Targeting waste

The Planning Commission's devastating evaluation of the targeted public distribution system (TPDS) has once again exposed the shocking inefficiencies of this mammoth government-run network in supposedly reaching subsidised food to the poor.

Its finding that an incredible 58 per cent of the foodgrains does not reach those below the poverty line (BPL), has nevertheless come as no surprise because, in many ways, this was to be expected.

In fact, it may be an underestimation of the actual extent of leakage, considering that a sizeable part of the subsidised foodgrains is also routed to the poor through food-for-work type of programmes, where malpractices and leakages are even more rampant.

Even in the case of the TPDS, the real dimension of its inefficiency comes out clearly when viewed from the monetary angle. As revealed so starkly by the Planning Commission study, for every rupee worth of income transfer to the poor, the government spends Rs 3.65.

In other words, one rupee as budgetary subsidy on food is worth only 27 paise to the poor. That is better than Rajiv Gandhi's off-the-cuff assessment of 15 per cent.

But it bears pointing out that over 36 per cent of the budgetary subsidy on food gets siphoned off out of the supply chain and another 21 per cent reaches households that are above the poverty line (APL).

What is worse, even after incurring such whopping costs, the government has managed to cover through TPDS only about 57 per cent of all BPL households.

Some of the other findings are equally telling. It is reported that at most places the economic cost of grains to the government is higher than local market prices.

This reveals the truth long suspected, that the market is a more efficient mode for food distribution than public agencies. Besides, since fair price shops are financially not viable unless they divert foodgrains to other destinations, it is obvious that if the leakages are somehow plugged, nobody would come forward to run a ration shop.

And since over 40 per cent of the genuinely poor are not covered by the TPDS and part of the TPDS supplies actually reach APL families, it is apparent that the TPDS has failed as a programme.

Under these circumstances, it seems imperative to review the basic approach of using foodgrains as a means of income transfer to the poor.

In fact, the very concept of the PDS, as originally conceived and subsequently fine-tuned in the form of the TPDS, has outlived its utility and is no longer relevant.

It does not serve as an effective instrument for providing price support to farmers (because this function is confined to just three or four states), nor does it provide affordable food to the genuinely poor at a reasonable cost.

Therefore, the issue is whether this is the way to help the poor. The answer surely is, no. For, neither are all poor people food-insecure nor, conversely, are all food-insecure people poor.

Some fresh thinking needs to be done to find ways to tackle the issues of poverty and food insecurity. Any new system will have to aim at income transfer to the poor in some kind of a self-targeting manner.

Food stamps distributed through panchayats might be one option. Beyond that, the trade and distribution of food needs to be left to the market.