No savings

If the purpose of the food ministers' conference, held in the capital last week, was to make the states take on greater responsibility in the procurement of foodgrains for the public distribution system (PDS) and thus to lighten the Centre's burden, it has not been fully served.

In fact, the states seem to have prevailed upon the Centre to shoulder some additional financial liabilities, not just of procurement but also of distribution of grains which, hitherto, has been the states' job.

The Centre will now be bearing the entire cost of the local movement of procured paddy as well as that of gunny bags in those states that participate in the decentralised procurement operations.

In addition, the Centre will begin paying a commission to the village societies undertaking foodgrain procurement and also to all the 4.75 lakh fair price shops for distributing foodgrain to families covered under the Antyodaya scheme.

Moreover, the Centre will now pay higher milling charges for parboiled rice in all states. As a result, it is not clear whether the Centre will save any money by promoting decentralised procurement.

This is especially because the grains purchased in Punjab and Haryana, which constitute the bulk of the procurement, have in any case to come to the Centre.

One of the major problems with the existing PDS is the faulty identification of the poor, resulting in misplaced targeting of the supply of subsidised foodgrain.

While many households manage to get access to cheap food and other benefits under one or the other poverty alleviation and welfare programme, a large segment of the deserving poor is totally left out.

Instead of facing this issue squarely, the food ministers' meet sought to side-track it by urging the Planning Commission to revisit the criteria for identifying poor households.

This will serve little purpose as long as the selectors of these families remain the same. The proposal to outsource this task to the private sector has been shot down.

The food management system, from the procurement to the final distribution level, is far from cost effective. It suffers from several significant and well-known deficiencies.

These include ad hoc or flawed grain allocation, lack of field demand planning, absence of a well-conceived distribution calendar, complicated grain lifting procedures and non-deployment of information technology in monitoring and other operations.

The biggest problem is the universal nature of the PDS, and which the states view as sacrosanct. In such a situation, it would be naive to expect tangible savings on the food subsidy, which crossed an unsustainable level of Rs 25,000 crore in 2003-04.

In fact, going by the UPA's national common minimum programme, this subsidy is bound to swell further. Meanwhile, there is no sign of the much needed food sector reforms.