Pathetic distribution system

The public distribution system (PDS) has long been criticised for both its ineffectiveness and its inefficiency. One more damning piece of evidence on both these fronts has emerged from an analysis of the National Sample Survey Organisation's (NSSO) survey of consumer expenditure carried out during 2004-05, which provides the basis for the government's most recent estimates on poverty incidence. The survey finds that, amongst the rural population, more than half of the country's marginal farmers do not possess ration cards. However, as the size of land holdings increased, the likelihood of the household possessing a ration card also increased. The differentiated Below Poverty Line (BPL) card, which entitles the holder to greater access to subsidised commodities, was held by about 26.5 per cent of rural households. This is not bad, considering that rural poverty is estimated to be around that level. However, the survey reveals that about 40 per cent of the BPL cards are possessed by households which are not poor. In urban areas, only about 10 per cent of households have BPL cards, while poverty is estimated to be over 20 per cent. So much for effective targeting, which is supposed to be at the heart of the BPL programme.

The picture is equally bleak when it comes to the purchase of commodities from the system by those who have these cards. Only 16 per cent of rural households and 12 per cent of urban ones bought sugar from the PDS. While the use of the system for cereal purchases varied across states, it was typically a rather small number.

The question must be asked: Is the system as it stands worth what it costs? After all, its raison d'etre is the delivery of necessities to the poor at low and, most importantly, stable prices. The survey confirms the impression that neither do the poor have access to the system nor is it a major source of purchases for the majority of households. The objective remains paramount, but it is clearly time to start thinking of alternative delivery mechanisms, including those in which the private sector plays a significant part. For most of the commodities that the system provides, keeping prices low on average is a matter of ensuring adequate supplies at all times. These can come from domestic producers or imports, depending on market circumstances. For some of them, keeping prices stable involves the maintenance of some level of stocks, which the government could do itself or contract out. Ensuring that households below the poverty line can afford these necessities requires that they have the purchasing power necessary to buy them from the most convenient and economical source""very possibly, a neighbourhood, privately-owned, provisions store that sells at competitive prices. This power can be provided by instruments ranging from outright cash doles to more restricted mechanisms such as food stamps or vouchers, which can only be exchanged for specific commodities.

What the alternative system should look like and whether it should be a "one size fits all" across states is a matter for expert analysis and recommendation. What is clear, though, is that the prevailing system is not serving its intended purpose. That in itself is a strong reason for change; the fact that these interests have a decisive political influence makes the case even stronger.