PDS leakage more in targeted scheme

Only 42% of subsidised grain reaches the poor.

This is the first of a two-part series on the state of the public distribution system

Leakages from the targeted public distribution system (TPDS) are higher than those under the public distribution system (PDS), which it was meant to replace, finds a study conducted by the Planning Commission.

Leakages and diversion to unintended beneficiaries have meant that only 42 per cent of the subsidised grain released from the central pool actually reach the poor under the TPDS. Various estimates had put the leakages under the PDS at 31-37 per cent.

About 36 per cent of the grain are siphoned off from the supply chain and 22 per cent are going to families above the poverty line, which are not the intended beneficiaries of the TPDS, found the project evaluation organisation of the Planning Commission, which conducted the study Performance evaluation of TPDS.

"Certain kinds of leakages, however, cannot be captured and the actual leakages may well be above the 58 per cent that the study found,' said a Planning Commission official.

Bihar and Punjab had leakages of over 75 per cent, followed by Haryana, Madhya Pradesh and Uttar Pradesh, which reported leakages of between 50 to 75 per cent, the study said. Andhra Pradesh, Kerala, Orissa, Tamil Nadu and West Bengal reported leakages of less than 25 per cent.

Though the TPDS has resulted in greater participation of consumers and higher off-take of grain by poor households, 'the transition from PDS to TPDS has neither led to a reduction in budgetary food subsidies, nor has it been able to benefit the large majority of the food insecure households in the desired manner,' the study says.

During 2003-04, 16 large states in India were issued 14.07 million tonne of below poverty line (BPL) quota from the Central Pool. Of this, around 5.93 million tonnes was delivered to BPL families and 8.14 million tonnes intended for them never reached them, the study found.

These leakages raised the delivery cost of grain, so that the Centre had to issue 2.4 kg of subsidised grains for each 1 kg which reached the poor. In rupee terms, the Government spent Rs 3.65 through budgetary food subsidies to transfer Re 1 to the poor.

Of the intended consumer subsidy of Rs 7,258 crore in 2003-04, Rs 4,197 crore did not reach the BPL households. In fact, Rs 2,640 crore of the Central subsidy was siphoned off the supply chain itself.

The budgetary subsidy of Rs 3,061 crore, which did reach the BPL households, was worth only Rs 1,990 crore to the BPL families, because of the very high costs of transfer, the study found.