Issue

Context

Government is mulling of introducing ‘one nation, one ration card’

Background

• PDS is public rationing system of India.
• India’s Public Distribution System (PDS) is the largest distribution network of its kind in the world.
• PDS was introduced around World War II as a war-time rationing measure. In 1960s due to food insecurity, the government set up the Agriculture Prices Commission and the Food Corporation of India to improve domestic procurement and storage of food grains for PDS.
• By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food.
• In 1997, the government launched the Targeted Public Distribution System (TPDS), with a focus on the poor. TPDS aims to provide subsidised food and fuel to the poor through a network of ration shops.
• Food grains such as rice and wheat that are provided under TPDS are procured from farmers, allocated to states and delivered to the ration shop where the beneficiary buys his entitlement. The centre and states share the responsibilities of identifying the poor, procuring grains and delivering food grains to beneficiaries.
• National Food Security Act, 2013 relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.

Analysis

Issues

• Identification of Beneficiaries: 

• Large inclusion and exclusion errors in beneficiaries.
• Existence of ghost cards in several states. Ghost cards are cards made in the name of non-existent people. The existence of ghost cards indicates that grains are diverted from deserving households into the open market.
• Trends in Procurement vis-à-vis Production:
• Nearly 61 million tonnes of food grains are procured under NFA, 2013.
• Procurement of this quantity of food grains might be easier in years when production is high. However, in years of drought and domestic shortfall, India will have to resort to large scale imports of rice and wheat, exerting significant upward pressure on prices. This raises questions regarding the government’s ability to procure grains without affecting open market prices and adversely impacting the food subsidy bill.
• Rising Food Subsidy:
  • The subsidy bill for 2019-20 is estimated at 1.84 lakh crores.
• Lack of Storage Capacity:
  • FCI’s storage capacity (both owned and hired) has not increased commensurate to the growth in procurement.
  • In its report, the CAG found that from 2008-09 onwards, due to the increase in procurement of food grains, there was a severe strain on storage capacity available in the country for the central pool stock.
  • With the increasing food grains stocks, FCI’s storage gap increased from 5.9 million tonnes in 2007-08 to 33.2 million tonnes in 2011-12.
  • The grains are being stored in unscientific storage, leading to rotting of food grains.
• Leakage of food grains: TPDS suffers from large leakages of food grains during transportation to and from ration shops into the open market.
• Poor quality of commodities supplied

Steps Taken by Government

• Aadhaar Seeding in PDS: To weed out duplicate/in-eligible/bogus ration cards and to enable rightful targeting 83.41% i.e. about 19.41 crore ration cards (as on 29th May, 2018) have been Aadhaar seeded.
• Automation of Fair Price Shops:In 2014 Department of Food & Public Distribution prescribed the guidelines and specifications for use of PoS at FPS. At present 3,16,600 FPSs (as on 29th May, 2018) out of 5,27,930 have PoS.
• Digital/Cashless/Less-cash Payments in PDS:To promote the use of less-cash/digital payment mechanisms, the Department has issued detailed guidelines for use of AePS, UPI, USSD, Debit/Rupay Cards and e-Wallets in 2016. At present in 10 States/UTs a total of 51,479 FPSs are enabled for digital payments.
• Digitization of Ration Card: 100% digitization of Ration Card data has been done. All States have transparency portal, 30 States have online allocation of food grains and 21 States/UTs have computerised supply chain management system.
• ‘Integrated Management of PDS’ (IM-PDS): The scheme has been approved with an outlay of Rs. 127.3 crore to be implemented during FY 2018-19 and FY 2019-20 for establishing Public Distribution System Network (PDSN) to establish central data repository and central monitoring system of PDS operations and to also enable implementation of national level portability.
• Construction of Godowns and Silos:A total storage capacity of 22.23 lakh MT has been added during last four years under the PEG Scheme. A road map for creation of 100 Lakh MT storage capacity in the form of Steel Silos by FCI and other agencies including State Governments on PPP mode for wheat and rice has been approved. Construction has been planned in a phased manner. 6.25 Lakh MT Steel Silos have been completed and contracts for 23.5 Lakh MT capacity have been awarded.
• Simplified Registration Rules, 2017: To simplify the process of registration of warehouses and for their better and effective regulation and supervision, new rules namely, the Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017 have been notified.
• INGRAM portal: It was launched under National Consumer Helpline in 2016 for providing a common IT platform for various stake holders involved in the Consumer Grievance Redressal Mechanism and for disseminating information to consumers.

How to Improve the PDS?

Reforms have been proposed to make the TPDS more effective. Major reforms include using information technology and leveraging Aadhaar to improve identification of beneficiaries.

• Role of Aadhaar
  • One of the key problems in the implementation of TPDS is the inclusion and exclusion errors in the identification of beneficiaries. Using Aadhaar with TPDS would help eliminate duplicate and ghost (fake) beneficiaries, and make identification of beneficiaries more accurate
• Alternative to TPDS
  • Universal PDS: When PDS was first introduced, it was a universal entitlement scheme. In 1997, it was changed into the Targeted PDS. Unlike most states in the country, Tamil Nadu retained the Universal PDS, providing subsidised food grains to the entire population.

Case study: Universal PDS in Tamil Nadu Non-classification of Beneficiaries: Subsidized PDS commodities are distributed to all residents without classifying them into different categories. According to the Justice Wadhwa Committee Report, non-classification helps the state avoid errors of exclusion of eligible and vulnerable families. However, TN identifies AAY beneficiaries. Commodities provided under universal PDS - Rice is distributed at the price of Re 1/ kg to everyone, lower than the central issue price. Families are not given 35 kg as mandated by the central government; rice cardholders get anywhere between 12-20 kg rice depending on the number of individuals in their family. Groups involved in the distribution of food grains - No private trader is engaged in the PDS activity. Ration shops are mainly run by the cooperative societies and the Tamil Nadu Civil Supplies Corporation, the FCI counterpart in the state.

• Cash Transfers:
• • The National Food Security Act, 2013 includes cash transfers and food coupons as possible alternative mechanisms to the PDS.26 Beneficiaries would be given either cash or coupons by the state government, which they can exchange for food grains.
  • Some potential advantages of these programmes include: (i) reduced administrative costs, (ii) expanded choices for beneficiaries, and (iii) competitive pricing among grocery stores.
  • However, cash transfers may expose recipients to price fluctuation, if they are not frequently adjusted for inflation. Such programmes also do not address the issue of inclusion of ineligible beneficiaries and the exclusion of eligible ones. Additionally, since cash transfers include the transfer of money directly to the beneficiary, poor access to banks and post offices in some areas may reduce their effectiveness.27 In January 2013, the Ministry of Consumer Affairs, Food and Public Distribution introduced a pilot scheme in six Union Territories for the direct transfer of cash subsidy under TPDS
• Technology-based reforms of TPDS implemented by states:
  • The Supreme Court appointed wadhwa Committee found that certain states had implemented computerisation and other technology-based reforms to TPDS which helped plug leakages of food grains during TPDS.
  • The Committee found that the current manual recording of eligibility of beneficiaries and transactions was prone to human errors and tampering.
  • There was pilferage through the distribution network and no central monitoring system to ensure end-to-end delivery.
  • The Committee observed that end-to-end computerisation could curb large-scale diversion and help track the delivery of food grains from state depots to beneficiaries.
• MSP Implications for agricultural production and food prices: These include the effects of MSP on production of non-cereal crops and implications for water resources. In order to avoid crop and regional diversity in India MSP-like policies should be provided for other non-cereals and perishables to increase their productions.
• One Nation One Ration Card
  • It means allowing citizens to pick up foodgrains from any ration shop in the country.
  • The Economic Survey 2017 estimated that over nine million Indians change their state every year.

Conclusion

However, we must approach this bold vision with utmost caution because PDS is a crucial lifeline for many of the 800 million Indians it reaches. The reform like ‘One nation One Ration Card’ should be handled with more care. First the inter-sate portability should be provided.

Learning Aid