PDS has had a spectacular run. That may not last

 2020-21 was one of Indian agriculture’s finest moments, as memorable as 1967-68 that inaugurated the Green Revolution. While much of the country was locked out of economic activity in Covid-19’s first and second waves, farmers not only harvested their standing rabi crop from late March 2020 but also planted aggressively for the next two seasons. Agriculture was the only sector to grow 3.3 per cent in 2020-21, even as the economy overall contracted by 4.8 per cent. According to the Centre for Monitoring Indian Economy’s Mahesh Vyas, the farm sector added 3.4 million jobs in 2020-21 and 11 million from 2019-20 to 2021-22. During these three years, the rest of the economy shed 15 million jobs.

But 2020-21 and the year that followed were also remarkable for a related phenomenon – of India’s public distribution system (PDS) truly coming of age and delivering at a time of crisis. Sales of rice and wheat under various government schemes totalled 92.9 million tonnes (mt) in 2020-21 and 105.6 mt in 2021-22. This was as against an average offtake of 62.5 mt during the first seven years after the implementation of the National Food Security Act (NFSA) in 2013-14 and 48.4 mt in the seven years preceding the legislation.

The accompanying charts show the offtake of rice and wheat both at the all-India level and for the three poorest states as per the NITI Aayog’s National Multidimensional Poverty Index — Bihar, Jharkhand and Uttar Pradesh (UP). All three registered significant increases in offtake levels post-NFSA between 2013-14 and 2019-20: Jharkhand (from 1.2 mt to 1.9 mt), Bihar (4 mt to 5.6 mt) and UP (7.5 mt to 9.5 mt). These have further risen post-Covid, to 3.1 mt for Jharkhand, 9.8 mt for Bihar and 17.3 mt for UP in 2021-22.

 Graphics: Ritesh Kumar

The NFSA legally entitles up to 75 per cent of India’s rural and 50 per cent of the urban population — translating into some 813.5 million people — to receive 5 kg of grain per person per month at highly subsidised rates of Rs 2/kg for wheat and Rs 3/kg for rice. In the wake of the Covid-induced economic disruptions, a new Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme was launched giving NFSA beneficiaries an extra 5 kg grain per person per month free of cost. PMGKAY was implemented for eight months (April-November) in 2020-21 and 11 months (May-March) of 2021-22.

NFSA along with PMGKAY has led to a massive jump in grain offtake through the PDS. More importantly, this increase has largely taken place in the poorer states. UP, Bihar and Jharkhand together accounted for 21.6 per cent of national grain offtake in 2012-13, which was pre-NFSA. That stood at 28.6 per cent in 2021-22, higher than their combined 27.8 per cent share of India’s population based on the 2011 Census.

To put the numbers in context, only a handful of states — Kerala, Tamil Nadu and Andhra Pradesh — had well-functioning PDS till the early 2000s. In the late-2000s, Chhattisgarh initiated reforms to curb diversion/leakages by entrusting the running of fair price shops to cooperatives and local bodies (as against private licensees), making timely allocation and supplying grain directly to PDS outlets (bypassing middle-level distribution agencies), and using IT to track dispatches right from procurement centres to points of sale.

Chhattisgarh’s example was emulated by Odisha, followed by Madhya Pradesh and West Bengal — all by 2015-16.

These success stories paid off politically as well. The Bharatiya Janata Party secured successive wins in the 2008 and 2013 Chhattisgarh Assembly elections under Raman Singh, who earned the sobriquet “Chawal Waale Baba (rice monk)”. Mamata Banerjee’s Trinamool Congress was re-elected with an enhanced majority in the 2016 West Bengal polls; ensuring near-universal access to the PDS and rice at Rs 2/kg played a key part in that.

The three poorest states are the latest entrants to the list. UP particularly has seen its grain offtake soar from 9.5 mt to 17.3 mt in the last two years. Out of the 17.3 mt (10.7 mt wheat and 6.6 mt rice) distributed in 2021-22, 7.8 mt comprised free grains under PMGKAY. Most analyses of the BJP’s recent UP elections victory attribute it to the Narendra Modi-Yogi Adityanath “double-engine” government’s focus on not just expanding the reach of the PDS, but also last-mile delivery of grain to the intended beneficiaries.

In sum, the PDS delivered both when and where it mattered. Covid-19 will go down as India’s first major national disaster not to record widespread starvation, unlike the 1943 Bengal or 1966-67 Bihar famines. People in the poorest states got something to eat amid massive job and income losses. The PDS, indeed, turned out to be the only effective social safety net during the pandemic. Some states went beyond rice and wheat. Kerala leveraged its PDS network to supply free food kits to all ration card holders through the 2020 lockdown till around August 2021. These monthly kits — containing items (from coconut oil, pulses, sugar and salt to tea, coriander, turmeric, chilli powder and soap) over and above regular PDS grain — again helped the Pinarayi Vijayan-led Left Democratic Front win a fresh term in the April 2021 state polls.

But that road to success is today hitting a speed bump, which may also create political challenges ahead of the 2024 national elections. The expansion of the PDS, especially post-NFSA, was underwritten by the superabundance of rice and wheat in government granaries. Those overflowing godowns could soon be history. Official wheat procurement is likely to halve this time from last year’s record 43.3 mt, because of a poor crop singed by the abnormal spike in March temperatures. Rice stocks are far more comfortable, though the precarious supply situation in fertilisers raises questions about the prospects for the coming kharif season.

Looking ahead, the Food Corporation of India’s stocks can probably sustain the pre-2020-21 annual offtake levels of 60-65 mt – enough for NFSA, but certainly not schemes such as PMGKAY. The golden chapter of the PDS — including delivering votes to ruling parties — was scripted in an environment of low global commodity prices and surplus domestic foodgrain production. That party is over, even as food inflation is back. The PDS was originally meant to protect ordinary people from extraordinary price rises. Whether it can do that at a time of renewed global inflation remains to be seen.

Written by Harish Damodaran , Samridhi Agarwal

Source: Indian Express, 27/04/22

Dark clouds over the PDS

The imposition of Aadhaar-based biometric authentication in the Public Distribution System threatens to disrupt recent progress with PDS reforms. It also deprives millions of people of essential food entitlements.

India’s Public Distribution System (PDS) has improved steadily during the last 10 years. The system used to be most ineffective and corruption-ridden, with leakages of around 50 per cent at the national level, going up to 80 or 90 per cent in some States. Around 2007, Chhattisgarh took the lead in reforming the PDS — making it more inclusive, methodical and transparent. Within a few years, the system was overhauled. Today, most rural households in Chhattisgarh have a ration card, and are able to secure their entitlements (typically 7 kg of rice per person per month) on time every month.

The ‘Chhattisgarh model’ 

Later on, it turned out that the Chhattisgarh model (so to speak) was replicable. Odisha was among the first States to emulate Chhattisgarh’s experience, with similar results. Many other States also initiated Chhattisgarh-style PDS reforms: broad coverage, clear entitlements, de-privatisation of PDS shops, separation of transport agencies from distribution agencies, computerisation, fixed distribution schedules, tight monitoring, active grievance redressal, and more.

Jean Drèze

In the last few years, I have been involved in several surveys of the PDS initiated by independent researchers with student volunteers. In 2011, we studied the PDS in nine States: Andhra Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Odisha, Rajasthan, Tamil Nadu and Uttar Pradesh. We found that the system was working reasonably well for “below poverty line” (BPL) households: on average, they were receiving 84 per cent of their foodgrain entitlements from the PDS. A similar picture emerged from a follow-up survey in 2013. However, high leakages continued in the “above poverty line” (APL) quota, which tended to be used by the Central government at that time as a dumping ground for excess food stocks.

The National Food Security Act (NFSA), enacted three years ago, was — and still is — a chance to complete the process of PDS reform and ensure a modicum of food security for everyone. Under the NFSA, the APL category is abolished and eligible households come under two well-defined categories: priority households, entitled to 5 kg of foodgrains per person per month at nominal prices, and Antyodaya households (the poorest), entitled to 35 kg per household per month. The PDS is to cover at least 75 per cent of rural households at the national level, rising to 80-90 per cent in the poorest States.

Impending setback

In June this year, we went back to six of India’s poorest States (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha and West Bengal) for an update. We found that four out of six had a fairly good PDS, with most NFSA cardholders receiving the bulk of their entitlements every month and relatively low exclusion errors. The last two, Jharkhand and especially Bihar, still have a long way to go. Even there, however, the situation is much better than it was a few years ago. In Jharkhand, for instance, the transparency of the system has vastly improved, and the official NFSA website is among the best in the country. However, recent progress is in danger of being undone soon due to the Central government’s counter-productive push for Aadhaar-based biometric authentication in the PDS. This involves installing “Point of Sale” (PoS) machines at PDS shops, and verifying the identity of cardholders by matching their fingerprints against the Aadhaar database over the Internet.

This system requires multiple fragile technologies to work at the same time: the PoS machine, the biometrics, the Internet connection, remote servers, and often other elements such as the local mobile network. Further, it requires at least some household members to have an Aadhaar number, correctly seeded in the PDS database.

This is a wholly inappropriate technology for rural India, especially in the poorest States. Even in State capitals, network failures and other glitches routinely disable this sort of technology. In villages with poor connectivity, it is a recipe for chaos. Note that Internet dependence is inherent to Aadhaar since there is no question of downloading the biometrics.

Recent developments in Rajasthan illustrate the dangers of forcing biometric authentication on the PDS. During the last few months, the Government of Rajasthan has tried hard to enforce the system. The use of PoS machines is compulsory and every PDS shop has one. Yet, according to official data compiled by Nikhil Dey, only 61 per cent of Rajasthan’s foodgrain allocation found its way through the PoS system in July 2016, with a similar figure (63 per cent) for August. The rest is either siphoned off or delivered using the old “register” system — which of the two is hard to say since utter confusion prevails about the permissibility of using registers as a fallback option.

Further evidence comes from Ranchi district in Jharkhand where the PoS system is also mandatory. In July 2016, NFSA cardholders in Ranchi district received less than half of their foodgrain entitlements through that system, according to the model website mentioned earlier. The situation was much the same in August.

As in Rajasthan, it is not clear whether those for whom the PoS system does not work in Ranchi are getting any grain through the old “register” system. Officially, that is not allowed, according to local PDS dealers and officials (indeed, some dealers have been suspended for using this fallback option). Even if it happens unofficially, this dual system, where PDS grain goes partly through the PoS system and partly through the fallback register system, is the worst. The reason is that only PDS dealers know whether and when the register system is permissible, and they have no incentive to share that information with the cardholders. Quite likely, the new system is reviving PDS corruption in Jharkhand, reversing a healthy trend towards lower leakages in recent years.

A short visit to a PDS shop just outside Ranchi quickly brings out the multiple vulnerabilities of the new system. Within minutes we met many people who had been deprived of their food rations for months because they had no Aadhaar number; or because their Aadhaar number had not been correctly seeded; or because their biometrics did not work, or simply because the PoS machine returned various error messages.

Even those for whom the system works face huge inconvenience. Often they have to make repeated trips to the PDS shop, or send different members in turn, until the machine cooperates. Sometimes schoolchildren are asked to skip classes and try their luck at the PDS shop. This unreliable system causes a colossal waste of time for everyone.

By the way, all this is one year after I was told by the Food Department’s upbeat consultants that “the PoS system is functional throughout Ranchi district”.

The Aadhaar juggernaut

In spite of ample warnings, the Central government continues to push for compulsory Aadhaar-based biometric authentication in the PDS. Incidentally, this is a violation of Supreme Court orders. The court did allow the use of Aadhaar in the PDS, but not making it compulsory for PDS users. Nor can the government invoke the Aadhaar Act to justify this move: the relevant sections of the Act are yet to be notified.

PoS machines seem to be expected to ensure a corruption-free PDS. This expectation, however, builds on a misunderstanding of PDS leakages. The main vulnerability today, at least in the States I am familiar with, is not identity fraud (e.g. bogus cards), but quantity fraud: PDS dealers often give people less than what they are entitled to, and pocket the rest. PoS machines are ineffective in preventing quantity fraud. They may help in reducing identity fraud, such as it is, but that does not justify depriving people of their food entitlements when the technology fails.

As with many other applications of Aadhaar, this one is proceeding like a juggernaut, without paying serious attention to the collateral damage. Instead, the Central government peddles bogus figures of Aadhaar-enabled financial savings (often relayed by unsuspecting columnists or economists) to justify further imposition of the technology. It is only when concerned journalists, activists or researchers make enquiries from the victims that we learn about the adverse effects of Aadhaar on the PDS.

The Central government and its advisers pride themselves on their commitment to “evidence-based policy”, but this is a case where evidence is being systematically ignored to press on with technological solutions based on blind faith (handsomely nurtured by commercial interests). The drive to impose biometric authentication on the PDS must stop immediately to avoid further damage. There are better ways of plugging last-mile leakages, including the use of simpler technologies not dependent on the Internet. Imposing a technology that does not work on people who depend on it for their survival is a grave injustice.

Jean Drèze is Visiting Professor at the Department of Economics, Ranchi University.

Keywords: Public Distribution System, PDS, Aadhaar card, biometric authentication, National Food Security Act, NFSA

Source: The Hindu, 10-09-2016