PDS, a Fiasco

By Manohar Manoj

T he much talked about India's Public Distribution System (PDS) has become an epitome of complete fiasco on both its policy and implementation front. At one side it is nothing but wastage of huge amount of the public exchequer. On the other hand it is not accruing benefits to all poor. It is an irony that every year the central government incurs about Rs 50,000 crore on food supply subsidy simply to provide cheaper foodgrains to the poor people.

          But the million dollar question here is - does this whole amount of money really reaches the pocket of poor people? The past many years have proved that this money does not actually reach to the poor people in terms of food subsidy rather it subsidies malpractices, inefficiency and mismanagement of the Food Corporation of India (FCI). Does government not give this money in terms of gainful employment with sufficient wages & salary, pension and stipend to the poor and vulnerable people so that they can purchase these items in the open market?

          Currently, over 50 per cent of the food subsidy is being spent in the name of grain decay, storage, transportation of foodgrains and of course mismanagement. It demands a better assessment whether the government really wants to feed the poor people or  corrupt FCI? Despite having a provision of food subsidy today almost all urban poor and 50 per of the rural poor go to the open market to purchase their daily essential food requirements. Does the government not know this reality? Though government has started a provision of food coupon in forms of smart card simply to check the illegal distribution of the essential food items, but it is very difficult for poor people to make it due to lengthy process and rampant corruption involved in the system itself. Nobody likes to spend huge amount of time and effort to make their smart card. Rather they prefer to go to the market and immediately purchase their food items.

          To be precise about, the whole PDS system has created a multi-layer corruption. It starts from the procurements of foodgrains during the harvesting season, the government purchase different food items from the farmers on minimum support price. Actually the minimum support price has lost its relevance. This system was started to check the tendency of the falling prices of essential foodgrain items during harvesting season. The sole objective of MSP was to maintain the price of foodgrains in the open market just above the MSP, not bellow the MSP. However, what has happened is that these prices go down even below to MSP. The reason is that the government procurement agencies are not found everywhere and they also take commission while purchasing foodgrains from the farmers which ranges from Rs 50 to 100 per quintal. In this situation farmers are compelled to sale their produces at very lower rate in the open market.

          Secondly, the MSP which the government decides is not adequate enough to meet out the actual cost of cultivation. MSP should have cost plus pricing formula. Thirdly, the wrong doings committed by government is subsidizing cheaply purchased food items simply to cater the transportation, storage and damaging cost of these items. These all three items constitute even bigger amount than MSP what government pays to the farmers, which ultimately form the composition of subsidy amount.

          The fourth crucial point is the PDS dealership system which is the major cause of concern to be noted about. People are very eager to take dealership of PDS despite the fact they get only 10 to 20 paise per Kg of PDS food grains as their commission. However they have to spend at least Rs 1 per kg in terms of carriage cost and bribe to the food supply inspector, local dealers are forced to get engaged in malpractices. It means these PDS dealers are very much engaged in black marketing of the PDS foodgrains, otherwise they would not have opted the PDS dealership at all. 

          There are numerous cases of corruptions, which is generally being heard and read in media from time and again across the nook and cranny of the country.  Take for instance, in Arunachal Pradesh, former Chief Minister Gegong Apong who was the longest serving chief minister in the country was arrested on August 2010 on charges of PDS scandal. It is alleged that during his 23 years of rule of the state he has been procuring all the PDS food items only to siphon off to the contractor or the middlemen who sold them in the black market. His long unchecked rule of the state as the Chief Minister has witnessed unabashed corruption and loot of the exchequer which was said to  be misappropriation of Rs. 1000 crore.

          Even in state like Nagaland, the country has witnessed rampant corruption in PDS over the past many years. As per the report available, despite the presence of innumerable BPL families in the state PDS food items like rice, wheat etc were not distributed among them for the last 25 years. The government statistics says that every month Nagaland receives about 27,590 quintal of BPL rice, 11,790 quintal of wheat, 13,380 quintals of AAY rice (meant for senior citizens), etc. It is said because of the unholy nexus between the elected representatives of the government, FCI officials and a pocket of middlemen, all these PDS food items meant for the poor people of the state are falling into the hands of a contractor who is based at Kolkata.

          Even before these food items reach the local dealers, all PDS food items are sold away directly from the FCI godowns. It's also found that the contractor who is behind the show earns over Rs. 10 to 12 crore by selling these food items in the black market every month. Such is the degree of corruption involved in the so called India's Public Distribution System even in the Northeaster part of the country these two examples are only the tip of the iceberg.

          What is actually happening in India it has become a 'Mecca of corruption' through PDS scheme. The question is what is the rationality behind nurturing this PDS system when it has failed to achieve its objective? What is worth questioning here is that 'has India really achieved anything out of this PDS scheme other than drawing criticisms for its failure? This system in reality is neither providing any food security nor saving public money. It is neither benefiting the farmers nor the consumers. If so, then the best solution would to

scrap the whole PDS system and allow the market forces to determine the prices of the essential food items. And if anything the central government wants to do that should be directly delegated to the needy farmers and consumers. Think about it.