The stated objective of the Public Distribution System (PDS) of India was to offer basic minimum quantity of essential commodities at the lowest prices especially to poorer sections of society and also to stabilize the open market prices or at least to stop an unwarranted rise in such prices under any crisis period. The prices charged are usually lower than open market prices and also lower than the procurement and other costs incurred by the government. Yet the PDS has mostly failed in its mission to feed the poor and hungry of India. The PDS was failed by the people involved in the PDS themselves: invisible Injustice.
The Public Distribution System (PDS) of food supplies of India is the oldest and the most prominent anti-hunger and poverty alleviation programme in India. It was initiated in 1939 as a relief measure to victims affected by the famine due to drought and World War I and was expanded in its range to include areas of procurement, storing and distribution of food grains and other items essential for life at fair prices. The salient features of the PDS are the following:
1. It is a system of distribution of selected essential goods through the fair price shops which are operated by private dealers under the government's control and direction.
2. Rice, wheat, sugar, kerosene and edible oils are the main items distributed through PDS.
3. The PDS worked along with free market and hence it was part of a "dual economy" for the supply of vital commodities. Customers were free to either purchase through Fair Price Shops or from the open market.
4. The required amounts of food grains and other items are acquired by the government through internal procurement and or through imports. A buffer stock is maintained through FCI go-downs to meet the demands of the shortage periods. The government feeds the PDS with supplies, bears the cost in the form of subsidy, and decides as to which goods to be supplied at what rates and in how much quantity per head or per family.
Till the end of seventies, the PDS was basically confined to urban population only. In the beginning of eighties, some state governments like Kerala, Gujarat, Tamil Nadu, and Andhra Pradesh extended the coverage of PDS to rural areas and also introduced the target grouping approach. Increase of food grain production from 74 million tons in 1968 to 99 million tons in 1977 and further increase to 158 million tonnes in 1991 also favoured such policy changes in PDS at least on paper.
The ground reality is that, even after 78 years of its existence, it does not really reach the people it is meant for. A study by Planning Commission member Kirit Parikh in 1994 found that in Uttar Pradesh, Bihar, Odisha and Madhya Pradesh, more than 90 per cent of the deserving population did not get any cereals from the PDS. Even where it is operational, the PDS was socked in corruption and pilferage.
Every review of PDS since 1980 characterized it as a combination of waste and deceit. In 1985 the Planning Commission's Programme Evaluation Organization reported "irregularities in quality, quantity and in the reach of the programme". A revamping exercise followed but in 1995 the Planning Commission found that there was hardly any improvement in the new Revamped PDS. Two years later in 1997, a World Bank study by R. Radhakrishna and K. Subba Rao reported that "the impact of the PDS on poverty and the nutritional status was minimal. An amount of Rs 4.27 was incurred to transfer one rupee of income to the poor."
A study done on the impact of the PDS in Kalahandi, the dust bowl of poverty, by Bhabani Shankar Nayak states that the entire emphasis of the scheme has been on satisfying the millers, traders, large farmers and bureaucrats and not on meeting the consumption needs of the poor and the undernourished. The story is same both in urban and rural areas. Time and again reviews of PDS were done and several indictments were issued to it for the gross INVISIBLE INJUSTICES the public distribution system was committing for several decades.
1985: Planning commission study:- “ Beneficiary households were not drawing the ration even for one out of eleven commodities because of their irregular supply and poor quality”. (Rice, wheat, millets, sugar, kerosene, pulses, edible oils, iodized salt, spices, soft coke…etc. were originally envisaged to be distributed; today is just boiled down to just some wheat or rice.)
1994: Kirit Parikh Report:- “ In Punjab, Haryana, Uttar Pradesh, Bihar, Odisha and Madhya Pradesh, more than 90 per cent of the people do not buy any cereals from the PDS.”
1995: Planning Commission Report:- “ Out of the 64 villages sampled ration cards were not provided to all the selected households in 30 villages.”
1997: WORLDBANK STUDY:- “ The impact of the PDS on poverty and the nutritional status was minimal. As stated already a sum of Rs 4.27 was spent to transfer one rupee of income to the poor.”
1997: RADHAKRISHNA & RAO:- “ Access to PDS is very limited and it is particularly weak in the states with the highest incidence of poverty.”
2000: COMPTROLLER AND AUDITOR GENERAL OF INDIA REPORT:- “ The benefits of subsidized price have not reached BPL households and income transfer through the PDS is poor”.
2005: PLANNING COMMISSION STUDY IN 2003-04:- “In 2003-4, sixteen states were issued 14.07 million tons (mt) of food grain of which only 5.93 mt reached BPL families. Of the remaining 8.14 mt, 5.12mt leaked out in transit from the go-downs of Food Corporation of India to retail outfits while 3.02 mt was delivered to unintended beneficiaries.”
On an average a sum of Rs 4.5 is spent in PDS to transfer the benefit one rupee to the poor. In many cases even that is not transferred to the poor.
The PDS was reformatted into “Revamped PDS” in 1992 and again in 1997 into “Targeted PDS” which was supposed to be an improved version of the ‘Revamped PDS’ with a quadrupled subsidy amount. Yet the situation showed practically no improvement.
The crux of the problem is in the food subsidy structure itself. Nobel laureate Jan Tinbergen had warned in the 1950s itself that ‘the use of one policy instrument to achieve more than one objective will invariably end up in failure’. In India food subsidy is used to support farmers with a minimum price, procure food grains, stabilize prices and subsidize the poor. Obviously, the outcomes in each objective will be poor. Higher the prices to the farmers greater will be the procurement cost and still greater will be the food subsidy cost which shot up from Rs 9,434 crore in 1999-2000 to Rs 27,800 crore in 2004. To the government it is a colossal investment with practically no return.
Another myth is that the minimum support price (MSP) will help small farmers. The truth is that 80 per cent of the farmers own just 20 per cent of the land. Worse still, nearly 80 per cent of those owning land have no surplus to sell and are forced to work on the farms of others to make both ends meet. That means procurement is largely from large farmers and will not be sufficient to meet the requirements for PDS. Hence governments resort to imports which are limited in quantity.
There are hidden and unofficial practices of forced procurements from small and semi-medium farmers to level the deficiency in PDS. The revenue officials knew the local farmers and all those small and semi-medium farmers were forced to part with 6-10 quintals of wheat or rice or both every year no matter whether the family had enough to eat or not. In many cases the price of procurement was not given either fully or partially. If the farmer made an issue of it he will be threatened with dire consequences by the revenue officials with whom any landowner has to deal with in the future. Thousands of families were made poor and hungry in the remote rural areas in India by this forced procurement system.
The third myth is that the Minimum Support Price (MSP) regime helps to stabilize prices. The fact is that the MSP for wheat shot up from Rs 391 per quintal in 1991 to Rs 839 per quintal in 2002 while that of rice increased from Rs 487 per quintal to Rs 1,174 per quintal between the same years. Along with this add the interest costs and the administrative costs of maintaining a countrywide network manned by 2.04 lakh workers. It is not surprising that the proportion of money used to procure food grain and maintain stocks increased from 16 per cent in the 1980s to 66.5 per cent in 2003.
The only people who really profit from PDS are the 2.04 lakh or more workers employed in it: Invisible Injustice of the poor feeding the rich and well-off.
The Down to Earth reported on 15 August 2007 that the PDS failed in feeding India’s Poor.
The Hindu reported on 16, March 2010 that the Central Vigilance Committee (CVC) appointed by Supreme Court has slammed the PDS as one of the most corrupt sectors saying that the root cause of its failure in several states is political interference. The CVC headed by Justice D.P. Wadha, a retired Supreme Court Judge observed, “Corruption is all pervasive in the entire chain involved in the PDS. It continues to remain a formidable problem. It is true that some officers are doing a good job but then most of the functionaries under them in the Department are typically callous and resort to corrupt practices…. The Central Government gives 28,000 crore annually to the States to subsidize food for the poor; but till the recommendations of the committee are put in place the poor will go on suffering at the hands of corrupt officials, dishonest fair price shop owners, treacherous transporters and unscrupulous millers as well…” The CVC brought to light large scale diversions of food grains supplied to the PDS, incidences of black marketing by Fair Price Shop (FPS) dealers, strong nexus between FPS and officials of the department, improper record-keeping, false entries, and above all political influence and interference hampering functioning of PDS. The CVC cited several instances of PDS failures from various states in its report. There are millions of ineligible and fraudulent ration cards; at the same time, millions of poor families have no ration card. PDS shop owners in collusion with government officials divert the subsidized food supply and petroleum to the black market. Card numbers are inflated by those held under false or duplicate names, in the names of dead people, or by real but ineligible people.
Times of India (Aug 14, 2012) reported that t he criminal waste of food grains meant for the public distribution system and open market is indicative of the systemic failure involving multiple agencies like the Central Warehousing Corporation, Food Corporation of India and Indian Railways. PDS in India is a system of organized looting of the poor and hungry: Invisible Injustice.
(The writer is retired Professor, XIM Bhubaneswar. Email: firstname.lastname@example.org)(Published on 29th January 2018, Volume XXX, Issue 05)