Thursday, September 1, 2011

Public Distribution System: Evidence from Secondary Data and the Field*

Reetika Khera hailing from Department of Humanities and Social Sciences, India Institute of Technology (Delhi) gave a presentation titled Public Distribution System: Evidence from Secondary Data and the Field at Centre for the Study of Developing Societies (www.csds.in) on 29 August, 2011. During the introduction, Vipul Mudgal, Project Director, Inclusive Media for Change (www.im4change.org) said that food security is not the mood of the people presently as Lokpal Bill has grabbed everyone’s attention. The present discussion would focus on food security and PDS. He informed that Reetika has been engaged in research as a tool for policy making.

In the beginning of her presentation, Reetika clarified that Food Security legislation is not about PDS only. It is also about rights of the children. Presenting her findings from the secondary data, she informed that the PDS provides subsidized foodgrains viz. rice and wheat. The PDS used to be universal till 1992. Presently, the PDS serves the interests of the below poverty line population (BPL) only. The problems associated with the PDS are: a. Half of the poorest quartile don’t have BPL cards; b. Criteria to identify the poor is faulty; c. Criteria is not implemented properly (which sometimes happen due to local politics); d. In reality there exists transient poverty as a result of which the poor fall, come out and fall back again in the poverty trap.

So far economists have calculated the amount of leakages from PDS. On the methodology and data part, Reetika explained that matching the National Sample Survey (NSS) household purchases with Food Corporation of India (FCI) allocation/ offtake figures gives an estimate of leakages (but there are some caveats). She stated that the latest thick rounds of NSS on PDS took place in 2004-05 and 2009-10. Her present study (along with Jean Dreze) is based on 2007-08 thin round of NSS, where the data is representative. She found in her study that there are large variations in diversion of PDS foodgrains across the states. There exists divergence in performance of states, according to which states have been identified as “functioning”, “languishing” and “reviving”. “Functioning” states are those where per capita monthly purchase of PDS grain is 1 kg, “languishing” states are those where per capita monthly purchase of PDS grain is less than 1 kg and “reviving” states are those where per capita monthly purchase of PDS grain is more than 1 kg. In her study based on secondary data from NSS 2007-08, she has found that the reviving states are those who have traditionally performed poorly in terms of PDS purchase viz. Chhattisgarh, Uttarakhand, Orissa, Madhya Pradesh and Uttar Pradesh. In Chhattisgarh, per capita purchase witnessed a five-fold increase between 2004-5 and 2007-8, from a measly 600 grams to 3.2 kg per month. Uttarakhand's performance is similar — up from 640 grams to 2.15 kg.

Reetika’s study based on secondary data found that leakages in 2007-08 as compared to 2004-05 reduced in states like: Orissa, Uttar Pradesh and Madhya Pradesh. The improved performance of the PDS in terms of fall in leakages happened due to the initiatives undertaken by various states. The demand side measures include: a. Trend towards universalization; b. Increase in implicit subsidy, where implicit subsidy means difference between market and PDS prices (people are more aware of their rights due to which there is less siphoning off of PDS grains despite the gap between open market and PDS prices); c. Diversification of PDS commodities. The supply side measures undertaken by the states are: a. De-privatization of PDS outlets (by allowing the ration or fair price shops to be run by SHGs, cooperative societies); b. Door step delivery has reduced leakages because earlier they used to take place when grains came from FCI to ration shops; c. Rationalizing of officials commissions.

While explaining the purpose of PDS survey done during 2011, Reetika said that she wanted to know the ground level situation. The survey wished to know why some states do well and others don’t. The study’s objective was to inquire people’s views on Cash Transfers versus PDS and the reasons behind their choice. The sample comprised: a. Nine states: Andhra Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Orissa, Rajasthan, Tamil Nadu and Uttar Pradesh; b. Two blocks from 2 districts each and six villages in each district were chosen; c. A random sampling of 12 households in each village took place for the study. The survey covered 1,227 BPL and Antyodaya households.

The table 1 (as presented by Reetika) shows the dependence of consumers on foodgrains from PDS. The table shows that average purchase of grains (by BPL households surveyed) as percentage of total quota ranges from 45% in Bihar to 99% in Andhra Pradesh. Overall purchase of rationed foodgrain was 84 per cent of the full sanctioned quota in the nine states surveyed.


     
The table 2 (as presented by Reetika) shows how much percentage of the sample in various states engage in coping strategies.

Reetika said that the continuing concerns with the PDS are: a. Corruption, which has to do with APL quota and non-grain commodities; b. Quality of grains supplied under the PDS (see table 4a); c. Lack of predictability (such as opening of ration shop, see table 4b); d. Access to (geographical distance) ration shops (see table 4b); e. Lack of adequate grievance redressal—no supplies, harassment by dealer etc.   

Table 3 (as presented by Reetika) informs about the exclusive preference of sampled people (in percentage) for foodgrains and for cash. Only 17.9 per cent of respondents in a survey, of 1,227 BPL and Antyodaya households over 106 villages in nine states want cash transfers in lieu of PDS. 54.2 percent of respondents in Bihar, 34.1 percent in UP and 22.2 percent in Jharkhand have asked for cash transfers instead of a PDS. 67.2 percent of respondents prefer foodgrain to cash transfers. 



A comparison between table 4 (a) and 4 (b) (as discussed by Reetika) shows that states where purchase-entitlement ratio is lower are also the states where figures pertaining to reliability of PDS (i.e. days of opening of FPS are fixed and days of opening are adequate) is low. 
  


There are various reasons given by people to prefer either cash or food as shown below in box 1 (as discussed by Reetika).



Reetika stressed that PDS obituaries are premature. Targeting is divisive, unreliable and costly, and states are willing to contribute now. The existing system is not ready for cash in rural areas. In states where the PDS is universal or quasi-universal, it is performing better. Distribution of coarse cereals via the PDS will automatically keep away the rich and attract the poor due to the process of self-selection. There is need for a vision of universalism, she concluded.  

*Minutes prepared by Shambhu Ghatak

Further readings:

PDS leakages: the plot thickens by Jean Dr├Ęze and Reetika Khera, The Hindu, 12 August, 2011, http://www.thehindu.com/opinion/lead/article2351414.ece?homepage=true

PDS: Signs of revival by Reetika Khera, The Hindu, 12 June, 2011, http://www.hindu.com/mag/2011/06/12/stories/2011061250110400.htm  

PDS: Reform or Reject? by Rukmini Shrinivasan, The Times of India, 27 July, 2011, http://blogs.timesofindia.indiatimes.com/developmentdialogue/entry/pds-reform-or-reject  

Dreze urges PM to keep cash out of food security Bill by Sreelatha Menon, The Business Standard, 22 July, 2011, http://www.business-standard.com/india/news/dreze-urges-pm-to-keep-cash-outfood-security-bill/443542/  



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