Economy

‘Universal PDS model, efficient in controlling grain leakages'

Harish Damodaran New Delhi | Updated on March 28, 2011 Published on March 28, 2011

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States that do not strive to ‘target' public distribution system (PDS) beneficiaries do a better job of controlling leakage of foodgrains, a recent study shows.

To measure leakage, the study – by the Planning Commission Member, Prof Abhijit Sen and Dr Himanshu, who teaches economics at the Jawaharlal Nehru University – has relied on the National Sample Survey Organisation's (NSSO) Consumer Expenditure Surveys that collect State-wise information on the percentage of households buying from the PDS and the quantity of grain they purchase.

The reported PDS purchases from the NSSO data are, then, compared with the Food Ministry's official PDS grain offtake figures for each State.

In an ideal no-leakage scenario, the two would match, with the quantities lifted from the Food Corporation of India's godowns getting entirely sold through PDS outlets to households and not diverted to the open market.

Using this methodology, the study – published in the latest Economic & Political Weekly issue dated March 19 – has estimated total PDS grain sales to households based on NSSO data for 2007-08 at 189.3 lakh tonnes (lt), which is below the Food Ministry's offtake figure of 331.2 lt.

The gap – 141.9 lt or 42.8 per cent – represents the extent of ‘leakage' at an all-India level.

More targeting, more leakage

But it is the State-level numbers that are interesting, with leakage levels low at zero to 17 per cent for Chhattisgarh, Tamil Nadu (TN), Himachal Pradesh (HP), Kerala and Andhra Pradesh (AP). Even Punjab has low leakage, though it is insignificant given the small quantity of grains sold through its PDS – just 1.5 lt against 33.8 lt for TN, 30.3 lt for AP, 9.6 lt for Kerala, 8 lt for Chhattisgarh and 4 lt for HP.

Low grain leakages, in turn, seem to follow from having more universal access to PDS. Thus, more than 76 per cent of households in TN purchased grains from the PDS in 2007-08, with these being above the national average of 30.1 per cent even in the case of AP (70.2), HP (65.4), Kerala (54.2) and Chhattisgarh (40.2).

In contrast, States with limited PDS outreach – Bihar, Rajasthan, Uttar Pradesh, Assam or even the much-hyped Gujarat and West Bengal – report very high grain leakages. The ones which have reduced leakages in recent times – Chhattisgarh and Orissa, for example – are actually those that have extended PDS entitlements to include more households, as opposed to the currently favoured economist's recipe of ‘targeting' beneficiaries.

“When you increase the outreach of the PDS, you have more people demanding that the system work better, compelling governments to act. The chances of this happening get reduced the more you try and restrict access”, Prof Sen told Business Line.

In fact, after the introduction of a targeted PDS in June 1997, the all-India PDS grain leakage ratio rose from 28 per cent in 1993-94 to nearly 55 per cent in 2004-05.

But subsequently it fell below 43 per cent, as the spurt in open market prices led to increased patronage of ration shops among households and many States opted for more universal PDS solutions.

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Published on March 28, 2011
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