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The task of making the PDS work

Jean Dreze

The planned National Food Security Act represents a unique opportunity to achieve gains with respect to the public distribution system. However, the current draft is a non-starter.

When I first visited Surguja district in Chhattisgarh nearly 10 years ago, it was one of those areas where the Public Distribution System (PDS) was virtually non-functional. I felt constrained to write, at that time, that “the whole system looks like it has been designed to fail.” Ration shops were in the hands of corrupt private dealers, who made money by selling PDS grain in the open market. People were powerless to argue when a dealer told them that, for no fault of his, the stocks were bare. Hunger haunted the land.

Ten years later, there has been a remarkable turnaround on the PDS front. One hesitates to give good marks to the Government of Chhattisgarh these days, given its monstrous actions in other domains – the sell-out to mining companies, backing of Salwa Judum, and suppression of human rights, to mention a few. Still, the revival of the PDS in Chhattisgarh is a major achievement, of interest to the whole country.

I had an enlightening view of this revival in Surguja a few weeks ago. Today, almost every household in this area is entitled to 35 kg of grain each month, at Re. 1 or Rs. 2 a kg (depending on the type of ration card). What is more, the system is working – everywhere we went, we found that people were getting 35 kg of grain on time, every month. For people who live on the margins of subsistence, this is a dream.

The planned National Food Security Act represents a unique opportunity to achieve similar gains across the country. However, the current draft, prepared by an Empowered Group of Ministers, is a non-starter in this respect. Indeed, the food guarantee is restricted to 25 kg of grain (at an unspecified price) for BPL households. This is less than their existing entitlements. In response to recent agitations, the government seems willing to raise the poverty line by a few notches, so that more households are included. Even then, a targeted PDS is not the way to guarantee the right to food.

The main problem with targeting is that it is both unreliable and divisive. The first point is evident from many investigations into the distribution of BPL cards. The “exclusion errors” are enormous. For instance, among all rural households falling below the “poverty line” according to National Sample Survey data, almost half did not have a BPL card in 2004-05. Similar findings emerge from National Family Health Survey data.

Perhaps exclusion errors can be reduced with better BPL identification methods. The N.C. Saxena Committee has made valuable suggestions in this respect. But the fact remains that there is no reliable way to identify poor households based on proxy indicators – it is bound to be a hit-or-miss exercise. A landless household, for instance, may or may not be poor, and similarly with a Scheduled Caste or female-headed household. The fact that a household may be well-off today, but poor tomorrow (due, say, to illness, displacement or unemployment) does not help matters. Last but not least, the power equations in the rural areas are such that any BPL survey is liable to be manipulated. There is no reason to expect the next BPL survey to be more reliable than the last one.

Targeting is also divisive: it prevents the emergence of a cohesive public demand for a functional PDS. And vocal demand is very important for the success of the PDS. This is one reason why the PDS works much better in Tamil Nadu than elsewhere: everyone has a stake in it. Chhattisgarh's recent success builds on the same principle – about 80 per cent of the rural population is covered.

In short, targeting is an ugly business, and it would be particularly dangerous to “freeze” the BPL-APL distinction into law. That will amount to converting a purely statistical benchmark, the “poverty line,” into a permanent social division. Surely, the purpose of the Food Security Act is not to manufacture class conflict?

For all these reasons, serious consideration must be given to the obvious alternative – a universal Public Distribution System, at least in the rural areas and urban slums. Consider the potential benefits first: every family will have food assured in the house, month after month. Gone will be the days of cold hearths and empty stomachs. For those at risk of hunger, the PDS will be a lifeline. For others, it will be a form of income support and social security – valuable things to have, even when you are not hungry. The case for universalisation builds on this “dual purpose” of the PDS – food security and income support.

The nutrition impact of the PDS, one may argue, is likely to be limited even in the “universal” version. This may well be true. One reason is that the PDS may not do much for young children – the crucial age group as far as nutrition is concerned. What most children need is not more foodgrains but more nutritious food (including animal protein), better breastfeeding practices, health care and related support. They need to be fatter at birth, which requires further interventions (important in their own right) related to women's health and maternal entitlements. Special programmes are needed for marginalised groups such as the urban homeless. Thus, a universal PDS is only one part of an effective system of food and nutrition security.

This is not likely to come cheap. Tentative calculations suggest that a comprehensive Food Security Act may cost something like one lakh crore rupees a year. This may sound like a mind-boggling price tag, but it is not. For one thing, in a country where half the children are undernourished, there is no quick fix — any serious attempt to deal with mass undernourishment is bound to be expensive. For another, one lakh crore rupees is just about 1.5 per cent of India's Gross Domestic Product. Is that an excessive price to pay to protect everyone from hunger?

Incidentally, India already spends more than that sum on things that are rather trivial compared with the right to food. I am not just thinking of military expenditure, which could do with some pruning, especially when it is being used also for internal repression. The fertilizer subsidy is in the range of one lakh crore rupees a year, with doubtful social benefits, not to speak of the environmental damage. And the annual “revenue foregone” on account of tax exemptions is more than five lakh crore rupees, according to the Finance Minister's own “Foregone Revenue Statement.” This includes about Rs. 80,000 crore of corporate income tax foregone (some of it “on account of contributions to political parties”) and nearly Rs. 40,000 crore of foregone customs duties on “vegetables, fruits, cereals and edible oils.”

The “food subsidy” itself is already around Rs. 70,000 crore. The problem is not so much that this subsidy level is too low, but that it is badly used. A telling symptom of this today is the mindless accumulation of nearly 60 million tonnes of grain in government warehouses. Instead of whining about food inflation, and blaming “hoarders” for it, the government would do well to release some of the gigantic food stocks.

This is not to dismiss the resource constraints. One way ahead will be to introduce universal PDS, say, in the poorest 200 districts, and extend it gradually to the whole country – much as in the case of the National Rural Employment Guarantee Act. Today's excess stocks will be of great help in the initial phase of this transition. Five years from now, the cost of a comprehensive food security system will be closer to 1 per cent than 1.5 per cent of GDP, if the current rates of growth continue. Meanwhile there will be enough time to enhance food procurement and mobilise extra funds. The roadmap is clear: promote local procurement and tax the rich.

None of this, of course, will be of much use unless the PDS can be made to work. Universalisation itself will help in that respect, as argued earlier. But systemic reforms of the PDS are required, building on the wealth of insights that have been gained from recent initiatives to restore transparency and accountability in various domains. If Chhattisgarh can turn the PDS around, why not other States?

The National Food Security Act is not going to eliminate malnutrition in one go. But it could be the end of hunger, and the beginning of a new movement for the realisation of everyone's right to good nutrition. Let all this be clear before the idea is dismissed as unaffordable.

(The author is Honorary Professor at the Delhi School of Economics.)

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