Context

During discussions on the National Food Security Act (NFSA) 2013, concerns about the Public Distribution System (PDS) were significant due to its historical inefficiencies, with National Sample Survey (NSS) data from 2011-12 showing leakages of 41.7%. However, reforms in States like Bihar, Chhattisgarh, and Odisha had led to notable reductions in leakages prior to NFSA 2013, prompting optimism for broader improvements. The Household Consumption Expenditure Survey (HCES) for 2022-23, the first major survey post-NFSA 2013, reflects this optimism by reporting a decrease in PDS leakages to 22%.

Overview

The Public Distribution System (PDS) was established to manage scarcity by distributing food grains at affordable prices. Over time, it has become a key component of the government's policy for managing the country's food economy.

The National Food Security Act, 2013 provides for coverage of up-to 75% of the rural population and up-to 50% of the urban population, which at Census 2011 comes to 81.35 crore persons.

Understanding the data

• Definition of PDS Leakages:

PDS leakages refer to the proportion of rice and wheat released by the Food Corporation of India (FCI) that does not reach the intended consumers.

• Estimation Methodology:

Leakages are estimated by comparing NSS data on household PDS purchases with “offtake” data from the Monthly Food Grain Bulletin of the Food Ministry.

• Reference Period:

August 2022 to July 2023.

• • Priority households received 5 kg of NFSA grain per capita per month.
  • Antyodaya households received 35 kg per month.
  • Additional Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) grain was provided until December 2022.
• Estimation Process:

Off take data under NFSA, tide-over rations, Non-NFSA, and PMGKAY is matched with HCES 2022-23 data on PDS purchases (both paid for and free).

•  Challenges and Variability:
  •  Estimates of leakage can vary based on timing; for instance: Matching offtake with a lag (July-June) yields a leakage estimate of 17.6%.
  • Matching offtake with the NSS reference period (August-July) yields a leakage estimate of 18.2%.

Both estimates are considered underestimates.

• Underestimation Factors:

Some States run an “expanded PDS,” providing grain to non-NFSA beneficiaries through additional State contributions. Example: Chhattisgarh’s food security act made PDS quasi-universal using local procurement.

Impact on Leakage Estimates:

All-India leakage estimates (17.6%-18.2%) are lower than actual figures because they only account for central contributions, not State contributions. Including State-supported non-NFSA beneficiaries (14 crore total, with up to 6 crore supported entirely by States) raises the all-India leakage estimate to 22%.

Impact of NFSA on PDS Coverage:

• Expansion of Coverage:
  • NFSA 2013 aimed to broaden PDS coverage, reducing exclusion errors and also contributing to a reduction in leakages.
  • Pre-NFSA Statistics: 2011-12: Less than 50% of households had ration cards, and around 40% received PDS benefits.
  • 2004-05: Only 24% of households accessed the PDS.
• Improvements from 2004-12:

States like Chhattisgarh and Odisha saw significant increases in PDS coverage. Chhattisgarh PDS coverage rose three-fold from 21% to 63%.

• Post-NFSA Coverage:

2022-23: Proportion of households using the PDS increased to 70%, largely due to NFSA implementation.

• Coverage Shortfall:
  •  The Centre is not meeting the NFSA coverage targets (50% rural and 75% urban).
  • Administrative data indicated only 59% had access to PDS as NFSA beneficiaries.
  • HCES data shows 57%-61% of the 70% accessing PDS have NFSA ration cards; approximately 10% are non-NFSA beneficiaries.
• Reforms in Early Adopting States:

States like  Chhattisgarh and Odisha.

Reforms: Reduced PDS prices, doorstep delivery, digitization, deprivatization of management, and involvement of panchayats and self-help groups.

• Leakage Reduction:
  • 2011-12: Significant reductions in leakages in early reforming States.
  • 2022-23: Leakages were 9% in Rajasthan, 21% in Jharkhand, and 23% in Uttar Pradesh.
  • Role of Aadhaar: Aadhaar Integration Believed to improve PDS, but surveys indicate minimal impact. Surveys (2017)- Found that leakages were already under 20% before Aadhaar-based biometric authentication (ABBA) and no significant difference in purchase-entitlement ratios between ABBA and non-ABBA villages.

Challenges of PDS

• Traditional States: Some states with historically better PDS performance, such as Tamil Nadu, saw an increase in leakages from 12% in 2011-12 to 25% in 2022-23.
• Inefficiency in Distribution: Leakages indicate inefficiencies in the distribution system, where food grains are not reaching the intended beneficiaries, undermining the effectiveness of the PDS.
• Economic Losses: Financial resources allocated for subsidized food are wasted due to leakages, leading to increased government expenditure without corresponding benefits to the poor.
• Reduced Food Security: Incomplete or inadequate distribution of food undermines food security for vulnerable populations, affecting their access to essential food supplies.
• Increased Corruption: Leakages often result from corrupt practices such as embezzlement, pilferage, or fraudulent activities, which erode public trust in the system.
• Administrative Challenges: Poor management, inadequate record-keeping, and lack of proper monitoring and evaluation systems contribute to leakages and hamper effective implementation.
• Inconsistent Beneficiary Access: Discrepancies between official records and actual beneficiaries' access to food lead to unequal distribution and exclude eligible households.
• Quality Control Issues: Poor quality or stale food grains reaching beneficiaries can diminish the nutritional value and effectiveness of the PDS.
• Implementation Gaps: Mismatches between central and state-level contributions and misalignment in supply chain logistics can exacerbate leakage issues.
• Technological Shortcomings: Inadequate or outdated technology for tracking and managing PDS operations can hinder efforts to reduce leakages and ensure efficient distribution.

Conclusion

The Public Distribution System (PDS) has evolved into a crucial tool of social policy, providing essential food security to many individuals. During the COVID-19 lockdowns, it played a vital role in relief efforts alongside the National Rural Employment Guarantee Act. Despite its significance, the PDS faces ongoing challenges and is frequently subjected to various "innovations." These include cash transfer experiments, home delivery services (such as those implemented

in Delhi), and the use of technologies like Aadhaar-based biometric authentication. Rather than focusing on potentially disruptive measures, such as the current eKYC drive, which risks undermining the PDS, government resources should be redirected to address more pressing issues. These include expediting the delayed Census, which has resulted in the exclusion of over 100 million people from critical services. Additionally, there remains a need to incorporate more nutritious items, such as pulses and edible oils, into the PDS to better meet the nutritional needs of beneficiaries.

Source: THE HINDU