The passage of the National Food Security Bill by both houses of the Indian parliament has led to a deluge of strong reactions. Opposition to legal entitlement to food is primarily directed at one feature of the bill (now an Act): The provision of subsidised foodgrains for 75 percent of the rural population and 50 percent of urban dwellers through the Public Distribution System (PDS).
The PDS is comprised of a number of state-authorised Fair Price Shops (FPS) through which the centrally-procured food commodities are distributed to households across India. At the FPS, eligible households produce a “ration card” to purchase subsidised food commodities like rice, wheat, millets, cooking oil, sugar and kerosene. Different household categories are entitled to different PDS benefits, which further vary by state. Given the diversity in the arrangement of the PDS in India, its performance, as one could reasonably expect, greatly varies across the many states. Yet, broad brush-stroke criticisms of the PDS abound in the media.
The PDS has been labelled inefficient and corrupt, even “bizarre“. For many, it is not the goal of extending a social safety net to the poor that is objectionable, but the mechanism through which it is meant to be achieved – using the PDS. Figures of pilferage through the PDS run the gamut – “70 percent of the total budget” claims an article in the New York Times or “half” of the $14bn, asserts another in the Economist, is wasted.
According to Food Minister K V Thomas, 20-30 percent of food is lost due to “leakages” in the system. Leakage refers to malpractices like grains meant for the poor being diverted to open markets or to households that are excluded from food benefits. The danger of leakages is a real one in any targeted system of welfare – according to the undersecretary of US Department of Agriculture, “fraud” amounting to $750m is associated with food stamps in the US each year. Indeed, there are leakages in the Indian PDS as well, but there is more to the story.
Corruption: The full story
A study by Reetika Khera, an economist at the Indian Institute of Technology in Delhi, highlights trends in leakages for PDS-distributed rice and wheat that adds much-needed nuance to the sweeping arguments made about corruption. The study reveals that the level of diversion had increased dramatically between 1999-2000 and 2004-2005 – from 24 percent to 54 percent. This coincided with the move from a universal PDS coverage to a targeted system (Targeted Public Distribution System or TPDS), as part of economic reforms of the liberalisation period. Although the switch to TPDS was officially made in 1997, exclusion of households in a systematic way materialised only in 2000-01.
I found that the PDS has vastly improved in the last five years and now plays a fundamentally important role in people’s lives.
The negative trend, as per the study, began to reverse starting in 2004-05, and reductions in leakages were observed in many states, particularly Odisha, Chattisgarh, Madhya Pradesh, Jammu and Kashmir, Himachal Pradesh and Uttarakhand. Diversion of grain at the national level remains an issue today, but decomposing figures at the stat level shows that last five years have seen further improvements.
From July to September 2012, I conducted an in-depth field survey of a representative sample of 793 households in Koraput district of southern Odisha. Koraput is part of the “KBK” (Kalahandi-Bolangir-Koraput) region of India, which used to be in the news for regular starvation deaths. The district continues to be largely deprived – only 44 percent of the households in rural Koraput have electricity and 42 percent of children aged seven years or below are underweight. Some villages are as far as 50 kilometres away from the nearest Primary Health Centre, bank or market. All of them, however, have a functioning PDS “ration shop” that delivers the subsidised rice, kerosene and sugar.
I found that the PDS has vastly improved in the last five years and now plays a fundamentally important role in people’s lives. Rice distribution was highly regular in the district. Among households with a ration card, 97 percent had received their full quota of rice (25kg/35kg) at the right price during the three months preceding the survey.
Other studies reveal similar trends of progress in multiple states. The Chhattisgarh story is often cited as an illustration of how a combination of political will and technology can lead to change. Himanshu (who goes by his first name only), Assistant Professor at Jawaharlal Nehru University, notes dramatic reductions in leakages in Chhattisgarh and Odisha, enabling these states to join the ranks of traditionally well-performing states like Tamil Nadu, Andhra Pradesh and Himachal Pradesh, where wastage has been almost negligible. Additionally, he finds overall improvements in the PDS in seven other states, noting significant reduction in leakages and increase in the usage of the PDS by its beneficiaries in income-poor Bihar. From 65 percent leakage in 2009-10, Bihar managed a reduction to 12 percent in 2011-12, by increasing coverage of eligible beneficiaries, using technology in tracking foodgrain delivery, and improving transparency.
Remarkable improvements in Odisha, Chhattisgarh, and Bihar are noteworthy because a “leaky PDS” in “corrupt and backward” states such as these, would be considered hopeless cases of politicised state doles a few years back. However, state-specific examples of transformation are real and in evidence.
Staving off hunger
Beyond the corruption-argument, an essential but less-discussed facet of the PDS is its role in enhancing food security.
That PDS is an important safety net is something I found in the hunger-prone Koraput district. Almost all households with ration cards – 93 percent – considered it to be essential for their welfare.
The core idea of staving off hunger through subsidised food distribution in India can be traced back to World War II. A war-induced food scarcity in 1942 had transformed into a virulent famine, hitting Bengal the hardest, and claiming between 1.5 and 3 million lives. A catastrophe which was predominantly concentrated in rural areas, the scars of the Bengal famine of 1943 has kept the issue of food security alive in post-independent India.
Using the National Sample Survey (NSS, 64th round), it is claimed that the proportion of people not receiving two-square-meals a day has declined between 1993-4 and 2009-10, as it should in a country considered an emerging power. However, the fact of the matter is that starvation is a very real threat for many people, much more than “commonsense” would allow us to believe. In my sample, representative of the district, a little over half the families (55 percent) had no food at all in the house at least once in the 30 days preceding the survey. This is not trivial. Nor is the fact that 67 percent of families had to resort to borrowing food from neighbours or kin in the same time period.
Against this backdrop of vulnerability, the PDS, with all its flaws, plays an important role in fighting food insecurity. The same NSS data shows that in states like Tamil Nadu, Karnataka and Andhra Pradesh nearly all of the population, both rural and urban, were hunger-free in 2004-05. These are also the states with the best-performing and most generous PDS in terms of coverage and benefits. In Tamil Nadu, the PDS is universal.
That PDS is an important safety net is something I found in the hunger-prone Koraput district. Almost all households with ration cards – 93 percent – considered it to be essential for their welfare. They explained that access to cheap grains has been crucial in ensuring freedom from mass hunger prevalent even a decade ago.
Targeting – a needed discussion
Another bone of contention is related to coverage. On one side of the fence lies the opinionthat covering two-thirds of the population is absurdly large. On the other side, rests the idea that an almost universal coverage in a country like India would, in fact, be efficient.
Koraput, for example, is an especially deprived area: 88 percent of the sample is multi-dimensionally poor. Around 39 percent of households in the district are currently “excluded”, ie not covered by the PDS. These households suffer equally from child undernutrition and poor standards of living as the current beneficiaries. The fact that they do not have PDS access is indeed a lamentable error; this, I would say, is the inefficient aspect of the PDS in Koraput.
A system of universal access or quasi-universal approach, where only those households that meet specific “exclusion criteria” are not covered, would be appropriate in the area. In this regard, the increased coverage of the Food Security Act (FSA 2013) is a step in the right direction for a region like Koraput (although it will still fall short of the needs of the district).
The potential error of excluding needy households raises arguably the most crucial question at the moment: How individual states plan to identify urban and rural beneficiaries under the FSA 2013. A debate in this regard would be more constructive than the current one with vast generalisations on the functioning of the PDS. The FSA 2013 should be viewed as a window of opportunity to revamp targeting for social services by using innovative methodologies incorporating well-rounded ideas of poverty.
None of this detracts from the need to continue to scrutinise the PDS or explore the possibility of alternatives. It also does not undermine the importance of debating and focusing on more structural issues of poverty and development. However, over-simplified arguments that reduce the PDS to an irreparably debased system are a disservice to generating informed public opinion.
Mihika Chatterjee is a Researcher at Oxford Poverty and Human Development Initiative at University of Oxford.