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LATEST NEWS UPDATES | Think Beyond PDS

Think Beyond PDS

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published Published on Oct 28, 2010   modified Modified on Oct 28, 2010

Will UPA-II's ambitious food security programme work? The issue gains immediacy, with the National Advisory Council unveiling a new draft plan envisaging legal entitlement to subsidised foodgrain for at least 75 per cent of the population. That works out to almost 800 million people. If implemented, this means the government's food subsidy bill will be far bigger. Also, our groaning public distribution system will come under greater strain. Now, central to the question of the doability of any food cover plan is the efficacy or otherwise of its delivery apparatus. Clearly, the public distribution system as it exists can't deliver the goods.

Unsurprisingly, policymakers have called for alternative delivery mechanisms. Reportedly, a paper by the finance ministry's chief economic advisor Kaushik Basu advocates a lower profile for the Food Corporation of India in the delivery framework. It also asks that the PDS seen as pretty much beyond redemption be replaced by more effective mechanisms such as food coupons. In response to the contention that coupons may be bought and sold, defeating the purpose of reform, it is suggested that they be given to women members of households on an experimental basis. The idea makes sense. Women household heads will hardly resort to malpractice at the cost of letting their families go hungry.

Given the political class's aversion to radical change, consensus on the PDS's total dismantling may be hard to come by. But, remember, over 65 per cent of PDS foodgrain lands up in the open market. Basu highlights a study revealing that 70 per cent of PDS wheat eludes targeted BPL families. So, there's no denying that the PDS needs a thorough overhaul. Structural makeovers, however, can't happen overnight. While PDS revamp is undertaken, there's every reason to test out other innovative ways of providing access to food. Some states are already experimenting with food coupons, which are accepted at all grocery shops. An even better idea is biometric smart cards, whose use Orissa is piloting, which make identity theft or fudging difficult. Under PDS, ration cards using false names ghost cards are a big problem. Poor-directed cash transfer is also worth considering.

All these options are qualitatively superior to the existing system on several counts. They allow subsidy to go directly to targeted beneficiaries rather than circuitously via an inefficient, leaky PDS. Selling food at market rates reduces the incentive for profiteering through diversion by officials, transporters and fair price shops. Plus, people get to choose what they want to buy. It's been recommended that food coupons, supported by the UID project, should eventually cede way to mobile banking-linked smart cards. The government must act on this advice, which also mandates that UID and financial inclusion initiatives are fast-tracked.


The Times of India, 28 October, 2010, http://timesofindia.indiatimes.com/home/opinion/edit-page/Think-Beyond-PDS/articleshow/6823337.cms


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