PDS: objectives, functioning, limitations, revamping

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Relevance: 

Prelims: Economic and social development: Poverty, inclusion, Social Sector initiatives

Mains: GS III

What is PDS?
  • The Public distribution system (PDS) is an Indian food Security System for the poor people established by the Government of India under the Ministry of Consumer Affairs, Food, and Public Distribution.
  • While the Central government is responsible for procurement, storage, transportation, and bulk allocation of food grains, the State governments hold the responsibility for distributing the same to the consumers through the established network of approximately 5 lakh Fair Price Shops. Major commodities distributed include wheat, rice, sugar, and kerosene.
  • The benefits of PDS are significant for the emerging economies. Public distribution schemes in Bangladesh, Cambodia and Pakistan have helped to get more girls into education. (According to Asia Reasearch Centre)

Evolution of the PDS system
  • Evolution of public distribution of grains in India had its origin in the 'rationing' system introduced by the British during World War II.
  • Public distribution of foodgrains was retained as a deliberate social policy by India when it embarked on the path of planned economic development in 1951. 
  • Before the 1960s, distribution through PDS was generally dependant on imports of food grains. It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the government set up the Agriculture Prices Commission and the Food Corporation of India to improve domestic procurement and storage of food grains for PDS.
  • By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food. In the 1990s, the scheme was revamped to improve access of food grains to people in hilly and inaccessible areas and to target the poor.
  • Subsequently, in 1997, the government launched the Targeted Public Distribution System (TPDS), with a focus on the poor. TPDS aims to provide subsidised food and fuel to the poor through a network of ration shops. Food grains such as rice and wheat that are provided under TPDS are procured from farmers, allocated to states and delivered to the ration shop where the beneficiary buys his entitlement. 
  •  
  • In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.
Objectives of the PDS
  • Creation of Food Corporation of India and Agricultural Prices Commission in 1965 consolidated the position of PDS. The government was now committed to announce a minimum support price for wheat and paddy and procure quantities that could not fetch even such minimum prices in the market.
  • The resultant stocks were to be utilized for maintaining distribution through the PDS and a portion of these were used to create and maintain buffer stocks.
  • All through the ups and downs of Indian agriculture, PDS was continued as a deliberate social policy of the government with the objectives of:
  1. Providing foodgrains and other essential items to vulnerable sections of the society at reasonable (subsidised) prices
  2. to have a moderating influence on the open market prices of cereals, the distribution of which constitutes a fairly big share of the total marketable surplus
  3. to attempt socialisation in the matter of distribution of essential commodities.

 

Functioning of the PDS

  • The central and state governments share responsibilities in order to provide food grains to the identified beneficiaries.
  • The centre procures food grains from farmers at a minimum support price (MSP) and sells it to states at central issue prices.
  • It is responsible for transporting the grains to godowns in each state. States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.
  • The Food Corporation of India (FCI) is the nodal agency at the centre that is responsible for transporting food grains to the state godowns. Specifically, FCI is responsible for:
    1. procuring grains at the MSP from farmers
    2. maintaining operational and buffer stocks of grains to ensure food security
    3. allocating grains to states
    4. distributing and transporting grains to the state depots
    5. selling the grains to states at the central issue price to be eventually passed on to the beneficiaries.

Lessons from Brazil's initiatives

Bolsa Familia:

  • ‘Bolsa Familia’ involves conditional cash transfers (CCT) to the poorest families in situations of food insecurity. This scheme provides stipends and food to the poorest if they meet certain conditions, such as that children attend school, or babies are vaccinated.
  • The programme has improved the lives and nutritional intake and has about 12.4 million families enrolled.
  • It has been referred to as a ‘model of effective social policy’ by a former World Bank president. The programme allows children to miss about 15% of classes; if a child gets caught missing more than that, payment is suspended for the entire family. 

     

  • ‘Bolsa Familia’, while not a panacea, has a record of attaining its target better

    than most CCT schemes. Brazil’s success, possible through strong political

    commitment, might be adaptable for State-level implementations in India

 

The Food Products Procurement Programme:

  • It was also introduced in Brazil to ensure a market and reasonable price for products from small-scale farmers.
  • This programme involved direct procurement of products at harvest for maintaining:
    1. local food security stocks;
    2. advanced procurement of products at planting time;
    3. local procurement by local governments to be used in school feeding programmes; and
    4. a programme supporting milk production and consumption, benefiting producers with limited production and bargaining power

 

Issues in implementation
  • It has been observed that even though the Indian economy has achieved remarkable economic growth along with a decline in poverty over the last two decades, improvements in nutritional status have not kept pace with this economic growth. 
  • Greater access to subsidised grains for the poor was expected to reduce malnutrition, leading to a reduction in the number of underweight children. However, most national-level surveys conducted during this period including the National Family Health Survey did not find any correlation between PDS use and decline in malnutrition. Following are the issues with the existing PDS:
  1. Identification of beneficiaries:
    • Large errors occur in exclusion and inclusion of Below Poverty Line (BPL) and Above Poverty Line (APL) families in beneficiary data. The problem of targeting is compounded by the lack of good quality regular data; no regular official estimates of the actual income of households.
    • The entitled beneficiaries are not getting food grains while those that are ineligible are getting undue benefits. An expert group of the Ministry of Rural Development on the methodology for conducting the BPL census found that about 61% of the eligible population was excluded from the BPL list while 25% of non-poor households were included in the BPL list.
    • Another indicator of inaccurate classification of beneficiaries is the existence of ghost cards in several states. 'Ghost cards' are cards made in the name of non-existent people. The existence of ghost cards indicates that grains are diverted from deserving households into the open market.
  2. Shortfall in storage capacity with FCI against the central pool stock: 
    •  A performance audit by the CAG has revealed a serious shortfall in the governments' storage capacity
    • After obligations under TPDS have been met, the food grains that have been procured need to be stored as a buffer stock. While there has been a sharp hike in procurement from, FCI‟s storage capacity (both owned and hired) has not increased commensurate to the growth in procurement.  
  3. Rising Subsidy and financial burden: 
    • There are other issues with regard to trends in procurement vis-à-vis production of foodgrains. As recent data show, the central government procures about a third of the quantity of cereals produced domestically. However, the amount slated for procurement is expected to increase under the NFS Act, raising concerns regarding the sustainability of such a food delivery mechanism.
    • There are also concerns regarding the financial feasibility of such a system. The centre bears a large financial burden, the food subsidy because the cost of procuring and delivering food grains is about six times its sale price. It is anticipated that the food subsidy will rise steadily due to the increased procurement of grains under the Act, related costs and other factors. 
  4. Inconsistent quality:
    • The majority of the respondents reported that the quality of ration is inconsistent— sometimes it is fine, sometimes it is awful. The complaints were mainly of bad quality of wheat. Most of the recipients were unsatisfied with the quality of wheat and rice.
  5. Corruption and leakages: 
    • Despite a number of significant, system-wide changes over recent years, high levels of corruption and leakage continue to plague the PDS. Part of this leakage occurs at the level of the fair price shops, where some store owners exchange the high-quality goods provided from the government for distribution through the PDS with lesser quality goods from the general stores. 
    • Dual pricing introduced through the TPDS is seen by some as an incentive for stakeholders to divert commodities into the open market where they can command a higher price.
  6. Lack of transparency in the selection of procedure of PDS dealers

Supreme Court order on rotting of food grains in CAP storage

In August 2010, in the ongoing case of PUCL vs. Union of India, the Supreme Court found that food grains were rotting due to inadequate storage. It directed the central government to adopt long and short term measures to store and preserve procured food grain, and prevent rotting, including:

  1. constructing adequate FCI storage facilities in each state and division,
  2. increasing allocation to BPL families,
  3. opening Fair Price Shops for all days in the month,
  4. distributing food grains to beneficiaries at low or no costs.

Revamping the PDS
  1. End to End computerisation:
    •  The Justice Wadhwa Committee Report for PDS (2011) recommended computerisation for two reasons: a first one to prevent diversion, and a second one to enable secure identification at ration shops.
    • The Committee has recognised Chhattisgarh as a model state for the first component, and Gujarat as a model for the second. Other states have embarked upon the ambitious effort of computerising the whole supply chain, most notably Karnataka, where electronic PDS (e-PDS) covers transactions with authorised wholesale dealers and a biometric database of users.
  2. Universal PDS: Tamil Nadu implements a universal PDS, such that every household is entitled to subsidised food grains. This way, exclusion errors are reduced.
  3. Digitalisation: States such as Chhattisgarh and Madhya Pradesh have implemented IT measures to streamline TPDS, through the digitisation of ration cards, the use of GPS tracking of delivery, and the use of SMS based monitoring by citizens.
  4. Use of Adhaar: As part of Beneficiary Data Digitisation, States/UTs have been requested to seed the Aadhaar Number wherever available so as to weed out bogus/duplicate/ineligible beneficiaries. So far data of 61.25 per cent beneficiaries have been linked to the Aadhaar Number.

  1. Direct Cash Transfers: For checking of leakage and diversions, the Government is also pursuing with States/UTs to opt for Direct Benefit Transfer (DBT) under which subsidy component will be credited to bank accounts of beneficiaries to ensure their entitlement making them free to buy foodgrains from anywhere in the market.
  2. Improving storage capacities: As it is understood that storage capacities need to be improved ensuring proper storage of procured food grains for PDS schemes. Thus, storage capacities have been augmented across the country by using funds under plan schemes as well as through private investment in Public Private Partnership (PPP) mode. Under the Private Entrepreneur Guarantee (PEG) Scheme, godowns are constructed through private investors and hired by FCI for a guaranteed period of 10 years.
  3. Checking corruption: 
    • Every State/UT Government is required to set up Vigilance Committee at the State, District, Block and Fair Price Shop (FPS) level. These Committees regularly supervise the implementation of all the schemes covered under National Food Security Act and informs the District Grievance Redressal Officer in writing of any violation as well as any misappropriation of funds.
    • Under the new policy for allotment of Fair Price shop, preference is given to Panchayats, Self Help Groups, Co-operatives, in licensing of Fair Price Shops.

 

Suggestions to increase the efficacy of PDS
  1. To eliminate exclusion errors:
    • For including the excluded in the PDS during this pandemic, experts like Abhijeet Banerjee, Amartya Sen and Raghuram Rajan have gone on record recommending a temporary ration card for a period of six months to everyone who is in need with minimal checks. They have rightly remarked: “The cost of missing many of those who are in dire need vastly exceeds the social cost of letting in some who could perhaps do without it.”
    • The Delhi government has initiated this type of temporary e-coupon system
  2. Door-step Delivery:
    • During this pandemic, all the respondents complained of overcrowding at the ration collection points. They also expressed fear of catching the disease due to the complete absence of social distancing norms. Door-step Delivery is a good alternative to respond to such a situation.
    • If the doorstep delivery takes time to be rolled out, the government can consider increasing and diversifying distribution points. Government schools have already been used as PDS delivery points but other public spaces such as sports stadia, public parks, post offices can be roped in to distribute ration as an emergency measure.
  3. To meet inadequate food-supply:
    • various State governments should consider establishing community kitchens providing free food as done by the Kerala government to cater to the hungry as an immediate measure. Kerala’s community kitchens have been quite successful in the current situation.
  4. Addressing the food quality issue: 
    • technology-driven solutions have the potential to resolve immediate challenges as well as long term challenges. Use of upcoming technologies like Artificial Intelligence, Machine Learning, and the Internet of Things could be urgently adapted to eliminate the menace of adulteration and bad quality food grains.
  5. Ensuring accountability:
    • One mechanism for checking and making the process of distribution more accountable was suggested by the Delhi High Court in a petition filed by Delhi Rozi Roti Adhikar Abhiyan which sought time-bound redressal of complaints regarding non-supply of rations and transparency in the distribution of food grains.
  6. A separate cadre for ration inspection:
    • Experts suggest that a separate cadre of government employees be established for this purpose and stationed at all the FPS. They could be called Ration Inspectors and their job would be to ensure impartial and hassle-free delivery of food grains from the FPS.
    • The formation of such a cadre only needs a notification by the Ministry of Consumer Affairs, Food and Public Distribution, and the legislation can take place later.
    • We do have a provision for periodic inspection of FPS by the Circle food supply officers and Special Commissioners. Unfortunately, with no accountability and lack of supervision of these officers, inspections have been few and sporadic, and consequently, progress on the ground has been negligible. Therefore, having a cadre of officers permanently stationed at the FPS would have an impact.

IMPACT OF THE PANDEMIC ON ACCESS TO FOOD

  • The loss of livelihood induced by the pandemic has severely hampered people’s access to food.
  • Given the fact that massive unemployment and loss of livelihood has already engulfed the working millions due to the pandemic, and that some members of the households are excluded from the PDS, the quantity of ration provided by the government cannot act as a bulwark against hunger and want.
  • It naturally leads us to the question of how they survive for the rest of the days without any source of income. Most of the respondents borrowed money to meet their food requirements.
  • Thereafter consuming the ration from the PDS that lasts up to 15 days, they borrow money from their neighbours and friends. Similarly, those who received the kits only once in the last two months used their savings and borrowed money to buy these items again.
  • Few are surviving on meagre savings while the rest are borrowing money from friends and neighbours. None of them could access bank credit due to lockdown. Each had developed their networks of informal borrowing, which they relied upon in times of extreme distress.
  • In such a scenario, they expressed their anguish at falling deeper into a debt trap and not having a clue as to when they will be able to come out of it. The respondents declared that their meagre savings, ration from the PDS, and borrowed money from neighbours and friends are their only hopes of survival.
  • To address this, PM Garib Kalyaan Anna Yojana was launched

 

 How Lisbon tackled food crisis?

  • Lisbon, the capital of Portugal is an example of a city that has overcome challenges food insecurity.
  • It was awarded as the 2020 European Green Leaf Award Winner for its notable sustainable land use, transport, green growth and eco and waste innovations. 
  • The 2010 to 2014 Portuguese financial crisis resulted in increased unemployment rates and reduced household budgets. As a result, adequate food intake was evidently inhibited.
  • However, Lisbon demonstrated that sustainability and economic growth can go hand in hand. Measures were taken such as the ReFood Movement, a food waste prevention initiative, and the Municipal Plan Against Food Wastage program.

 

Conclusion
  • A pandemic has again driven home the importance of well-designed and meticulously implemented food security policies that provide for timely access to adequate quality and quantity of food (and water), and good hygienic norms.
  • Most of the problems that India’s poor are encountering could be attributed to a lack of implementation of the existing food security framework, although the ‘law may look good on paper’ .
  • To improve India's food security, most recommendations involve strengthening the existing PDS and other levers. For instance, the National Food Security Act (NFSA), 2013 mandates all State governments to set up grievance redress mechanisms and a State Food Commission to oversee the proper implementation of the law. However, States have not ensured such a mechanism to date. Some States have constituted their food commissions but they do not function fully.
  • The PDS may not be able to eliminate the issue of malnutrition and childhood morbidity or mortality in India, but it can reduce the levels of hunger in India if implemented effectively. Integrating the PDS with other interventions that will increase transparency and accountability may increase its potential to realise every citizen’s right to nutritious food while propagating good health.



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