23 November 2024, New Delhi: India’s Public Distribution System (PDS), the backbone of the country’s food security framework, has long been a lifeline for millions of vulnerable citizens. Yet, despite its enormous scale and importance, the system is plagued by inefficiencies, wastage, and leakages. A recent comprehensive study by the International Food Policy Research Institute (IFPRI) and the Indian Council for Research on International Economic Relations (ICRIER) reveals startling insights into these challenges and offers a roadmap for systemic reforms.
The findings highlight that as much as 28% of the grains distributed under the PDS fail to reach the intended beneficiaries, amounting to 20 million metric tons of rice and wheat wasted annually. This inefficiency translates into a financial loss of approximately ₹69,108 crores—a staggering burden on public resources. With the government’s food subsidy bill for FY 2022-23 already exceeding ₹2.72 lakh crores, it is clear that urgent action is required to rationalize the PDS and address its inefficiencies.
The Evolution of the Public Distribution System
India’s PDS, established during World War II to combat acute food shortages, has undergone several transformations over the decades. Initially a universal system, it was revamped into a Targeted Public Distribution System (TPDS) in 1997 to cater specifically to economically disadvantaged populations. The introduction of the National Food Security Act (NFSA) in 2013 expanded its reach further, providing subsidized grains to two-thirds of the population. However, this expansion has not been without its challenges, particularly concerning the financial and operational sustainability of the system.
Persistent Challenges in the System
The IFPRI-ICRIER report sheds light on the uneven performance of the PDS across states. While technological interventions like Aadhaar-based biometric authentication and digital PoS (Point-of-Sale) machines have reduced leakages in states like Bihar and West Bengal, inefficiencies persist in major states like Uttar Pradesh, Maharashtra, Arunachal Pradesh, and Nagaland. These issues stem from inadequate infrastructure, insufficient Aadhaar linkage, and the diversion of grains meant for distribution.
The universal provision of highly subsidized grains—where beneficiaries receive wheat at ₹2 per kg and rice at ₹3 per kg or even free under special schemes—further complicates matters. This blanket subsidy has led to significant fiscal pressures while failing to adequately target the most vulnerable sections of society.
Proposed Reforms to Rationalize the PDS
The report emphasizes the urgent need to restructure the PDS to ensure its sustainability and effectiveness. One key recommendation is to reduce the coverage from 57% of the population to approximately 15%, focusing exclusively on those most in need. By adopting multidimensional poverty indices to identify beneficiaries, the system can become more targeted and efficient.
Another critical reform suggested is the introduction of Direct Benefit Transfers (DBT). This model would replace in-kind transfers of food grains with cash deposits directly into the accounts of beneficiaries, enabling them to purchase food based on their requirements. Such a system would not only minimize leakage but also reduce administrative costs and improve transparency.
The study also highlights the potential of converting Fair Price Shops (FPS) into “nutrition hubs.” By diversifying the food basket to include pulses, oilseeds, and fortified cereals, FPS could address India’s broader nutritional challenges, which extend beyond mere caloric intake.
Aligning Food Security with Nutritional Needs
While the PDS has succeeded in ensuring basic food security, its heavy reliance on rice and wheat has not addressed the country’s nutritional deficiencies. Data shows that expenditure on vegetables, pulses, and other nutrient-rich foods has declined, even as the consumption of grains has remained stable.
India faces a dual challenge: undernutrition among a significant portion of its population and rising rates of lifestyle diseases due to poor dietary diversity. Reforming the PDS to include a wider variety of food items is essential to align the system with national nutritional goals.
The rationalization of India’s PDS offers an opportunity not only to reduce fiscal pressures but also to build a system that is both sustainable and inclusive. As the government works to refine its food security strategies, the focus must remain on creating a system that supports the most vulnerable while addressing the country’s broader nutritional and economic needs.
