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PDS and Food security (DAMP)

 

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Contents

• India’s surplus foodgrains in storage is attributed to its buffer stock policy. Analyze this assertion considering the country’s current situation and approach to buffer stocks.
• What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent?

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11-08-2023

Q: India’s surplus foodgrains in storage is attributed to its buffer stock policy. Analyze this assertion considering the country’s current situation and approach to buffer stocks. (15 Marks, 250 Words)

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Answer :

Buffer norms denote the stock level in the Central Pool meeting food-grain operational needs and emergencies. As of April 1, 2022, the Central pool holds around 74 million tonnes, exceeding the required 21.04 million tonnes. This comprises 19 million tonnes of wheat and 55 million tonnes of rice.

Despite the substantial buffer-stock aiding the government during the pandemic, India faces challenges with excess food grains due to these reasons:

1. Residual Grain Management: The absence of a proactive, sustainable policy for excess stock leads to issues in its disposal. Options like export, open market sales, or additional state allocation present challenges:

1. • Export: Ad-hoc international trade policy, influenced by domestic supply and prices, causes uncertainty with frequent export bans.
   • Open Market Sale: Releasing excess buffer stock may plummet prices, negatively impacting farmers’ earnings.

1. Financial Implications: Buffer-carrying costs, covering acquisition, storage, warehousing, and maintenance, have more than doubled since 2001-02. Food subsidy expenses have increased significantly over the past two decades.

Additional criticisms of the buffer-stock policy include:

• Market Impact: Government procurement of over 75% of marketable surplus reduces open market supply, causing upward price pressure, diminishing consumer subsidy benefits.
• Leakage: The procurement system leaks grains, diverting them to the open market, as reported by ICRIER.
• Coverage Shortfall: Only 59% of intended beneficiaries are covered by the Public Distribution System (PDS) against the 67% target set by the National Food Security Act (NFSA).
• Market Distortion: State bonuses above Minimum Support Price (MSP) distort markets and discourage private sales.
• Associated Effects: Open-ended procurement affects crop diversification negatively. Certain states witness substantial groundwater depletion due to excessive procurement.

India’s food economy currently faces an issue of surplus. Addressing this entails actions such as reducing issue prices, diverting surplus to ethanol production, and exploring export possibilities. A prolonged surplus due to high MSP and market inability could necessitate reformulating the agricultural price support policy framework.

11-08-2023

Q: What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent? (10 marks, 150 words)

Answer :

The Public distribution system (PDS) evolved as a system of management of scarcity and for distribution of food grains at affordable prices. PDS is operated under the joint responsibility of the Central and the State Government.

Factors hindering the efficiency of the Public Distribution System (PDS) in India:

• Corruption and Leakage: Complaints of foodgrains being siphoned off by middlemen is common.
• Inaccurate targeting of beneficiaries: PDS system has often missed the most vulnerable sections and complaints of well-off section in rural areas getting the advantage of PDS are frequent.
• Ration Cards are issued only to households that have a proper registered residential address. This means that many poor who are homeless and others without proper residential addresses (e.g., migrant laborers) are automatically left out of the food security system.
• Heavy losses in storage and transportation: Lack of sufficient storage facilities with FCI and inadequate transport facilities leads to heavy transit losses.
• Later and Irregular arrival of grains in fair price shops: The villagers are poorly informed and certainly not in advance. The poorest among the poor may not even have cash ready now stock arrives.
• WTO’s Agreement on Agriculture also puts restriction on the amount of subsidy that can be given to farmers. PDS system may lead to the violation of the norms.
• Nutritional challenges due to lack of focus on food diversity: PDS system primarily focuses on distribution of wheat and rice.
• Digitization of PDS is also facing challenges due to lack of digital literacy, internet connectivity issues and infrastructural challenges.
• Increased fiscal burden: Government procures wheat and rice at MSP and then makes it available at very low prices to poor families. The food subsidy burden of government in FY 2023 was more than Rs 2 lakh crores.

Initiatives taken by the government to reform the food grain distribution system in India:

• Aadhaar Integration: Linked Aadhaar to PDS, reducing leakages, and streamlining the system for efficient service delivery.
• Direct Benefit Transfer (DBT): Transferred food subsidies directly into beneficiaries’ bank accounts, minimizing leakages, corruption, and enhancing transparency.
• Integrated Management of Public Distribution System – (IM-PDS): Integrate PDS system/portals of states/UTs with Central Systems/portals with and aim to introduction of national portability, and de-duplication of ration cards/beneficiary etc.
• One Nation One Ration Card (ONORC) Scheme: Enabled beneficiaries to access entitled food grains from any FPS nationwide, ensuring portability and convenience.
• Use of Technology: End-to-End Computerization, deployed electronic weighing machines, GPS tracking, mobile apps, and digitized ration cards to enhance transparency and efficiency.
• Social Audits and Community Participation: Conducted social audits involving beneficiaries and civil society organizations to ensure transparency and accountability.
• Reforms in Procurement and Storage: Modernized procurement processes, improved storage facilities, and reduced food grain wastage through better management practices and infrastructure investment.
• Reduce population covered under PDS: The coverage should reduce from 67% of the population to 40% as recommended by Shanta Kumar Committee.

These measures aim to enhance the efficiency, transparency, and accountability of the food grain distribution system in India. With sustained and continuous efforts, the food grain distribution system can be further improved, leading to better outcomes and positive impact on the lives of the people.