by nu_lee2003 Sat Aug 21, 2010 9:10 amThe media is currently focusing on foodgrains stored by Food Corporation of India (FCI) in the open and rotting in Punjab, Haryana and Rajasthan, while poor families are starving in some pockets of India. This is not new — every year enormous quantity of foodgrains rots in FCI godowns. At the same time, it is a documented fact that the percentage of people suffering from malnutrition in India is worse than that in sub-Saharan Africa.
How to tackle this massive malnutrition problem while reducing the inefficiency of the present public distribution system? Currently, in this connection, debates are taking place at several levels.
Should we have a universal or targeted PDS? The supporters of universal PDS (that is, all families to have entitlement to some minimum quantity of food at uniform subsidised prices) basically argue that the identification of the so-called BPL (below poverty line) families is not easy in the present political and social environment.
As many studies have pointed out, there is large scale inclusion and exclusion errors. Many really poor are left out and many non-poor are included. Further, there is no unique definition of ‘poverty line.’ Hence, the line of distinction between BPL and APL (above poverty line) families is arbitrary. So, any attempt at targeting the PDS to the poor will be subject to large errors, given the Indian reality.
Opponents of universalisation of PDS point to inadequate grain production and procurement (currently only about 30 per cent of total rice and wheat production is procured) and severe budgetary constraints on subsidy payment as major hurdles on the way to universal PDS.
At another level, several ideas are being floated around to improve the targeting of PDS. Cash subsidy to buy food directly transferred to the bank accounts of the poor is one.
Here the apprehension is that the money will be used by the head of the family for non-food purposes, like buying liquor. Further, many poor people may find it difficult to open and operate a bank account because no bank branch may be available in the proximity.
Food coupons are considered better as it would be more difficult to convert coupons into food and then sell the food for money to buy liquor. It would also have several advantages over the current PDS.
First, since the food coupon recipient will get food at subsidised price by using the coupons while the PDS shopkeeper will get the full market price (the difference will be paid by the government to the shopkeeper), there will be no incentive for the shopkeeper to divert food from the poor to the black market.
Curb on sub-standard items
Second, it would weaken the incentive to supply sub-standard items to BPL card holders, specially if the option is given to the buyer to buy foodgrains by using food coupons from private stores along with PDS shops. Third, since food coupons are divisible, the poor family can buy part of its quota as his purchasing power allows him at any point. This would help the poor family to use up its full quota by spreading its purchase over time.
Under the existing system, the ration card holder has to lift the entire weekly/monthly quota at one go which many poor families can not afford and hence have to forego the ration altogether. The shopkeeper would often divert the unused ration to the open market.
One possible problem is that food coupons can be counterfeited. So, an even better option could be a smart card (which is more difficult to counterfeit) with the value of the food subsidy stored in there. Each time the buyer buys, he pays the subsidised price but the shopkeeper gets the full market price by transferring the subsidy amount (the difference between the market price and the subsidised price) from the balance in the smart card.
The major objection comes from the PDS bureaucracy who fears loss of jobs, specially if people are given the choice to buy from whatever shops (including private shops) they prefer. So, the compromise formula is likely to be (at least initially) that, as at present, food will be procured, stored and distributed by FCI through PDS ration shops only.
The number of fictitious or ‘ghost’ BPL ration cards (or food coupons or smart cards) can be reduced if these are issued against UID (Unique Identification) numbers with proper entry and verification of all supporting identity data. But this will take time.
Meanwhile, the huge amount of wastage and pilferage at FCI godowns will continue, unless better storage (including renting better quality private godowns) and monitoring system can be put in place. Some are suggesting fitting FCI trucks with GPS (global positioning system) so that their movement can be tracked all the time to catch them offloading food to unauthorised people/places and stringent punishment to those caught in the act.
But, given the unfolding huge scam surrounding the Commonwealth Games and the revelation of our MLAs willing to vote for any Rajya Sabha candidate for a crore or two, the question is who will punish whom?
How to tackle this massive malnutrition problem while reducing the inefficiency of the present public distribution system? Currently, in this connection, debates are taking place at several levels.
Should we have a universal or targeted PDS? The supporters of universal PDS (that is, all families to have entitlement to some minimum quantity of food at uniform subsidised prices) basically argue that the identification of the so-called BPL (below poverty line) families is not easy in the present political and social environment.
As many studies have pointed out, there is large scale inclusion and exclusion errors. Many really poor are left out and many non-poor are included. Further, there is no unique definition of ‘poverty line.’ Hence, the line of distinction between BPL and APL (above poverty line) families is arbitrary. So, any attempt at targeting the PDS to the poor will be subject to large errors, given the Indian reality.
Opponents of universalisation of PDS point to inadequate grain production and procurement (currently only about 30 per cent of total rice and wheat production is procured) and severe budgetary constraints on subsidy payment as major hurdles on the way to universal PDS.
At another level, several ideas are being floated around to improve the targeting of PDS. Cash subsidy to buy food directly transferred to the bank accounts of the poor is one.
Here the apprehension is that the money will be used by the head of the family for non-food purposes, like buying liquor. Further, many poor people may find it difficult to open and operate a bank account because no bank branch may be available in the proximity.
Food coupons are considered better as it would be more difficult to convert coupons into food and then sell the food for money to buy liquor. It would also have several advantages over the current PDS.
First, since the food coupon recipient will get food at subsidised price by using the coupons while the PDS shopkeeper will get the full market price (the difference will be paid by the government to the shopkeeper), there will be no incentive for the shopkeeper to divert food from the poor to the black market.
Curb on sub-standard items
Second, it would weaken the incentive to supply sub-standard items to BPL card holders, specially if the option is given to the buyer to buy foodgrains by using food coupons from private stores along with PDS shops. Third, since food coupons are divisible, the poor family can buy part of its quota as his purchasing power allows him at any point. This would help the poor family to use up its full quota by spreading its purchase over time.
Under the existing system, the ration card holder has to lift the entire weekly/monthly quota at one go which many poor families can not afford and hence have to forego the ration altogether. The shopkeeper would often divert the unused ration to the open market.
One possible problem is that food coupons can be counterfeited. So, an even better option could be a smart card (which is more difficult to counterfeit) with the value of the food subsidy stored in there. Each time the buyer buys, he pays the subsidised price but the shopkeeper gets the full market price by transferring the subsidy amount (the difference between the market price and the subsidised price) from the balance in the smart card.
The major objection comes from the PDS bureaucracy who fears loss of jobs, specially if people are given the choice to buy from whatever shops (including private shops) they prefer. So, the compromise formula is likely to be (at least initially) that, as at present, food will be procured, stored and distributed by FCI through PDS ration shops only.
The number of fictitious or ‘ghost’ BPL ration cards (or food coupons or smart cards) can be reduced if these are issued against UID (Unique Identification) numbers with proper entry and verification of all supporting identity data. But this will take time.
Meanwhile, the huge amount of wastage and pilferage at FCI godowns will continue, unless better storage (including renting better quality private godowns) and monitoring system can be put in place. Some are suggesting fitting FCI trucks with GPS (global positioning system) so that their movement can be tracked all the time to catch them offloading food to unauthorised people/places and stringent punishment to those caught in the act.
But, given the unfolding huge scam surrounding the Commonwealth Games and the revelation of our MLAs willing to vote for any Rajya Sabha candidate for a crore or two, the question is who will punish whom?
