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Leakages from Public Distribution System (PDS) and the Way Forward

Publisher: ICRIER

In an effort to highlight the inefficiency and iniquitous nature of the exis ting PDS, the present paper estimates the proportion of grain that wasdiverted/leaked from the PDS grain-chain in 2011-12. This is doneby mapping the difference between the grains off-taken by states from the Central pool and the grain consumed by the PDS beneficiaries. It also studies how tuned is the PDS welfare delivery system to the country’s poor. The paper finds that at an all-India level, 46.7 per cent or 25.9 MMTs of the off-taken grain did not reach the intended PDS beneficiaries in 2011-12. The percent share of total leakage increased with states where greater percent of India’s poor resided (five states: UP, Bihar, MP, Maharashtra and West Bengal, which are home to close to 60% of India’s poor accounted for close to 50% of the total grain leakage in the country in the year 2011-12). While some experts (Himanshu and Sen, 2011) pitch for near universal PDS to plug leakages, and NFSA argues for end to end computerization and setting up of vigilance committees and courts, this paper makes a case for shifting the support to poor from highly subsidized price policy to income policy of cash transfers through Jan-Dhan yojana dovetailing UID of Aadhaar scheme. We also argue that this is the best global practice, can plug leakages, reach the vulnerable segments of population, not interfere with markets of food, and save more than Rs . 30,000 crores annually to the government of India under the most likely scenario, while still giving a better deal to consumers.

Author(s): Ashok Gulati, Shweta Saini | Views(168)

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