Competitive Exams: Current Affairs 2011: PDS leakages

PDS leakages

It is well understood that a substantial proportion of the grain, mainly wheat and rice, that is meant to be distributed to eligible families under the Public Distribution System (PDS) ends up being sold in the open market by corrupt intermediaries, including some dealers who manage PDS outlets.

Two recent surveys shed further light on the matter.

The diversion ratio (proportion of PDS grain diverted to the open market) has been estimated by several researchers in the past by matching National Sample Survey (NSS) data on household purchases with Food Corporation of India (FCI) data on offtake. The former tell us how much grain people are buying from the PDS. The latter tell us how much grain has been lifted by State governments from FCI godowns under the PDS quota. The difference is a rough estimate of the extent of diversion.

Based on this method, the estimated diversion ratio was around 54 per cent in 2004 05, the last year for which detailed data are available from a thick round of the NSS. These estimates, if proved correct, suggest a comprehensive breakdown of the PDS.

Further evidence on these matters is available from a recent survey, conducted in June 2011 (hereafter PDS Survey). The survey covered about 1, 200 randomly selected BPL households in nine sample States.

The findings of this survey confirm other recent evidence of substantial improvements in the PDS around the country. In most of the sample States, there have been major initiatives in the recent past to improve the PDS, and it seems these efforts are showing results.

NSS based estimates of diversion rates, however, remain high. The diversion rate for 2009 − 10 seems to be around 41 per cent. This is 13 percentage points lower than in 2004 − 05, but still very high.

  1. , is devoid of any transparency. There are no specific entitlements for APL households, and no clear allocation norms. This segment of the PDS remains highly vulnerable to corruption, as it is possible for large quantities of grain to disappear without anyone feeling the pinch.

Diversion rates may be higher (possibly much higher) under the APL quota, and perhaps also in urban areas. Indeed, the APL component of the PDS, which has expanded steadily since 2004 − 05 with a big upward jump in 2009

If this tentative line of explanation is correct, two conclusions can be drawn. First, both surveys (the PDS Survey, and the 66th Round of the NSS) add to growing evidence of steady improvements in the PDS in recent years. There is still a long way to go in achieving anything like acceptable levels of functionality, especially under the APL quota, but recent progress shows that the PDS is not a lost cause far from it. Second, one thing that really helps to prevent corruption is to give people a strong stake in the system (large quantities, low prices), and make sure that they are clear about their entitlements. That has already happened, to a large extent, with the BPL quota: It has become much harder to cheat the recipients, because they know their due and clamour for it if need be.

Courtesy: The Hindu and Times of India