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 scheme.

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 it.

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 no choice.

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 irrelevant.

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)

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