Events & Issues
PDS A Sacred Cow?
TIME TO CONSIDER ALTERNATES
By Dharmendra Nath, IAS (Retd)
New Delhi, October 29, 2010
Over the years the Public Distribution System (PDS) has
become some kind of an article of faith with us. In the public
mind it might be synonymous with corruption but for the policy
makers it is a sacred cow, some thing beyond question,
irrespective of whether it delivers or not. It could be
revamped and re-targeted but its essentials must remain the
same. Whereby, this mind set is blinding us to alternative
approaches to meet the same objective.
True, our goal is food security. But the PDS in its current
form cannot be the only approach. If in all these years it has
not performed (according to a widely publicized estimate it
delivers only 30 paise out of one rupee) we should be
seriously considering other alternatives.
Importantly, men will never be angels to make the PDS work.
Nor will any amount of vigorous re-loading ever fill such a
leaky pot. It will only oblige the beneficiaries of the
spillage. The leaks are too many and too wide-spread to be
amenable to any cure and they cover the entire gamut of the
Government from the Centre to the States to the local bodies
and their agents. Clearly, if we are not interested in the
spillage it is time to roll back and finally wind up the
The PDS, as it exists today, aims to provide some minimum
quantity of food grains at subsidized rates through Government
licensed shops to the weaker sections of society who are
spread out far and wide. They hold BPL (below poverty line)
Cards. These Cards co-exist with a large number of
unauthorized Cards. No amount of checking and re-checking has
been able to eliminate ghost BPL Cards and other BPL Cards
held by persons not entitled to them.
Food grains flow from a Central agency to a State agency which
then transports them to far flung areas of the State and makes
them available to its licensed shops for distribution. At all
these levels the supply chain is impacted by powerful
political and administrative influences. There are hardly any
effective checks and balances. In the circumstances
neutralising these influences has never been possible.
The intended ultimate beneficiary is largely ignorant and sits
at some remote place. He is in no position to stand up for his
rights. All others involved in the process are smarter than
him. Knowing these limitations it should be our effort in the
interim, to devise a mechanism that is not purely a Government
show but has some reasonable checks and balances built into
Today, the entire PDS show is Government run; it is
essentially politico-administrative and monopolistic. The
Government handles the grains, selects the shopkeepers and
fixes the timings of the shops. There is just one licensed
shop for an area. Other shopkeepers and the beneficiaries have
Thus, a Government licensed shop fully exploits this
situation. More often than not, the shopkeeper is a party
worker whose main job is to arrange party shows. And the PDS
grains are his wherewithal. He is also hand in glove with the
official machinery or if he is powerful enough the official
machinery is mortally afraid of him and his lobby.
Undoubtedly, there is talk of public-private partnership in
various spheres nowadays. Yet that does not touch the PDS.
Hence there is a pressing need to involve private initiative
in this massive task. The Government could continue to be in
the business of the minimum support price (MSP) based
procurement and storage. That would assure the Government’s
position as a market leader.
However, there are problems galore on the distribution side
and most of the mischief takes place there. To begin with,
instead of the Government licensing the shops, all shops
should be made eligible. They could still be supervised by
Government agencies. Beneficiary entitlements could also be
decided by the Government.
Whereby these shops would supply Government fixed quantities
to the beneficiaries at Government fixed rates (call the
scheme a variation of the Food Stamps scheme, if you will) and
recover the difference in price from the Government. Thus,
much casual handling, diversion and wastage of stocks could be
avoided as the stocks would belong to the shopkeeper and he
would take proper care of them.
Besides, many more distribution points would become available
to the beneficiary. The beneficiary would have the freedom to
retain his relationship with his current or chosen shop. In
addition, the problem of viability of PDS shops could vanish
as an existing shopkeeper would be taking on this
responsibility. There might be some competition but the whole
thing would become people-friendly.
Needless to say, it might not have been possible to adopt this
approach in the early years of the PDS as the financial,
commercial and physical infrastructures to run it would not
have been adequately available. But today, with increased
availability of banking, better transport and communication
facilities and a broad expansion of the retail sector the
picture has changed. We should be utilizing this resource for
running a better PDS.
Significantly, this could be the first stage of the
change-over. And gradually we should be moving towards a full
wage system. Given that many Government schemes these days
offer wages. The Government fixes the minimum wages too.
Questionably, what is the point if after receiving minimum
wage one is still poor? Why pay less and then subsidise
rations? Why not be more direct and pay full wages --- a
living wage --- in the first instance.
If we start moving in this direction our wage bill would go up
but our subsidy bill with all its problems and leakages would
go down. Moreover, the exercise would be budget neutral. As
higher wages would have a multiplier effect on rest of the
economy. Even incomes of the self-employed would go up as
wages and incomes would get spent and re-spent.
Further, this would also assure true honour to the worker and
establish dignity of work. Think. What kind of honour is it,
when after putting in an honest day’s work the worker still
finds himself in a queue for subsidy? It is unfair and
demoralizing to the worker and his family. The sooner we get
out of it the better. As at this stage the PDS would become
In sum, the only losers would be those who profess to serve
the poor and their hangers-on. Whom will they serve if there
are no poor? It is a testimony to the strength of this lobby
that so little real reform of the PDS has taken place in all
these years. ----- INFA
(Copyright India News & Feature Alliance)