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How Bihar mended its ways -Jean Drèze
-The Hindu

The State’s recent experience shows that even the worst-governed States can reform their public distribution system and make good use of the National Food Security Act.

“In Lalu’s days we had a lal card [BPL card], with Nitish we got coupons, and when Manjhi came we got this new ration card”. This is how Anuj Paswan, a Dalit resident of Tetar village in Gaya district, sees recent changes in Bihar’s public distribution system (PDS). His account is not quite accurate, but it does convey the heightened political relevance of these matters in rural Bihar.

A stream of recent reports indicate that Bihar’s PDS has improved in recent years. National Sample Survey data, matched with official data on PDS allocations from the Central Government, suggest leakages in the range of 75 to 90 per cent throughout the 2000s. The latest estimates, however, show a dramatic decline – from 75 per cent in 2009-10 to 24 per cent in 2011-2. Further evidence of positive change emerges from at least four independent surveys, led by researchers from the Delhi School of Economics, the National Council of Applied Economic Research, the Indian Institute of Technology (Delhi) and the World Bank respectively.

Some of these reports have led to premature euphoria in the national media. One leading daily even described Bihar as India’s new “PDS poster boy”. This certificate overlooks the fact that it is mainly in comparison with its earlier dismal record that Bihar is doing so well. Compared with other States, Bihar’s PDS is still far from the best. Nevertheless, Bihar’s recent progress is of much interest for two reasons. First, it shows that even India’s worst-governed States are capable of reforming their PDS. Second, if not a poster boy, Bihar has at least been a pioneer in terms of the implementation of the National Food Security Act (NFSA), and this early attempt to roll out the Act has important lessons for other States.

A recent survey of 1,000 rural households in Banka, Gaya, Purnea and Sitamarhi districts sheds further light on the status of the PDS and NFSA in Bihar. The sample households were selected at random from the Socio Economic and Caste Census list. Out of 1,000 households, 89 per cent were eligible for PDS entitlements under the NFSA (in the sense that they did not meet any of the official exclusion criteria) – this is quite close to the mandatory coverage of 86 per cent in rural Bihar. Among eligible households, 83 per cent had a new ration card and had started receiving PDS rice or wheat under the Act. Another 4 per cent or so had retained their Antyodaya cards, which remain valid. The remaining 13 per cent, however, were still waiting for their ration card. It was not entirely clear whether this gap was due to administrative delays or hoarding of ration cards by corrupt middlemen.

No more mass embezzlement

Households with a new ration card are entitled to 5 kg of foodgrains per person per month under the Act, at Rs.3/kg for rice and Rs.2/kg for wheat. In practice, most of them received a little less and paid a little more. On average, these households were able to purchase 77 per cent of their entitlements during the month preceding the survey (November 2014). This figure is broadly consistent with recent estimates of PDS leakages in Bihar from the studies cited earlier. It confirms that the days of mass embezzlement are over. On the other hand, it suggests no further progress in plugging the leakages in the last two or three years. Note, however, that part of the gap between purchases and entitlements may reflect supply bottlenecks rather than leakages. Indeed, the quantities of PDS grain to be distributed in Bihar shot up after NFSA came into force, and it seems that the system is still trying to cope with the logistic burden of enhanced allocations.

One manifestation of this problem was a very erratic distribution schedule. Ideally, PDS rations should be distributed on fixed days every month (to facilitate public monitoring and vigilance), and in any case within the month when they are due. In Bihar, however, PDS rations are often distributed one month or even two months behind schedule. This makes it very difficult for people to track their entitlements, and opens the door to corruption.

Other useful insights emerged from this survey, both positive and negative. The new list of ration cards (and of household members on each ration card) is linked to the Socio-Economic and Caste Census, making it possible, in principle, for anyone to verify his or her status. The new list is more logical, reliable and inclusive than the earlier “BPL list”, notorious for its arbitrariness. However, the new list of ration cards is not in the public domain as things stand. This defeats the whole purpose of achieving greater transparency.

Bihar still has a long way to go before it achieves poster boy status. The progress achieved so far reflects the partial adoption of PDS reforms that have proved effective elsewhere, notably in Chhattisgarh. However, major gaps remain: PDS dealers in Bihar still operate in an environment of arbitrariness and impunity (one of them shrugged his shoulders when we confronted him with evidence of corruption, claiming that this was the norm). Aggrieved households still have no effective means of securing a response to their grievances. Further PDS reforms are urgently needed, but vested interests are likely to dig their heels in the process.

The silver lining is that the public distribution system and the National Food Security Act have become politically charged issues in Bihar. This is in sharp contrast with the situation that prevailed in the 2000s, when wholesale looting of the PDS failed to trigger active protests. The run-up to Lok Sabha elections last year, and to Assembly elections this year, seems to have prompted the Bihar government to initiate serious PDS reforms. Opposition parties, for their part, are constantly challenging the government’s claims and keeping it on its toes. This political awakening around food security issues is a positive development and gives some hope of further progress in the near future.

(Jean Drèze is Visiting Professor at the Department of Economics, Ranchi University.)