The current public distribution system in India
In 1997, the targeted public distribution system (tdps) replaced the universal public distribution system (upds). Under tdps, bpl households -- those below the poverty line -- were first identified. Only they qualified to receive 20 kilogrammes (kg) of foodgrain at half the economic price
upds was replaced for at least two reasons:1) Above poverty line (apl) households were also picking up these 'rations'; 2) The system was full of 'leakages'. But tdps hasn't turned out to be any better, as a recent Planning Commission study shows
tdps covers only 57 per cent of an estimated 45.41 million bpl households
Foodgrain is still diverted to apl households
The study identifies the processes by which this happens:
1) Exclusion error, where genuine bpl households are excluded during the bpl household identification survey; 2) Inclusion error, where apl households are issued bpl cards; and 3) dark ownership, where bpl card is used by someone other than the person the card is issued to
68 per cent of all such diversion to apl households occurs in 3 states: Tamil Nadu, Andhra Pradesh and Karnataka
50 per cent of all tdps foodgrain lifted in Tamil Nadu goes to apl households. In Karnataka, this proportion is 42 per cent and in Andhra Pradesh, 36 per cent
Leakage is still legion
Leakage occurs throughout the chain. When foodgrain is transferred from the central pool to states, thence to districts and blocks, and even from the fair price shop ( fps ) the grain ends up in.
Only 42 per cent of the foodgrain issued from the central pool reaches bpl households. The rest are diverted, or leak away
Punjab and Bihar are states with the maximum leakage (above 75 per cent of all foodgrain issued). Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and West Bengal are low-leakage states (below 25 per cent; but note that the first two are also high-diversion states)
In 2003-2004, India's 16 largest states issued 14.07 million tonnes of foodgrain to be distributed through tdps. Only 5.93 million tonnes reached bpl families. 8.14 million tonnes were not delivered: 5.12 million tonnes leaked out; 3.02 million tonnes reached 'unintended recipients', such as apl households
Do bpl households get the 20 kg of foodgrain they are entitled to every month? Only in one state, Himachal Pradesh (here, the grain is door-delivered). bpl households in West Bengal and Tamil Nadu are the luckiest: they get 19 kg foodgrain. In Bihar and Punjab, only 5 kg of the entitled 20 kg reaches bpl households
Is tdps a budgetary conundrum for the government? No, there are no puzzles here
tdps could be a viable option of income transfer to the poor, but isn't. For, while the budgetary income transfer per bpl household is Rs 819, the income gain per bpl household is a mere Rs 533.30. Anuual income gain for a bpl cardholder is maximum in Kerala (Rs 1,414); it is a paltry Rs 82 in Bihar
Also, the Centre spends Rs 50 to deliver 1 kg of grain to Bihar, whereas the intended subsidy per kg of grain for the state is Rs 4.52. The Centre spends Rs 40.15 to deliver a kg of grain to Punjab; intended subsidy here is Rs 4.22
The total intended subsidy of the central government for 1 kg of tpds foodgrain is Rs 5.16. Unintended subsidy to the tune of Rs 7.08 per kg means the actual subsidy comes to Rs 12.24 per kg of tpds foodgrain. The rub here is that the market price for this foodgrain is Rs 8.14
For every rupee of tpds -related budgetary subsidy by the Centre, 42.3 paisa reaches bpl households. 36.4 paisa passes out as leakage; 21.3 paisa gets diverted to apl households
There's nothing fair about fps. These shops, meant to retail tpds foodgrain, are unviable. Only 22 per cent of fps earn an annual return of 12 per cent on working capital. Is this because, in most states, these shops are privately-controlled?
Source: Anon 2005, Performance evaluation of Targeted Public Distribution System, Programme Evaluation Organisation, Planning Commission, Government of India, New Delhi
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