With PDS, you con more poor

The common minimum programme (CMP) of the new coalition government promises to strengthen the Public Distribution System (PDS) and extend it to the poorest blocks in the country.

Unfortunately, continuous ‘strengthening’ over four decades has strengthened leakages instead of giving relief to the poor, leading to estimates that it takes Rs 20 of government spending to get Re 1 to the poor (Kripa Shankar, EPW 2004).

Clearly, this is a rotten system that benefits crooked shopkeepers and officials rather than the poor, but the CMP proposes no reform, only an extension of the system. Many other studies confirm this tale of waste and woe.

A UNDP study in UP found that there were no sales to BPL families in three out of four villages studied. Estimates of diversion to the open market range from 40-83% (Ahluwalia 1993). Former civil supplies minister Shanta Kumar told the Parliament that 36% of wheat and 31% of rice were diverted.

A study based on NSS data (Parikh 1994) suggests that in UP, 98% of rural households make no PDS purchases at all. Kripa Shankar’s study of Dudhi block in Southeast UP showed that despite acute poverty, 73% of BPL card holders did not buy PDS grain.

Reasons: 25% said they never knew when the ration shop opened, 22% said they could not forgo a day’s wages to go to the shop, 26% said that inferior powdered/broken rice in the open market was cheaper while 11.6% said the BPL supply was cancelled.

Kripa Shankar also found that against the norm of 35 kg/month per household, actual average purchase by BPL households was only 2.3 kg/month.

Shopkeepers are allowed a profit margin of Rs 6 per bag by PDS, but have to incur transport costs of at least Rs 12/bag and bribes of up to Rs 58/bag (Dreze 2002). No honest shopkeeper can afford to enter this scheme. The participants are only those pre-determined to divert supplies to the open market.

Shopkeepers are not complete rogues. They meet their full commitment to supply destitute households with 10 kg of free grain per month under the Annapurna scheme.

If the Rs 28,000-crore BPL subsidy was simply distributed to BPL households in the form of cash or food stamps, they would get Rs 4,000/year each, against the average benefit of Rs 250/year from PDS.

Given this state of affairs, it is no wonder that incumbent governments are voted out. Yet the beneficiary of anti-incumbency, the Congress coalition, has no remedy to offer.

What do you think?