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An exemplary feature of Indian democracy is its Public Distribution System (PDS). The PDS system in India took shape in the 1960s due to a critical shortage of food. One hand, this system had given a new lease of life to Indian agriculture - which is still largely informal and dependent on the vagaries of natural rainfall - by ensuring a significant buying of food grains by government authorities and on the other hand, it has helped India, a country with a mammoth population, tide over various criticalities and contingencies.

Evolution of the PDS

After its evolution in the 1960s, in 1992 the PDS was revamped on the grounds that it catered primarily to the urban areas and was not reaching out. The system then came to be known as the Revamped Public Distribution System (RPDS), covering 1752 blocks of drought-prone, desert, tribal and hilly areas of the country.  Despite revamping the system, it failed to cater to the targeted beneficiaries. The first significant evolution took place in 1997, when the Indian government launched the Targeted Public Distribution System (TDPS) linked to poverty estimates. The Below Poverty Line (BPL) and the Above Poverty Line (APL) concepts were introduced. States were required to formulate and implement fool proof arrangements for the identification of eligible beneficiaries for the delivery of food grains and for grain distribution in a transparent and accountable manner through Fair Price Shops (FPSs). 

In 2000, the Antyodaya Anna Yojana (AAY) was launched to serve the poorest of the poor among the BPL households and included landless agricultural labourers, marginal farmers, rural artisans, destitute and people earning their livelihood on a daily basis in informal sectors. The next step was the enactment of the National Food Security Act (NFSA), enacted in the year 2013. It essentially delinked the coverage under TPDS from erstwhile poverty estimates. Eligible households/beneficiaries under NFSA comprised the Antyodaya Anna Yojana (AAY) households and persons belonging to Priority Households (PHH) categories. As per NFSA norms, among priority households, each member is entitled to five kgs of grain per month at `2/kg for wheat and ` 3/kg for rice. Antyodaya households get 35 kgs/month at the same price, irrespective of the family size. Coverage under NFSA was linked to the population estimates and in practice, entitles up to 75% of the rural population and upto 50% of the urban population for receiving subsidised food grains under the TPDS – covering nearly two-thirds of the country’s population.  

Challenges

According to an article published in Indian Journal of Economics and Development titled ‘Public Distribution System in India: Key Issues and Challenge’ by Mahima Gopal Ghabru, Ganga Devi and Nilam Rathod, the PDS system in India has been wrought by several challenges. Firstly, inaccurate identification of beneficiaries implies that food grains are not reaching the targeted recipients. Instead, people who are not entitled to the in-kind transfers are enjoying undue benefits. These errors are referred to as an error of inclusion and exclusion. The error of inclusion means including the non-poor in the poor category and the error of exclusion implies including the poor in the non-poor category.

Secondly, leakages pose a severe challenge. Leakage is defined as the difference between off-take of grains by the state and actual consumption by the beneficiaries. It generally happens through fraudulent practices linked to ration cards and black marketeering of PDS food grains in the open market.

Thirdly, the food subsidy burden has increased manifold. It increased from `2850 crore in 1991-92 to about `107823 crores in 2014-15 and has gone up since then. This increase in the subsidy can be attributed to hike in the MSP over years, accumulation of large stocks of food grains, high economic cost of food grains, high off-take under TPDS and other welfare schemes and constant central issue price (CIP) which has led to widening of the difference between CIP and economic cost - causing a huge food subsidy burden on the exchequer.

Fourthly, perineal problems with storage are weakening the PDS. FCI’s average annual rate of increase in storage capacity has been a meager 4.5% while the growth rate of rice and wheat stocks in the central pool has been more than 18%.  This has led to acute storage problems.

Lastly, efficient functioning of Fair Price Shops (FPS) is a must for the success of PDS. But, in reality, only 39% of the FPS around the country (data of 2016) generate a positive net income over variable costs and 8.3% earn income sufficient enough to run the FPS.

Pandemic and the PDS

The global Covid-19 pandemic has overwhelmed India’s health infrastructure and disrupted the economy. Additionally, recent data on malnutrition is problematic. India has one of the highest proportions of undernourished children in the world, in terms of both stunting and wasting. Moreover, the National Family Health Survey 2015-16 and 2019-20 rounds (pre-pandemic estimates) showed that there were either stagnation or worsening of several malnutrition indicators in several states.  

Research indicates that households continued consuming less food several months after the nationwide lockdown in 2020. A survey by the Centre for Sustainable Employment at Azim Premji University found that over 75% of the households were eating less during the lockdown than before it. There was a slight recovery post-lockdown, but 60% of the households still reported eating less than before the lockdown. Moreover, disadvantaged households have been disproportionately affected. For example, almost half of the informal workers in a survey said that they were eating less than before. In this context, PDS can be very important to help vulnerable families tide over the pandemic-induced food insecurity.

As the pandemic spread through the country, the Indian government announced the Pradhan Mantri Garib Kalyan Anna Yojana - providing 5 kgs of rice or wheat and 1 kg of pulses to eligible people free-of-cost - in addition to the regular entitlement of quota of food grains. The scheme was initially meant to be implemented from April 2020 to June 2020 but was later extended till November 2020. In April 2021, as the second wave of infections spread, the Indian government again announced 5 kgs of free food grains per person per month for the months of May and June and was further extended till November 2021. Various state governments also rolled out their own packages.

However, with the economy on the path to recovery and GDP growth projected at around 9%, many economists are questioning the rationale of continued free food grains from the central government. Many political commentators are also venturing to say that this is now more of a political compulsion - with five important state elections approaching - than an economic necessity.  

Technology

The massive strides taken by the country’s PDS system during the pandemic has been emboldened by technological advancements. The most important aspect of technology-reforms is the identification of genuine beneficiaries - for effective targeting of subsidised food grains. India has successfully ensured that over 90% ration cards are seeded with the Aadhaar card. This has ensured transparent biometric distribution of up to 70% monthly allocation, through about 4.9 lakh (91% of total 5.4 lakh) electronic Point of Sale (PoS) devices across the country. These measures have also put a check on ghost lifting of subsidised food grains, by detecting and weeding out nearly 4.39 crore ineligible/duplicate ration cards during the past seven years since 2013 and has been greatly utilised during the pandemic.

Further, technology has ensured that such a large and complicated system can be resilient with the help of continuous oversight and feedback. Regular third-party assessments besides concurrent evaluations have kept the Indian PDS system updated. The “One Nation One Ration Card (ONORC) plan is allowing beneficiaries to access PDS from any FPS – a significant development that aided many migrant labourers stuck in their workplaces during the Covid-19 lockdowns. During the lockdowns, the country’s technology-driven PDS swiftly came to the fore. It scaled up to distribute almost double the quantity of food grains to more than 80 crore beneficiaries during April to November 2020. During this period, the department had allocated nearly 680 LMT food grains (about 350 LMT under normal NFSA, 321 LMT under PM Garib Kalyan Anna Yojana). It was seen that 93% of food grains per month were successfully distributed with all the Covid-19 protocols despite a multitude of challenges.