Evolution of PDS system

• The Public Distribution System (PDS) originated as a rationing scheme during World War II. 
• Initially, food grain imports were required for distribution purposes. In the 1960s, to address food shortages, the government established the Agricultural Prices Commission and the Food Corporation of India (FCI) to increase domestic procurement and grain storage. 
• The Revamped Public Distribution System (RPDS) was introduced in 1992 to provide service to remote and inaccessible locations. 
• The Targeted Public Distribution System (TPDS) was implemented in 1997 to benefit poor populations.
• The Antyodaya Anna Yojana (AAY) was launched in 2000 to help the most needy households. 
• In 2013, the National Food Security Act (NFSA) was passed to secure food rights for around 2/3rd citizens of India.

How does the PDS system work?

• The PDS allocates essential commodities such as wheat, rice, sugar, and kerosene to states and union territories for distribution. 
• State governments manage the system on the ground and are encouraged to include extra items like pulses, salt, and school supplies.

Role of Food Corporation of India (FCI)

• The FCI purchases wheat and rice at Minimum Support Prices (MSPs) to ensure fair earnings for farmers. 
• They keep purchased food grains in FCI or hired facilities to ensure adequate buffer stocks.
• Food grains are distributed to states at Central Issue Prices (CIPs) through public welfare programs like the Public Distribution System (PDS) and the Mid-Day Meal Scheme.

Challenges

• Eligibility Issues: A significant proportion of vulnerable populations are not covered within the criteria for Below Poverty Line (BPL) status, which results in exclusion errors. At the same time, many households above the poverty line (APL) receive subsidies, resulting in a high inclusion error.

• Increasing Costs: Government expenditure on Subsidies are increasing as a result of the inclusion of APL households, and other issues like corruption and leakage. The PDS is no longer financially viable as a result of rising procurement costs and low issue prices due to populist policies.
• Operational Inefficiencies: The FCI's bureaucratic and centralized structure results in operational inefficiencies that raise distribution and procurement costs
• Corruption and Leaks: Corruption leads to a large portion of food grains to be diverted to the open market, which increases the government expenditure.
• According to data from the 2022-23 Household Consumption Expenditure Survey (HCES), 28% of allocated rice and wheat does not reach its intended beneficiaries.
• Leakages vary across states, with Arunachal Pradesh, Nagaland, and Gujarat having higher rates than the national average of 28%.

Shanta Kumar Committee (2014)  

• Reduce the number of beneficiaries under the Food Security Act from 67% to 40% to prioritize the most vulnerable and increase efficiency.
• Allow the private sector to participate in food grain procurement and storage to reduce the FCI's burden.
• FCI should conduct full-fledged grain procurement only in states with limited procurement capabilities. States that perform well, such as Haryana and Punjab, should be responsible for their own procurement.
• To improve transparency and efficiency, PDS operations should be computerized from top to bottom and must be tracked using GPS.

Steps taken to improve PDS

• End-to-end computerization to improve the efficiency and transparency of PDS operations, including reducing leaks and eliminating bogus ration cards.
• The One Nation One Ration Card (ONORC) allows beneficiaries to collect their permitted food grains from any Fair Price Shop (FPS) in the country using biometric or Aadhaar authentication.
• The linking of ration cards with Aadhaar has helped in identifying legitimate beneficiaries and ensuring that food grains reach those who need them.
• Over 2.33 crore ration cards have been eliminated through digitization and Aadhaar-based de-duplication to ensure that only eligible households benefit from the system.
• The government has encouraged the formation of self-help groups to manage local PDS operations, thus boosting community participation and efficiency.

PRACTICE QUESTION

Q.Critically analyze the issues related to the Public Distribution System (PDS) and how it affects the efficiency of the food security programme. (150 words)