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PDS reforms must be completed

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  9 Jun 2016 12:00 AM GMT

By Sandip Das

The Public Distribution System (PDS), till 1992, was a general entitlement scheme for all consumers without any specific target. The Revamped Public Distribution System (RPDS) was launched in June 1992 in 1775 blocks throughout the country. RPDS was launched with a view to strengthen and streamline the PDS as well as to improve its reach poor families especially in the far-flung, hilly, remote and iccessible areas.

RPDS covered those areas where special programmes such as the Drought Prone Area Programme(DPAP), Integrated Tribal Development Projects (ITDP), Desert Development Programme (DDP) and certain Desigted Hill Areas (DHA) were in operations while the main focus was to improve the PDS infrastructure. Foodgrains for distribution in RPDS areas were issued to the states at 50 paise below the Central Issue Price. The entitlement was 20 kg grain per card.

Subsequently in June, 1997, the central government launched the Targeted Public Distribution System (TPDS) with focus on the poor families. Under the TPDS, states were required to formulate and implement foolproof arrangements for the identification of the poor for delivery of foodgrains and for its distribution in a transparent and accountable manner at the Fair Price Shops (FPS) level. TPDS aimed at benefiting about six crore poor families for whom a quantity of about 7.2 million tonne (MT) of food grains was earmarked annually.

The identification of the poor under the scheme was done by the respective states as per state-wise poverty estimates of the Planning Commission for 1993-94 based on the methodology prepared by ‘the expert group on estimation of proportion and number of poor’ chaired by Late Prof Lakdawala. The allocation of foodgrains to the states was made on the basis of average consumption in the past or average annual off-take of food grains under the PDS during the past ten years at the time of introduction of TPDS.

The quantum of food grains in excess of the requirement of Below Poverty Line (BPL) families was provided to the state as ‘transitory allocation’ for which a quantum of 10.3 MT of food grains was earmarked annually. Over and above the TPDS allocation, ‘additiol allocation’ to States was also given periodically. The transitory allocation was intended for continuation of benefit of subsidized food grains to the population Above the Poverty Line (APL). However additiol allocation was issued at prices, which were subsidized but were higher than the prices for the BPL quota of food grains.

The number of BPL families covered under TPDS was increased in 2000 by shifting the base to the population projections of the Registrar General as on March 1, 2000, instead of the earlier population projection of 1995. With this increase, the total number of BPL families were 6.52 crore as against 5.9 crore families origilly estimated when TPDS was introduced in June 1997.

Under the TPDS which was in operations till the tiol Food Security Act (NFSA) was rolled out, began in September 2013, the end retail price is fixed by the states after taking into account margin for wholesalers or retailers, transportation charges, levies, local taxes etc. However, since 2001, flexibility has been given to states for fixing the retail issue prices by removing the restriction of 50 paise per kg over and above the central issue price for distribution of food grains under TPDS except with respect to Antyodaya An Yoja (AAY) where the end retail price is to be retained at Rs.2 / a kg. for wheat and Rs.3/ a kg. for rice. The NFSA, 2013 which is being implemented now, aims at providing highly subsidized foodgrains (5 kg per person per month) to close to 82 crore population.

However, the High Level Committee, chaired by former food minister Shanta Kumar, in its recommendation to government last year had stated gradual introduction of cash transfers in PDS, starting with large cities with more than a million population; extending it to grain surplus states, and then giving option to deficit states to opt for cash or physical grain distribution. This will be much more cost effective way to help the poor, without much distortion in the production basket, and in line with best intertiol practices.

According to HLC’s calculations, DBT could save the exchequer more than Rs 30,000 crore annually, and still giving better deal to consumers. “Cash transfers can be indexed with overall price level to protect the amount of real income transfers, given in the me of lady of the house, and routed through Prime Minister’s Jan-DhanYoja (PMJDY) and dovetailing Aadhaar and Unique Identification (UID) number. This will empower the consumers, plug high leakages in PDS, save resources, and it can be rolled out over the next 2-3 years,” HLC had stated.

For the last two years, the NDA government led by rendra Modi has focused on PDS reforms specially following passage of NFSA, 2013. Cutting pilferage from the PDS is becoming far easier with almost all of the 23 crore ration cards in the country being digitised and 56% of these already seeded with unique identification number Aadhaar. Besides, several states have now installed electronic point of sale (ePOS) devices at their fair price shops to track the sale of foodgrains to actual cardholders on a real-time basis.

According to recent government estimate, DBT scheme for subsidies has resulted in significant savings across welfare schemes, including Rs 27,000 crore in PDS, LPG distribution and Mahatma Gandhi tiol Rural Employment Guarantee Act.

According to the food ministry data, Andhra Pradesh, Telanga, Chhattisgarh and Delhi, besides union territories Chandigarh and Andaman and Nicobar, have completed seeding of all the ration cards with Aadhaar. States such as Kerala (95%), Rajasthan (94%), Harya (86%), Jharkhand (73%) and Odisha (65%) have also reported significant progress in terms of seeding of PDS beneficiaries’ cards with Aadhaar.

However, Uttar Pradesh, Bihar, Tamil du and north-eastern states such as Assam and Manipur, have been slow in this technological process aimed at elimiting pilferage and ensuring that subsidised foodgrains reach intended beneficiaries. Among the laggards, Bihar, which has 1.54 crore ration cards, still has only 9,000 cards seeded with Aadhaar. Similarly, Tamil du with around 2 crore ration cards has only 10% of these cards linked with Aadhaar.

On electronic point of sale (ePOS) installation, Gujarat and Andhra Pradesh have almost completed the process, while others like Chhattisgarh and Madhya Pradesh are catching up. States with large poor populations like Uttar Pradesh, Bihar and Odisha have, however, yet to make any headway in equipping their fair price shops with ePOS devices. According to estimate, Andhra Pradesh would save around Rs 800 crore annually through steps like putting ePOS devices in its 28,000 odd public distribution system (PDS) outlets and seeding ration cards with Aadhaar numbers.

The objective of ePOS, of course, is to ensure that only genuine cardholders or his or her family members whose mes are mentioned in the ration card can buy the subsidised commodities. When the ration is taken, the ePOS device captures the buyer’s biometrics, which is verified online with the Aadhaar database.

The device helps record all FPS transactions electronically, which ebles real-time accounts of opening stock, daily sales and closing stock. In turn, this would facilitate monthly allotment of stocks to the FPSs based on the stock position and also facilitate monitoring and detection of fraudulent transactions. However, there is still a long way to go on this front as only 22% of the 5.3 lakh fair price shops (FPSs) in the country have installed ePOS devices so far.

With the food subsidy in the current fiscal estimated at Rs 1.34 lakh crore (the NFSA has passage of NFSA, 2013 which aims at providing highly subsidized foodgrains to close to 82 crore population has already been rolled out in 27 states and 6 UTs), compared with Rs 1.24 lakh crore (revised estimate) for last year, the government is keen to bolster direct transfer of subsidies to the beneficiaries’ bank accounts. Direct benefit transfer (DBT) in PDS, however, is still at an early stage; three UTs — Chandigarh, Puducherry and Dadra and gar Haveli — have implemented DBT on a pilot basis.

However for next couple of years, the government’s task is to ensure that all the states uniformly carry forward PDS reforms so that pilferage and inefficiency in the system could be removed.

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