A group of economists
have recently opposed the leakage figure of 47% in public
distribution system (PDS) that was earlier endorsed by the Report
of the High level Committee on Reorienting the Role and Restructuring
of Food Corporation of India, written under the chairpersonship
of Shanta Kumar.
The HLC report on FCI
reforms actually had taken the estimate on PDS leakage from an
academic paper written by Ashok Gulati and Shweta Saini, which was
published from Indian Council for Research on International Economic
Relations (ICRIER) in January this year. Dr. Ashok Gulati was also a
member in the HLC on FCI reforms.
In a briefing session for
media persons on 3 February, 2015 held in New Dehi, the group which
challenged the HLC figure informed that leakages and diversion from
PDS stood at nearly 42%. They clarified that methodological
differences is leading to 2 different estimates regarding PDS
leakages. (Please check the chart below).
Please note that many
of the states/ UTs for which leakages have been calculated by Gulati
and Saini are not shown in the above chart.
It was earlier seen in a
number of studies that leakages from the PDS reduced over the years.
Thanks to a series of measures undertaken in states like Odisha,
Bihar and Chhattisgarh, PDS could see a turnaround in these states.
For example, PDS leakage in Bihar reduced to 24% in 2011-12 from 91%
in 2004-05 due to introduction of coupon system, while diversions
declined in Chhattisgarh to 3.3% in 2011-12 from 52.0% in 2004-05 as
a result of transparency measures adopted apart from complete
overhauling of PDS.
This indicates that PDS
can be corrected and made to perform, provided there is adequate
political will and enough room for introducing innovative measures.
However, on the sole ground of leakage, the HLC on FCI restructuring
had suggested to replace PDS with cash transfers without going into
further details.
Two economists, namely
Reetika Khera from IIT Delhi and Jean Dreze, Visiting faculty at
Ranchi University, who disagree with the HLC recommendations on PDS
dilution, have alleged that Gulati and Saini miscalculated the
figures on total PDS offtake from FCI and total PDS purchase.
Dreze and Khera have
argued that most of the leakage is in the Above Poverty Line (APL)
quota (apart from the 'ad hoc quotas') into which more and more
foodgrain is presently being dumped. Comparatively, there is much
lower leakages in the below poverty line (BPL) quota.
One calculation by Dreze
and Khera, based on National Sample Survey (NSS) data, shows that
while leakages in the BPL/ Antyodaya Anna Yojana (AAY) quota was to
the tune of 30%, it was nearly double (i.e. 67%) in the case of APL
quota during 2011-12.
Instead of using the NSS
data, if the India Human Development Survey (IHDS) data of National
Council of Applied Economic Research (NCAER) is considered, then one
can find that leakages from PDS was around 32% in 2011-12, which once
again puts a question mark on the leakage figure quoted by HLC.
Apart from end-to-end
computerization, the Government should ask the states to release the
Socio Economic and Caste Census (SECC) data so that eligible
households could avail the benefits of PDS, suggested Dreze and Khera.
References:
Report of the High level
Committee on Reorienting the Role and Restructuring of Food
Corporation of India, January 2015,
http://fciweb.nic.in/app/webroot/upload/News/Report%20of%20the%20High%20Level%20Committee%20on%20Reorienting%20the%20Role%20and%20Restructuring%20of%20FCI_English_1.pdf
Leakages from the Public
Distribution System (PDS) and the way forward - Ashok Gulati and
Shweta Saini (2015), ICRIER,
http://icrier.org/pdf/Working_Paper_294.pdf
The National Food
Security Act 2013
The National Food
Security Ordinance 2013
FCI reforms: prescription
to cure or kill? -Roshan Kishore, Livemint.com, 27 January, 2015,
http://www.im4change.org/latest-news-updates/fci-reforms-prescription-to-cure-or-kill-roshan-kishore-4675181.html
Water For The Leeward
India -Jean Dreze and Reetika Khera, Outlook, 24 March, 2014,
Public Distribution
System Reforms and Consumption in Chhattisgarh -Prasad Krishnamurthy,
Vikram Pathania, and Sharad Tandon, Economic and Political Weekly,
Vol-XLIX, No. 8, February 22, 2014,
http://www.im4change.org/latest-news-updates/public-distribution-system-reforms-and-consumption-in-chhattisgarh-prasad-krishnamurthy-vikram-pathania-and-sharad-tandon-24265.html
Ajay Chhibber, Director
General of the IEO, a former assistant secretary general of the UN
Development Programme, interviewed by Sanjeeb Mukherjee, Business
Standard, 3 February, 2014,
http://www.business-standard.com/article/economy-policy/there-seems-to-be-at-least-40-leakage-in-our-targeted-pds-system-ajay-chhibber-114020200447_1.html
Rural Poverty and the
Public Distribution System-Jean Dreze and Reetika Khera, Economic and
Political Weekly, Vol-XLVIII, No. 45-46, November 16, 2013,
http://www.im4change.org/latest-news-updates/rural-poverty-and-the-public-distribution-system-jean-dreze-and-reetika-khera-23277.html
Reforming the Public
Distribution System: Lessons from Chhattisgarh by Raghav Puri,
Economic and Political Weekly, February 4, 2012,
http://www.im4change.org/docs/335reforming-the-pds-lessons-from-chhattisgarh.pdf
PDS leakage drops to
10-15%: govt, The Indian Express, 12 December, 2011,
http://www.im4change.org/latest-news-updates/pds-leakage-drops-to-10-15-govt-11988.html
Revival of the Public
Distribution System -Reetika Khera, Economic and Political Weekly,
November 5, 2011, Vol xlvi, No. 44 & 45,
http://www.im4change.org/siteadmin/tinymce/uploaded/Reetika%20PDS.pdf
Trends in diversion of
PDS grain -Reetika Khera (2011), Working Paper No. 198, Centre for
Development Economics, Department of Economics, Delhi School of
Economics,
