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Chidambaram calls for overhaul of PDS

NEW DELHI: Finance Minister P. Chidambaram on Wednesday called for an overhaul of the public distribution system in view of its in-built inefficiencies and faulty delivery mechanism while noting that the availability of food and food prices would pose a grave challenge in the coming years.

In his address at the meeting of the National Development Council chaired by Prime Minister Manmohan Singh here, Mr. Chidambaram pointed to the exports which has been under stress owing to the appreciating rupee against the U.S. dollar and held out an assurance of further relief for the export sectors.

The Finance Minister hailed the States for their achievement in fiscal consolidation and noted that the achievement of targets set under the fiscal responsibility legislation had not only consolidated the fiscal health of the States, it had also improved the credibility of their budgetary operations.

Mr. Chidambaram pointed to the 114.8 per cent increase in the gross budgetary support (GBS) of the Centre for the Eleventh Plan estimated at Rs 14,21,711 crore (at 2006-07 prices) and pointed out that nearly 50 per cent of this support was earmarked for the priority sectors such as education, health, rural development, agriculture and irrigation. “I would like to emphasise that the primary responsibility in these crucial sectors lies with the States. The Centre is ready and willing to help, and we are indeed doing so by increasing budgetary support to State Plans from Rs.1,75,021 crore to Rs.3,24,851 crore [at 2006-07 prices],” he said.

On the food front, Mr. Chidambaram said that according to many observers, the era of cheap food prices was over and this called for an efficient PDS. “We need a PDS for the poor, but unless it is efficient, procures adequate quantities of food grains and delivers food to the poor, the PDS could become an albatross around our neck and an opportunity for rent seekers to enrich themselves,” he said.

In this regard, he also referred to “the deeply flawed distribution system” and noted that the most recent evaluation study on the Targeted Public Distribution System by the Programme Evaluation Organisation found, inter alia, that taking into account all the inefficiencies of the PDS, the Centre spent Rs. 3.65 to transfer Re. 1 to the poor.

“About 58 per cent of subsidised grains do not reach the target group, of which a little over 36 per cent is siphoned off the supply chain. I ask you, respectfully, do not the poor of India deserve a better PDS? How can we sit back and watch helplessly the poor being robbed of their meagre entitlements?”

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