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The PDS impact on household expenditure
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Context
The release of data from the Household Consumption Expenditure Survey (HCES):2022-23 has sparked renewed interest in analyzing the impact of the Public Distribution System (PDS) on household expenditure patterns and poverty metrics in India.
Key Findings from HCES:2022-23:
- PDS Coverage: Up to 75% of rural and 50% of urban populations are eligible for subsidized foodgrains under NFSA, 2013.
- Imputation Methodology: NSSO imputed values for free food items, with 94-95% of imputed value attributable to food items from PDS.
- Consumption Impact: Average imputed value for food is ?82 in rural areas and ?59 in urban areas, indicating significant impact on household consumption.
Impact on Consumption Patterns and Poverty Metrics:
- Upward Mobility: 20% of those in the bottom 5% of rural MPCE distribution (about 86 lakh individuals) move to the next fractile class when considering imputed values.
- Urban Effects: Similar upward movement observed in urban areas and across major states, suggesting widespread impact of PDS.
- Poverty Line Debate: Need for reconsideration of poverty line drawing methods in light of PDS impact on total value of consumption.
Challenges in Data Interpretation and Policy Implications:
- Survey Limitations: HCES:2022-23 not designed to provide precise estimates of scheme coverage, with survey estimates often lower than administrative data.
- Imputation Complexities: Imputation done only for free items, not subsidized purchases from PDS, potentially underestimating total impact.
- Policy Considerations: Need for larger discussion on poverty line determination and refinement of social security programs based on consumption pattern insights.
UPSC Mains Questions:
Q. Analyze the impact of the Public Distribution System on household consumption patterns in India. How does this affect our understanding of poverty metrics?
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