GOVERNANCE

The PDS impact on household expenditure

Source: The Hindu

Context

• The Public Distribution System (PDS) in India implements the National Food Security Act (NFSA), 2013 for ensuring food security to the population where about 75% of the rural and 50% of the urban population is covered under NFSA

Details

Overview of Public Distribution System (PDS):

• Objective:
  • Food security is maintained through selling affordable food grains.
• Coverage:
  • According to NFSA, 2013 75% population of rural area and 50% population of urban area is eligible for food security.
• Importance:
  • Reduces the consumption of foods high in energy density in the household

Historical Evolution

World War II	It was originally used in rations to avoid wastage of food stuffs.
1960s	To address food scarcity it was expanded, FCI and Agricultural Prices Commission were set.
1970s	It turned into a universal entitle scheme.
1992	Redesigned as Revamped Public Distribution System (RPDS) for better coverage.
1997	Shifted to Targeted Public Distribution System (TPDS) to target the poor population.
2000	Antyodaya Anna Yojana (AAY) for the BPL households of the country introduced.
2013	National Food Security Act passed and food grains are declared as legal right under TPDS.

Structure and Operation

• Central Government:
  • Personally, supervises purchasing, warehousing, and distribution in large quantities using FCI.
• State Governments:
  • Perform the task of allocation of ration cards within the state, distribution and monitoring of Fair Price Shops (FPSs).
• Commodities:
  • Supplies wheat, rice, sugar, Kerosene and in some of the states, pulses, edible oils and spices.

Impact on Household Expenditure

• Social Security: Of immense importance in the provision of food security.
• Resource Allocation: Being able to spend on other nutrient rich items, households are able to have subsidized food grains.
• Consumption Diversification: Banalized through the analysis of the results obtained from the questionnaire developed by HCES in 2022-23 academic year.
• The survey is also known as the household consumption expenditure survey 2022-23.
• Scope: It covers details on cash value of food and other goods obtained through food aid from social assistance programmes.
• Objective: Provides educated guesses of household benefits, but possibly less comprehensive than those from administrative sources.
• Errors: The type of error that was investigated includes inclusion (ineligible households benefiting) and exclusion (eligible households not benefiting).
• Characteristics: Enables one to look at the households which receive benefits from the social programs.

Poverty Implications

• Discussion: It raises the question where to put the poverty line when it comes to free items’ consumption.
• In-Kind Transfers: Huge effect on the quality of life of the less-favoured families.
• Estimation: Should take into account expenditure as well as the total value of consumption.

Challenges

• Errors: Over- and under-identification in the lists of beneficiaries.
• Infrastructure: Lack of proper and proper storage and transport infrastructure.
• Leakages: Hunger and food aid being diverted since due to corruption and inefficiencies of the current government.
• Quality: This area of the project implementation is the worst aspect as most of the beneficiaries complained of substandard food quality delivered to them.
• Awareness: These include: lack of awareness and access especially in the rural areas.
• Administration: These inefficiencies are in the form of bureaucratic barriers to productivity.
• Technology: The lack of integration in the distribution process.
• Economics: Lack of funds that can hamper the enhancement of the quality of care.

Way Forward

• Targeting: Reduction of errors with the help of technical methods such as Aadhaar.
• Infrastructure: It also involves investment in storage and transport of the products hence a large capital investment.
• Leakages: They should ensure the put in place strict monitoring mechanisms.
• Quality: Set very high-quality control standards.
• Awareness: Carry out campaigns, and rationalize processes.
• Coordination: Improve inter-agency coordination.
• Technology: Biometric authentication, Real time tracking and Online payments should be incorporated.
• Funding: Devise strategies and plans such as increasing the budgetary provisions for the development of renewable energy and establish PDPs with the private sector.

Conclusion

• Solving PDS’ problems entails improvement of its technology, infrastructure, and governance and raising awareness to feed every vulnerable group in India.

Sources:

The Hindu

POLITY

Just a Bargaining Chip

Source: Indian Express

Context

• Special Category Status (SCS) in India was introduced in 1969 which provides higher plan assistance and tax concessions to states with socio-economic and locational disadvantages and is aiming for balanced regional development. It has evolved significantly over time.
  

Introduction

• In 1969, The concept was introduced by the Planning Commission during the Fourth Five-Year Plan.
• Purpose: Positive intervention for higher plan assistance to states with locational and socio-economic disadvantages.
• Objective: Balanced regional development.

Details

Initial and Current States with SCS:

• Initially status was given to Jammu & Kashmir, Assam, Nagaland.
• Later it was extended to all northeastern states, Uttarakhand, Himachal Pradesh.

Allocation and Financial Assistance

• Gadgil Formula: Higher weightage was given to population and economic deprivation.
• Plan Assistance: 30% of funds reserved for SCS.
• Finance Commission Role: Higher per capita transfers to SCS since the Fifth FC in 1969.
• Centrally Sponsored Schemes: 90% grants and 10% loans for SCS whereas 60-75% grants for other states.

Tax Concessions and Benefits

• Concessions like excise, customs duties, income tax and corporate tax benefits will be given to the SCS states.
• Planning Commission Role: Higher central plan assistance (now under NITI Aayog).

Political and Structural Changes

• Regional Parties Influence: these parties are pushing harder for SCS status as a political bargaining tool.
• 2014 Andhra Pradesh Announcement: Central assistance was promised but not the full SCS status.

Finance Commission Recommendations

• 14th FC did not talk about SCS but allocated higher funds to NE states, Uttarakhand and Himachal Pradesh.
• 15th FC has ignored SCS but assigned 10.5% share of devolved taxes to northeastern and hilly states.
• Weightage Factors: Ecology, area, 2011 Census population data.

Challenges and Controversies

• Updating Framework: Difficult to update SCS identification criteria in contemporary context.
• Political Use: Leaders often claim SCS status for political gains without proper assessment of net benefits.

Alternative Approaches

• Proper Utilization of Funds: Net benefits of SCS can be achieved through full utilization of existing funds and opportunities.
• Strategic Interventions: Special budgetary allocations and transparent packages from the Centre.

Conclusion

• The focus should shift from broad Special Category Status designations to strategic, well-targeted interventions that ensure inclusive development. Effective utilization of existing funds and transparent, specific packages from the Centre can achieve the desired socio-economic

Sources:

Indian Express