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Cash transfers can plug PDS leakages: study

A new study has estimated that 46.7 per cent or 25.9 million metric tonnes (MMTs) of the grains (rice and wheat), released through the PDS, did not reach the intended beneficiaries in 2011-12.

In the study, based on the latest NSSO data, by Chair Professor for Agriculture at ICRIER and former Chairman, Commission for Agricultural Costs & Prices (CACP), Ashok Gulati and Shweta Saini, Chhattisgarh was the best performing State with 0 per cent diversion. Andhra Pradesh and Tamil Nadu were among the better performers with 11.1 per cent and 12.2 per cent leakages respectively.

The worst-performing State was Manipur where 97.8 per cent of the grains failed to reach beneficiaries, followed by Daman and Diu where leakages were 95.8 per cent. In Delhi, 82.6 per cent of the grains were diverted.

During the period under study, when Prime Minister Narendra Modi was the Chief Minister in Gujarat, the pilferage was 72.2 per cent. Poor States such as Bihar, Uttar Pradesh and West Bengal delivered greater proportion of off-taken grains to the poor than Gujarat.

The paper makes a case for shifting the support to the poor from the highly subsidised price policy to Direct Benefit Transfers (DBT) of cash transfers through the Jan Dhan Yojana dovetailed with Aadhaar. The researchers estimate that this could result in savings of up to Rs.33,087 crore annually in food subsidy bills.

This is the best global practice which can plug leakages, reach the vulnerable segments of population, not interfere with markets of food, result in savings to the Centre, while still giving a better deal to consumers, the paper says.

The paper questions the need for the PDS not only on account of its inefficiency owing to high leakages but also on equity grounds. Five States — Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra and West Bengal — which are home to close to 60 per cent of India’s poor, accounted for almost 50 per cent of the total grain leakage in the country.

Examining whether the PDS is tuned to help abolish poverty, the paper says that the major beneficiaries of the PDS are people from States that have a smaller number of poor. “In a way, it helps the better offs more than the real poor of the country,” the paper says.

The paper, however, cautioned that the better-than-normal efficiency of some States, reflected in the findings, could be the result of state-run, food-based welfare schemes supplementing the central PDS. Chhattisgarh covers 90 per cent of its population, while Tamil Nadu covers close to 100 per cent of its population and both have greater per card entitlement relative to the centre-run scheme, it says.

A CACP paper had estimated that leakage for the year 2009-10 was 40.4 per cent. Just before the Independent Evaluation Office (IEO) was wound up by the new government in 2014, it had reported in a preliminary finding that approximately 40 per cent of the food grain allocated under the PDS did not reach the intended beneficiaries.

The PDS operates through a network of roughly 5.00,000 fair price shops (FPS) across the country and is likely the largest public network of its type in the world, currently distributing roughly 50-55 MMT of grains annually.

The National Food Security Act (NFSA), 2013 also relies on this vehicle to deliver food security to 67 per cent of population (75 per cent rural and 50 per cent urban) with an estimated distribution of about 61.4 MMT of grains.

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Printable version | Aug 13, 2020 3:54:41 AM | https://www.thehindu.com/news/national/cash-transfers-can-plug-pds-leakages-study/article6843342.ece

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