50 lakh BPL households headed by widows or terminally ill persons or disabled persons or persons aged 60 years or more with no assured means of subsistence or societal support. With this increase, 1.5 crore (i.e. 23% of BPL) families have been covered under the AAY. SECOND EXPANSION OF AAY 8. As announced in the Union Budget 2004-05, the AAY has been

further expanded by another 50 lakh BPL families by including, inter alia, all households at the risk of hunger. Orders to this effect have been issued on 3rd August 2004. In order to identify these households, the guidelines stipulate the following criteria: - Landless agriculture labourers, marginal farmers, rural artisans/craftsmen, such as potters, tanners, weavers, blacksmiths, carpenters, slum dwellers,

and persons earning their livelihood, on daily basis in the informal sector like porters, coolies, rickshaw pullers, hand cart pullers, fruit and flower sellers, snake charmers, rag pickers, cobblers, destitutes and other similar categories irrespective of rural or urban areas.

Households headed by widows or terminally ill persons or disabled persons or persons aged 60 years or more with no assured means of subsistence or societal support.

Widows or terminally ill persons or disabled persons or persons aged 60 years or more or single women or single men with no family or societal support or assured means of subsistence.

All primitive tribal households.

With this increase, the number of AAY families has been increased to 2 crore (i.e. 30.66% of BPL families). THIRD EXPANSION OF AAY 9.1 As announced in the Union Budget 2005-06, the AAY has further been

expanded to cover another 50 lakh BPL households thus increasing its overage to 2.5 crore households.(i.e. 38% of BPL) 9.2 As on 30.04.2009, 242.75 lakh AAY families have been covered by

the States /UTs under this scheme. The State-wise estimated number of AAY families and the families identified and ration cards issued under AAY by the State Govts/UTs are given in the Annexure.

IDENTIFICATION OF ANTYODAYA FAMILIES AND ALLOCATION OF FOODGRAINS : 10. The identification of the Antyodaya families and issuing of

distinctive Ration Cards to these families is the responsibility of the concerned State Governments. Detailed guidelines were issued to the States/UTs for identification of the Antyodaya families under the AAY and additional Antyodaya families under the expanded AAY. Allocation of food grains under the scheme is being released to the States/UTs on the basis of issue of distinctive AAY Ration Cards to the identified Antyodaya families. The present monthly allocation of food grains under AAY is around 8.50 lakh tons per month. SCALE OF ISSUE OF FOOD-GRAINS UNDER TPDS 11. Since 1997, the scale of issue of the BPL families has been gradually

increased from 10 kg. to 35 kg. per family per month. The scale of issue to BPL families was increased from 10 kg. to 20 kg. per family per month with effect from 1.4.2000. The allocation of food grains for the BPL families was further increased from 20 kg to 25 kg. per family per month with effect from July, 2001. Initially, the Antyodaya families were provided 25 kg. of food grains per family per month at the time of launching of the scheme in December, 2000. The scale of issue of foodgrains under APL, BPL and AAY has been revised to 35 kg per family per month with effect from 1.4.2002 with a view to enhancing the food security at the household level. CENTRAL ISSUE PRICE (CIP) 12. The present Central Issue Price (CIP) of food grains being supplied

under TPDS is as under: -

(Figure in Rs. per kg.) Commodity Rice Wheat ACHIEVEMENTS OF TPDS 13. After June 1997, PDS has now become pro-poor. The urban bias has been completely eliminated as a larger proportion of BPL families are living in rural areas. Though PDS is supplemental in nature, but now the enhanced allocation of food grains fulfils around 50% of the monthly cereal requirement of an average BPL household. In accordance with the commitment of the Government to create a hunger free India and to reform the PDS so as to serve the poorest of the poor, the AAY scheme was launched in December 2000. The CIP for AAY category was kept lowest i.e. Rs.2/- a kg for wheat and Rs.3/- a kg for rice. The number of AAY households have been increased to 2.5 crores. The CIP of food grains for BPL families has not been revised since 25.07.2000 and that for AAY since Dec., 2000. Basis of Allocation and BPL estimates of Planning Commission 14 As per the latest Poverty Estimates of the Planning Commission
APL BPL AAY

8.30 6.10

5.65 4.15

3.00 2.00

(1999-2000), the poverty ratio at national level has come down from 36.15% in 1993-94 to 26.10% during 1999-2000 (with State-wise

variations). The allocation of food grains under the TPDS, however, continues to be made on the basis of estimates of poverty of 1993-94, which are higher. This allocation based on 1993-94 poverty estimates, have been further revised upwards, and based on the population projection, as on 1st April 2000 thereby increasing the monthly allocation to the State Governments. MEASURES TAKEN TO STRENGTHEN TPDS 15
Citizens Charter

A revised Citizens Charter has been issued in July, 2007 for adoption and implementation by the State/UT Governments for facilitating its use by citizens as per provisions of Right to Information Act , 2005, in relation to functioning of the TPDS. 16
PDS (Control) Order, 2001

In order to maintain supplies and securing availability and distribution of essential commodities, Public Distribution System (Control) Order, 2001 has been notified on August 31, 2001. The Order mainly contains provisions with regard to the following issues:(i) (ii) Identification of families below the poverty line; Ration cards;

(iii) Scale and issue price; (iv) Distribution of foodgrains; (v) Licensing; (vi) Monitoring. The Order requires all State Governments/UTs to ensure that the BPL and Antyodaya families identified are really the poorest of the poor. It also

requires the State Governments/UTs to get the lists of BPL and Antyodaya families reviewed every year for the purpose of deletion of ineligible families and inclusion of eligible families. It further devolves on the State Governments/UTs to conduct periodical checking of ration cards to weed out ineligible and bogus ration cards. The State Governments/UTs are also to ensure issue of Utilisation Certificates confirming that the foodgrains have been lifted and distributed to the intended beneficiaries under the TPDS. An offence committed in violation of the provisions of this Order shall invoke criminal liability under the Essential Commodities Act, 1955. 17

Area Officers Scheme

The Area Officer's Scheme was launched on 21st February, 2000 in the Department of Food and Public Distribution with the objective to provide a mechanism to coordinate with the State Governments and UT Administrations for regular and effective review and monitoring of the Targetted Public Distribution System in the States/UTs. Officers of the rank of Deputy Secretary, Director and equivalent are nominated as Area Officers for different States/UTs from time to time. The broad features of the Scheme are as under :i. The Area Officer is required to visit two districts of their allotted

territories once in a quarter and review the functioning of TPDS as per the instructions/guidelines and a set of questionnaire; ii. They are also required to submit their visit report within 10 days, clearly bringing out important issues, findings along with recommendations on actionable points; iii. The report of the Area Officers are sent to the Food Secretaries of

the concerned States/UTs for taking remedial action towards smooth

functioning of TPDS. 18
Meetings /Conferences

A meeting of all State and UT Food Secretaries was held under the Chairmanship of Union Food Secretary at Hyderabad on 8.2.2008 to discuss the measures for reforming PDS. The minutes of said meeting were sent to all concerned for taking necessary action thereon.

Annexure

(As on30/04/2009) (figures in lakh) S.No. States/UTs Estimated no of AAY Families 15.578 0.380 7.040 25.010 7.189 1.568 0.184 8.128 3.025 1.971 2.822 9.179 11.997 5.958 15.816 25.053 0.636 0.702 0.261 0.475 12.645 1.794 9.321 0.165 18.646 1.131 40.945 1.909 19.857 0.107 0.088 0.069 0.015 0.012 0.322 249.998 AAY Families identified & Ration Cards issued 15.578 0.380 7.040 24.285 7.189 1.502 0.145 8.098 2.924 1.971 2.557 9.179 11.997 5.958 15.816 24.639 0.636 0.702 0.261 0.475 12.645 1.794 9.321 0.165 18.646 1.131 40.945 1.512 14.799 0.043 0.015 0.052 0.015 0.012 0.322 242.749

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Andhra Pd Arunachal Pd Assam Bihar Chattisgarh Delhi Goa Gujarat Haryana Himachal Pd J&K Jharkhand Karnataka Kerala Madhya Pd Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pd Uttarakhand West Bengal A&N Chandigarh D&N Haveli Daman & Diu Lakshdweep Pondicherry Total

Public Distribution System

From Wikipedia, the free encyclopedia

Jump to: navigation, search This article relies on references to primary sources or sources affiliated with the subject, rather than references from independent authors and third-party publications. Please add citations from reliable sources. (March 2010) Public Distribution System (PDS) is an Indian food security system. Established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments in India, it distributes subsidised food and non-food items to India's poor. Major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through a network of Public distribution shops (FPS) established in several states across the country. Food Corporation of India, a Government-owned corporation, distributes food grains to FPS throughout the country, which are managed by state governments.[1] As of date there are about 4.99 lakh Fair Price Shops (FPS) across India.[2] In terms of both coverage and public expenditure, it is considered to be the most important food security network. However the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality. The average level of consumption of PDS grains in India is only 1 kg per person / month. The PDS has been criticised for its urban bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to much corruption in the process of extricating the poor from those who are less needy.

Contents

1 Overview 2 Fallouts of P.D.S System 3 Food stamps 4 Benefits of Food Stamps o 4.1 Black marketing 4.1.1 Reducing monopoly o 4.2 Avoid wastage of food o 4.3 Food security o 4.4 Drawbacks 5 Abuse or misuse 6 Forgery or fraud 7 Distribution of food stamps o 7.1 Microeconomic analysis of food stamps 8 See also 9 References 10 External links

[edit] Overview
Both the central and state governments shared the responsibility of regulating the PDS. While the central government is responsible for procurement, storage, transportation, and bulk allocation of food grains, state governments hold the responsibility for distributing the same to the consumers through the established network of Fair Price Shops (FPSs). State governments are also responsible for operational responsibilities including allocation and identification of families below poverty line, issue of ration cards, supervision and monitoring the functioning of FPSs[clarification needed].[2] Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month, while a household above the poverty line is entitled to 15 kg of foodgrain on a monthly basis.[3]

[edit] Fallouts of P.D.S System

This article is in a list format that may be better presented using prose. You can help by converting this article to prose, if appropriate. Editing help is available. (September
2011)

1. Generally, the consumers get inferior food grains in ration shops. 2. Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of India) with inferior stock. 3. Many retail shopkeepers have large number of bogus cards to sell food grains in the open market. 4. Many FPS dealers resort to malpractice since they acquire little profit. 5. Despite the PDS, India accounts for over 400 million poor and hungry people. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poor. Several schemes have augmented the number of people aided by PDS, but the number is still extremely low. Poor supervision of FPS and lack of accountability have spurred a number of middlemen who consume a good proportion of the stock meant for the poor. There is also no clarity as to which families should be included in the BPL list and which excluded. This results in the genuinely poor being excluded whilst the ineligible get several cards. The stock assigned to a single family cannot be bought in instalments. This is one of the biggest barriers to the efficient functioning of PDS in India. Many BPL families are not able to acquire ration cards either because they are seasonal migrant workers or because they live in unauthorised colonies. A lot of families also mortgage their ration cards for money.

To improve the current system of the PDS, the following suggestions are furnished for: 1. Vigilance squad should be strengthened to detect corruption, which is an added expenditure for taxpayers.

2. Personnel-in-charge of the department should be chosen locally. 3. Margin of profit should be increased for honest business, in which case the market system is more apt anyway. 4. F.C.I. and other prominent agencies should provide quality food grains for distribution, which is a tall order for an agency that has no real incentive to do so. 5. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards, which is again an added expenditure and not fool proof. 6. The Civil supplies Corporation should open more Fair Price shops in rural areas. 7. The Fair Price dealers seldom display rate chart and quantity available in the block-boards in front of the shop. This should be enforced. In aggregate, only about 42% of subsidised grains issued by the central pool reach the target group, according to a Planning Commission study released in March 2008.

[edit] Food stamps

Food stamps is an indirect financial support given to the needy and to the underprivileged by issue of coupons, vouchers, electronic card transfer etc. they can purchase commodities at any shop or outlet and would not have to purchase food from a particular shop as in the case of the PDS system in India. The state government would than pay back the grocers shop for the stamps they possess.This was the plan proposed by the Finance minister in his budget[4] but the United Progressive Alliance (UPA) government which came to power in 2004, it decided on a Common minimum programme (CPM) and one of the agenda was food and nutrition security. Under that the government had plans for strengthening the Public distribution System (PDS).[5] However the Finance minister P. Chidambaram in his budget speech went contrary to the idea proposed in the CPM and proposed the idea of the food stamp scheme.[6] and has proposed to try the scheme in few districts of India to know its viability.[7] ) In the CPM the government had propsed that if it is vaiable it would universalise the PDS but if the Food stamps would be introduced it would be a Targeted public distribution system and a group of about 40 economist have cautioned the NAC headed by Sonia Gandhi against the food security bill as it would put an additional burden on the ex-chequer and instead have advised to go ahead and experiment with food stamps and other alternative methods and did point out the flaws in PDS . These set of 40 economist hail from different institutes like Delhi School of Economics, Indian Statistical Institute, Jawaharlal Nehru University, Indira Gandhi Institute of Development Research, Centre for Development Studies, Harvard, MIT, Columbia, Princeton, London School of Economics, University of British Columbia, University of California and University of Warwick.[8]

[edit] Benefits of Food Stamps

Food stamps is an ideal solution to counter few issues like

[edit] Black marketing

As a faire price shopkeeper earns barely anything from the sale. He gets only 35 paisa per kg of grain and 7 paisa per litre of kerosene. as the gains are so low that they tend to sell it in the open market and not to the actual beneficiaries. [edit] Reducing monopoly The ration shops are usually located in the urban areas and they are not always open and the ration card which an individual receives is only valid to a specific and not valid at other fair price shop due to which a monopolistic condition is created and individuals cannot access any other faire price shops.

[edit] Avoid wastage of food

The Food Corporation of India (FCI) collects food grains from the farmers from all over the country and than distributes it to state government which than further distributes it to the fair price shops. Its a very lengthy process and to add to the miseries the FCI does not have enough warehouses to store all the grains and hence there is immense wastage of food grains as it is kept in open eaten by rats, if procurement and sale happens in the open market than wastage would be drastically reduced.[9]

[edit] Food security

There is a huge population of India that still continues to be poor and it is the responsibility of the state to ensure that the poor gets atleast food to eat and food stamps seems to be is one of the easiest ways to achieve the goal of food security. There has been huge expenditure borne by the government every year to tackle the issue of food security however issues like corruption, rotting of food, transmission and distribution cost etc leads to its failure, food stamps if administered properly will definitely lead us to thee achievement of food security. Food stamps would change the whole system and give purchasing power directly in the hands of the poor consumer. No separate system will have to be created like the fair price shops, FCI for procurement and distribution etc. Only the government will have to make payments to the grocery shops and ensure fair distribution of the food stamps to the needy.

[edit] Drawbacks

[edit] Abuse or misuse

Individuals may encash the food stamps for money from the grocers and may end up buying liquor or anything which he is they are entitled for. Reducing the value of subsidy In a dynamic economy like India where inflation is of great concern to the public and the government and being developing in nature there are always chances of inflation increasing and its nature would not remain constant in the short run. Hence as quantities are not defined the targeted consumer may not get the indented benefit they are supposed to get.

[edit] Forgery or fraud

The government will have to take immense steps to ensure that duplicate food stamps are not in circulation in the market. As this would create a scene of chaos in the market because than the shopkeepers may not accept food stamps in fear of it not getting redeemed by the government.

[edit] Distribution of food stamps

The government may have to set up a complete system for the same or would have to put this responsibility on Post office, banks or such other institutions. In this process there could be leakages which are a matter of concern. Also there would be a burden which would come on the poor class who has to benefit from the same of going and collectinf the food stamps.[10]

[edit] Microeconomic analysis of food stamps

Panel 1 shows the effect of subsidy on consumption in the panel let goods under subsidy be represented by E on the X-axis (all that is provided in the PDS) and all other goods outside the PDS by a good K on the Y-axis. Let KL be the initial budget line. Let U0 and U1 be the two indifference curves, utility on U1 is higher than that on U0. Panel 1 shows the effect of subsidy. The tangency point is Q on indifference curve U0. Subsidy acts like price reduction, changing

the budget line from KL to KL. The new point of consumption is R on indifference curve U1. The consumption pattern changes for both those covered under subsidy and for those which are not covered.

Panel 1 shows the effect of food stamps on consumption the initial position Q on the indifference curve U0 is the same as it was in panel 1. The food stamp is like additional cash which the consumer receives to spend on a specific set of goods. The distance KK represents the amount of the gift, so that the consumers budget line shifts outward from KL to KL. But this increase in income can only be used on E. Thus the consumer cannot reach the dashed part of the budget line between K and K. Therefore the new budget line for the consumer is the kinked line KKL. The new optimum is at S on U1. Food stamps will increase purchase of commodity E, whenever E

'India's PDS fails to ensure food for all'

03 September 2009

The National Food Security Act has failed to reform the discriminatory public distribution system leaving many high and dry, says development journalist Kathyayini Chamara. The costly targeted system excludes the genuinely poor and encourages corruption, she adds.
A concept note on the proposed National Food Security Act circulated to all states continues to push for a targeted public distribution system instead of a universal one, and proposes to reduce the issue of foodgrains to 25 kg per BPL household, completely ignoring the contentious issue of who is poor and what an adequate and nutritious diet consists of.

Rising food insecurity in India/ Photo credit: World Prout Assembly

At a public hearing on the public distribution system (PDS), held before the Justice Wadhwa Committee in Bangalore in December 2008, Sarojamma, a single parent with four children (one of whom is mentally disabled) pleaded for a below the poverty line (BPL) ration card. She had been given an above the poverty line (APL) ration card as she is a garment worker earning Rs 3,500 per month. The APL ration card fetches her only kerosene and no foodgrain in Karnataka. To be eligible for a BPL card, Sarojamma needs to be earning less than Rs 17,000 per year, or less than Rs 1,500 per month. At todays prices, the rent alone for a measly 10 x 10 sq ft space in Bangalore is upwards of Rs 1,500 a month. So, to be considered poor, the state expects its citizens to be living on air and to have no other needs such as health and education. Eeramma, who has been a single parent for 20 years with six children, was seen pleading for an Antyodaya Anna Yojana (AAY) card that would entitle her to 10 kg more foodgrain than her BPL card. Her BPL card gets her a maximum of 25 kg of foodgrain, or around 3.5 kg per person per month for her household of seven. Insufficient food for the poor One would have thought one needed at least 15 kg of cereal per person per month to provide 2,400 calories per day merely to exist, let alone eat a balanced diet consisting of pulses, oil, fruit and vegetables that is necessary to grow to ones full potential and lead a healthy life. The present PDS expects you to become food secure by merely eating an inadequate quantity of cereal! There were others like Arthiamma and her husband, both blind, and Ritu (name changed) who is HIV+, who had been given APL cards. Their social and physical vulnerability did not make them eligible for special consideration by the state.

"Almost 50% of its children are malnourished and 75% of its women suffer from anaemia; and per capita food availability has actually decreased"

What is incredible about Incredible India is that while it sports a high growth in GDP, it ranks 66th in a list of 88 countries on the World Hunger Index. Almost 50% of its children are malnourished and 75% of its women suffer from anaemia; and per capita food availability has actually decreased between 1991 2004-05. Food security refers to a situation that exists when all people at all times have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life, says an FAO report State of Food Insecurity in the World, 2001. As reflected in these examples, Indias current public distribution system does not seem to be fulfilling any of the above criteria to ensure the right to food expected of a just and humane society. Flawed concept note However, into this gloomy scenario comes the UPA governments hopeful promise of enacting a National Food Security Act. A concept note on the proposed Act, circulated to all state food secretaries by the food secretary, GoI, cites the above FAO quotation and says: To ensure food security to all citizens of the country based on a rights approach, there is need for providing a statutory basis to food security. And, the nutritional status of individual household members is the ultimate focus, (emphasis added). Although these pious statements give the impression that here, at last, is an attempt to address shameful deficiencies in the countrys food security situation, the rest of the concept note is more in the manner of a preamble to a National Food Insecurity Act! While civil society is clamouring that the PDS be universalised, without any distinctions between BPL and APL, so that the poor get self-selected as it was earlier when the country was growing at the Hindu rate of growth of about 3%, the concept note seeks to make the targeted PDS statutory.

"If universalisation of the PDS is not accepted, those earning less than the minimum wage need to be considered poor"
The targeted PDS is costly and gives rise to a lot of corruption in the process of trying to decide who is and who is not poor. This results in the genuinely poor being left out whilst the ineligible get several cards. Economists like Jayati Ghosh say that the cost difference between a universal and targeted PDS is not very great. So what happens to the aim of covering all citizens? Currently, the limits of annual income required for a household to be declared BPL are illogical. In Karnataka, for instance, the figures are Rs 11,000 and Rs 17,000 in rural and urban areas respectively. That means that a household of five people in Bangalore would have to be living on around Rs 47 per day, or about Rs 10 per person, on which even a beggar would not survive. Rising hunger and malnutrition problem In other words, a person would have to be earning less than half the minimum wage of Rs 88 (which itself is inadequate) to be considered poor. If universalisation of the PDS is not accepted, those earning less than the minimum wage need to be considered poor. The concept note assumes without any justification that the nation may not be able to procure the required amount of foodgrain or bear the cost of a food subsidy. It is therefore proposing to reduce the scale of issue to 25 kg per BPL household, or 5 kg per person. This, despite the Supreme Court ruling that every BPL family shall be given 35 kg, and that no changes shall be effected in any foodrelated scheme without its permission. This will result in families having to buy 10 kg from the market, paying more for the same amount of food than earlier.

Taking all this into consideration, the Wadhwa Committee recommends that the income criterion needs to be revisited and that estimation of poverty should not be made on a criteria (sic)which is less than the minimum wage fixed by the state for agricultural labourers. Also, that the government may also consider using calorie intake per person per day as an indicator of poverty. The Peoples Health Movement has demanded that every person be given enough foodgrain to ensure 2,400 calories per day. Moreover, the predominance of cereals and lack of adequate pulses, oil, fruit and vegetables in the diet of most Indians is what is causing high levels of malnutrition among them. We need to find ways to get these items to the populace through the PDS, if malnutrition is to be addressed. The concept note does not mention the word malnutrition at all; it completely ignores the contentious issue of defining who is poor and how much and what constitutes adequate and nutritious food. It does not recognise anywhere that entitlements should be linked to levels of malnutrition, if food security is to be achieved. It concentrates wholly on how to reduce the number of BPL families, reduce entitlements, and reduce subsidies. A great way indeed to ensure food security and raise Indias position on the World Hunger Index! Binding clauses Further, the concept note seeks to take away the freedom enjoyed by the states until now to: (1) fix the numbers of those who are BPL in their respective states; (2) decide the amount of foodgrain to be given to them, and (3) fix the rate at which these shall be provided. As a result of this freedom, the note says, the actual number of BPL ration cards issued by all the states is 10.68 crore while the accepted figure of BPL households by the Centre is 6.52 crore, resulting in an excess of 4.16 crore BPL cards. Tamil Nadu, for instance, has universalised the PDS, while Karnataka has issued BPL cards to 85% of households.

"The Centre is planning to bring in an enforcement mechanism that will monitor the states adherence to the Centres fiats and penalise those that transgress them"
The Centre is planning to curtail this right and insist that all states abide by the levels of poverty fixed by the Planning Commission, and that the Centre shall decide the numbers of poor that shall be eligible in each state, the amount of foodgrain that shall be given, and the rates at which these shall be issued to families. To ensure that states do not defy these restrictions and fix their own entitlements, the Centre is planning to bring in an enforcement mechanism under the Food Security Act that will monitor the states adherence to the Centres fiats and penalise those that transgress them. Here is a blatant attempt not only to centralise decision-making and curtail the freedom of the states in a federal setup, but also to reduce the basic entitlement to food of a hungry and malnourished nation. The present allocation under the TDPS to the BPL and AYY categories is 277 lakh tonnes which entails a huge commitment on the central pool for BPL families, the concept note adds. The Planning Commissions latest poverty estimates, according to 2004-05 figures, reveal that the countrys BPL population is only 27.5% whereas it was 36% according to 1993-94 figures. As per the above, the number of BPL families (including AAY) will come down from 6.52 crore to 5.91 crore, and the number of APL families will go up from 11.52 crore to 15.84 crore. In view of this, based on the current scale of issue, annual allocations of foodgrain for AAY and BPL categories may come down from 277 lakh tonnes to 251 lakh tonnes, and for the APL category it will go up from 162 lakh tonnes to 202 lakh tonnes, the concept note estimates.

However, in view of this increase of 40 lakh tonnes for the APL category, the concept note makes the categorical statement that the central government will not be able to guarantee distribution/supply of any quantity of foodgrain for the APL category from the central pool, and that the APL category may be excluded from TDPS, except for APL families in some food-deficit and inaccessible states/union territories. This reasoning fails to recognise that there will be a saving of 26 lakh tonnes of foodgrain as a result of the reduction in BPL numbers. The effective increase in foodgrain allocation to the APL category will thus only be 14 lakh tonnes. To use this reasoning to restrict the PDS only to 27.5% of the population is to deprive the rest of the population, which is unable to meet the requirement of 2,400 calories per day, of the right to food. Researchers like Utsa Patnaik estimate this number to be 70% of the population. While civil society demands that BPL cards be updated every year in order to capture those who have slid back into poverty due to various exigencies like debt, drought, displacement, etc, the Centre is talking about annual updation only to seek out those who have risen above the poverty line, with the aim of taking away their BPL cards. The concept note recognises that some households may have more than the average number of persons whereas others may have less than the average. But nowhere does the Centre make a commitment to provide foodgrain to every individual in a family, whether it has five or 10 members. It continues to think in terms of an upper ceiling of five units per household as the maximum that a family can receive. What happens to the guarantee of having the individual as the focus? Schemes/ Yojana's for addressing hunger Even more worrying seems to be the Centres intent to do away with other food-related schemes such as the Annapoorna Yojana for elderly destitutes and supply of foodgrain from the central pool to welfare institutions, hostels, etc, in the name of avoiding multiplicity of schemes, as beneficiaries of these schemes may already be covered under the TDPS. By mentioning the school midday meal scheme, the ICDS scheme, and the nutrition programme for adolescent girls as schemes that cause multiplicity, the Centre is hinting that these too may be curtailed or done away with altogether. Or, at the very least, that it is keeping its options open. There goes the hope of 50% malnourished children and anaemic adolescent girls of ever leading a full and healthy life. In the same breath, the Centre is proposing that the Antyodaya sub-category within the BPL also be done away with on grounds that sub-categories are unnecessary.

"With this, the government seemingly wishes to wash its hands of any accountability ensuring the right to food to all its citizens"
The Centre doles out a plethora of excuses as to why it may not be able to obtain or sustain current levels of foodgrain procurement at minimum support prices, or sustain their distribution at current levels. And that all this uncertainty could necessitate the import of foodgrain. The Centre also hints that if the issue price of rice and wheat are fixed at Rs 3 per kg for all BPL families, the annual food subsidy may go up from the current Rs 37,000 crore to Rs 40,380 crore. And that continuing to provide foodgrain for the APL category would further affect this figure. Nowhere is there an acceptance that these costs have to be borne as a matter of course if food security is to be ensured. The possible increase in cost is spoken of more in the nature of a looming threat to the economic health of the nation, which needs to be avoided. The only good points in the concept note appear to be the governments commitment to ensuring doorstep delivery of foodgrain to all fair price shops (FPSs), monitoring FPSs and certification of issuance of foodgrain by local vigilance committees, social audit by local bodies, computerisation of

operations, effective grievance redressal mechanisms, and the setting up of food security tribunals at the taluka level, and appellate tribunals at the district level. The piece de resistance of the concept note lies in the statement: In case a state/UT government is unable to distribute the entitled monthly quantities of foodgrain to eligible BPL families/individuals, such families/individuals will be entitled for payment of a food security allowance. With this, the government seemingly wishes to wash its hands of any accountability in the matter of ensuring the right to food to all its citizens. Activists see the proposed Food Security Act as a gimmick to win future votes, just as the NREGA was seen as the reason for the substantial mandate given to the UPA in the last elections. The government will be seen to have done something pro-poor even though it will only be a mask behind which it quietly carries on its real agenda of neo-liberal reforms.

Finmin weighs replacing PDS with food coupons

Anto Antony, ET Bureau Feb 17, 2010, 04.17am IST NEW DELHI: The finance ministry is looking to replace the public distribution system in the country with food coupons that can be used to buy food items from the open market, as it looks to target subsidies better through a less obtrusive mechanism. The ministry is holding internal discussions on a phased withdrawal of the price control mechanism for food items. It will present its views before a committee set up two weeks ago to look into the restructuring of the public distribution system. The proposal is likely to find a mention in the upcoming budget, a government official involved in the budget-making process told ET. The economic survey for 2008-09 had mooted the idea of food coupons. "(I)it may be useful to introduce food stamps/coupons which may be valid outside the PDS outlets once the markets get better integrated. Food coupons will allow the consumers a wider choice," the survey said.

Centre, State to join hands to streamline PDS

Special Correspondent THE HINDU A PDS outlet in Thiruvananthapuram. Running the public distribution system being a collective responsibility of the Central and State governments, the State's decision to provide rice at Rs.2 a kg for 35 lakh families will be jointly implemented, Food and Civil Supplies Minister C. Divakaran has said. Replying to questions in the Assembly on Tuesday, Mr. Divakaran said between 2001 and 2005, the State government had lifted only 90 per cent of the grain allotment, but during the past four years there was no laxity in lifting the total allotment. The increase in rice prices was one of the main reasons for lifting the quota without any lapse. The rice allotted to the State at Rs.6.20 a kg for BPL families was earlier distributed for Rs.3 a kg. Now, the same quota was being given at Rs.2 a kg. Though the Centre has announced a scheme to provide rice at Rs.3 a kg to the State, it has not been implemented so far. The Minister said the Centre had not yet responded positively to the government's repeated requests to restore the rice quota. But for Defence Minister A.K. Antony, no other Minister from the State in the Union Cabinet had intervened in the issue. No specific timeframe has been set for issuing new ration cards. All applications are being scrutinised and cards issued continuously. The facility for submitting applications will be extended to more places, he said. Water Resources Minister N.K. Premachandran said that the Chief Secretary-level talks between Kerala and Tamil Nadu on the Parambikulam-Aliyar agreement would be held in April.

Thursday, April 17, 2008

Food Crisis Hits Kerala: A Summer of Discontent in God's Own Country

Facing an acute food crisis, Kerala seeks higher rice quota for its public distribution system, but the Union Government refuses to budge.