Corruption rendering PDS ineffective

What is ailing India's Public Distribution System (PDS)? "Corruption" is the one and only answer to that question. Even the Central government's new Targeted Public Distribution System (TPDS) is in no way helping to weed out graft in the entire sector.

Fair price shops and PDS have been the breeding ground for corruption right from its inception.

Results of a study conducted by Delhi-based research firm Centre for Media Studies and Transparency International are enough to conclude that PDS needs a total overhaul to get rid of its dubious distinction of being one of the most corrupt sectors in the country.

The study on corruption in India's Public Distribution System covered 4,405 respondents over 20 states and found that the chain of ration shops provide supplies to only 10 per cent of the country's population. However, the government claims it supplies goods to 16 per cent of the people.

PDS — evolved as a major instrument of the government's economic policy for ensuring food security for the poor — is arguably the largest distribution network of its kind in the world with 4.89 lakh fair price shops.

The government woke up to the reality a bit too late. Realising that PDS has failed to serve poor people, the government started issuing distinctive ration cards to families living Below Poverty Line. From June 1997, the Centre introduced Targeted Public Distribution System (TPDS).

Under this scheme, the states are required to formulate and implement foolproof arrangements for identification of the poor.

The main users for PDS goods are rural poor families of six crore for whom about 72 lakh tonnes of foodgrains were earmarked during 2006.

However, the survey has found out that 60 per cent households using PDS are not getting ration supplies. The survey further said in high-poverty states, 'out-of-stock' scenarios were as high as 80%. And, 34% of those visiting PDS offices had to make four or more visits before their voice could be heard and suitable action was taken. Moreover, nearly 50% of them paid bribe for obtaining a new and legitimate ration card.

Even though the fair price shop owners are blamed for corrupt practices, their plight is also not very hunky-dory. Low margins in the business lead to low profitability, especially after the launch of targeted public distribution system; credit provided is so low that they cannot lift enough stock from government godowns; they have no control over quality of grains; they too may have to pay bribe to PDS officials to get their quota of supplies.

The government-owned Food Corporation of India procures foodgrains for PDS from farmers. At times, the support price is so low that FCI can only attract low quality grains, the rest goes to the open market.

The study reveals that in Nagaland 100 per cent of the grain procured ends up in the open market. The figure is 70 per cent for Punjab.

It's not that Centre is not aware of the problem. Minister of state for consumer affairs and food Akhilesh Prasad Singh said an action plan has been prepared by the central government on ways to curb leakages, diversions under the TPDS after consulting state governments.

CPI general secretary D Raja said the present system should be disbanded and the government should come up with a new policy so that the poor are able to get the benefits.

Corruption is more prevalent in the Delhi and Bihar PDS, while Kerala and Himachal Pradesh are considered less corrupt states.

The main reason for short supply of ration is diversion of grains to open market. Registering complaints against the shop owner is a complicated task. Again, consumer is unaware that he/she is being overcharged.

About 60% of the respondents to the survey felt that corruption increased in 2006 in high poverty states and people paid Rs 50-500 as bribe to get new ration cards.

About 19% respondents who used PDS relied on alternative means (bribe, repeated requests and middlemen) to procure rations. In Bihar (32%), Rajasthan (37%) and Delhi (44%), meanwhile persons sought external means, the report claimed.

According to the survey, possible solution to check this loot is to hand out food vouchers or stamps to enable them encash it for goods at any fair price shop. Another point is to develop local production and distribution systems to reduce dependence on existing distribution chains which breed corruption.

PDS: Other Side of the Story

While corruption rules the roost in TPDS, Kerala state paints a different picture. Here, the aggrieved lot is fair price shop owners.

The implementation of the TPDS and the consequent collapse of the efficient statutory distribution system in the food-deficit Kerala have driven around 50,000 families depending on the ration business for their livelihood into a miserable existence. Of a total of nearly 15,000 ration dealers, many have quit in search of other profitable business and some 1000 outlets have been attached by the government.

Almost all fair price shop owners in Kerala are in the grip of debt. In Kozhikode district alone, 10 dealers have committed suicide. And, two of them hanged themselves in their own ration shops.

Kerala, a food-deficit state which boasted of the most successful PDS in the country and which provided access to foodgrains for almost the entire population, is the worst hit by the shift in the food policy of the Central government in the late nineties.

Till then, the PDS served the whole population equally. But with the shift in food policies at the Centre and the decisions of the central government to restrict the coverage of the subsidised PDS to what it considered to be poor and to unilaterally increase the prices of the food grains, Kerala too was forced to follow the national pattern. Before the TPDS, on an average 1,85,000 tonnes of foodgrains, including 1,55,000 tonnes of rice and 35000 tonnes of wheat, were sold through the PDS in Kerala every month.

But now the off-take of rice, which is the staple diet of the population, has come down to 4000-50000 tonnes per month. The sales turnover of the Kerala State Civil Supplies Corporation has fallen drastically since 1999-2000. The main reason for the fall has been the heavy drop of the sale of PDS items.