Reform the PDS

The government's move to import 1.5 million tonnes of wheat, in addition to 0.5 million tonnes already contracted, amounts to an admission of its failure to manage the foodgrain economy. The fact that the duty-free imports are to replenish official grain coffers, and not because of any gain shortage, tells its own story. What is noteworthy is that the government knew that such a contingency would arise if it persisted with its policy of liberally dishing out foodgrains through various outlets. It was this that had prompted the food ministry to propose in January a cut in the monthly ration quota for both below-poverty-line (BPL) and above-poverty-line (APL) households, so as to reduce the rate of stock depletion. The Cabinet Committee on Economic Affairs (CCEA) even okayed the move before retracting in the face of political pressure. Had the government stuck to its stand, today's imports would have been unnecessary.

The genesis of the problem can be traced to a flawed foodgrain policy that involves open-ended grain procurement and even more open-ended distribution of the procured grains. This leads, on the one hand, to needless accumulation of grains in the official kitty and, on the other, to the necessity to off-load those grains. As a result, the PDS is no longer the only way that subsidised grain stocks are used. Sizable quantities of grains are used for welfare and employment generation schemes, which, while well-intentioned, suffer from poor management and delivery. Moreover, the government has increased the monthly grain entitlements of ration card holders despite their not being able to lift the allotted quotas. No wonder then that a good chunk of the subsidised grains routinely gets diverted to unintended destinations.

Going by the latest government-sponsored study, about 37 per cent of PDS grains, meant for BPL people, gets diverted to the open market and another 21 per cent to non-poor households. Much of this foodgrain is sold by the government at a token price of Rs 3 a kg for rice and Rs 2 a kg for wheat under the Antyodaya scheme, while the economic cost of rice and wheat is Rs 13 and Rs 10 a kg, respectively. What is worse, the number of cards being issued to BPL and Antyodaya households has been rising although the Planning Commission estimates that the poverty ratio has come down from 36 per cent in the early 1990s to 26 per cent now. And, it should not be forgotten that a large proportion of the genuinely poor, including the shelterless and migratory labour, do not have access to the PDS. It should be obvious that the PDS, in its present form, has become unsustainable and needs to be pruned to a manageable level or scrapped and replaced with some other way of routing a food subsidy to the poor. States like Andhra Pradesh, Karnataka and Jammu and Kashmir, for instance, have introduced bar-coded or manual coupons to ensure better distribution of food. The Centre, too, needs to be innovative and consider alternatives to the PDS.