Cutting across the political spectrum, the Chief Minsters of Bihar and Delhi, both seasoned politicians, and well known for their positive and pro-active role in offering better delivery of government services have suggested that in view of the malfunctioning of the PDS , direct cash transfers to the BPL may be a better option. The poor families had to spend long time in queues for indifferent quality of ration, the PDS dealers had created artificial monopolies and the civil supplies corporations had virtually raised their hands to establish a supply chain to serve the poorest sections of the society. There is strong merit in the arguments, but the question is : are cash transfers the panacea to the failure of the state to enforce the regulations with respect to PDS dealers, and /or build an effective network of PDS shops in the public/co-op sector?
AgriMatters is convinced that Cash Transfers in lieu of access of food through the PDS system will legitimize the failure of the state to provide services to the poor. If this be so, then there is the larger question – why does the state exist at all? A state which accepts that the majority of its PDS dealerships are controlled by the mafia, or that its own corporations are unable to establish a network to supply essential commodities to the BPL families can also turn around and say: ‘we cannot manage our schools and hospitals – let us give cash transfers to the BPL families and abolish the education and health departments. Our public libraries are not doing well; let us give allowances to the BPL to buy one newspaper each, and so on….’
Let us ask more fundamental questions: why has PDS failed in Bihar and Delhi, but not in Chhattisgarh, TN and Kerala. In fact the success story of PDS in these states ,( again cutting across the political spectrum) shows that PDS can be run well if policies are clear and transparent, the public is aware, margins for dealers are such that they can make good legitimate money, the co-op sector offers a viable alternative, and the state civil supplies corporation takes the responsibility of providing good back –end support to the PDS . If PDS margins are low, and the shops have t sell only wheat, rice, sugar and kerosene, the business proposition is certainly not viable. But if the portfolio is expanded to include the entire range of goods that a family needs – from tea leaves to pulses and match boxes to copy books, the domain can shift. And why not give good margins? If the per kg subsidy on wheat or rice can range from Rs 6-8 per kg depending upon the location, why can’t we give a decent margin of , say 3-5% to the PDS dealer, besides a line of credit at 7 % because by definition, the PDS dealer is catering principally to the BPL families. The argument of the Delhi government that PDS dealerships are sold in ‘benami’ again does not hold much ground, because the main concern is not about ownership, but about the delivery of ‘entitlements’ , which can be addressed by better regulation.
However what no one wishes to put across in black and white is the reluctance of the ‘state’ to crack down on the political economy of corruption in PDS.
Now, let us look at the counter factual. If PDS is abolished, and cash transfer of Rs 300 /is done per BPL family, it only adds to the money supply, without ensuring that the money is spent essentially on basic cereals. Given the fact that the poor family is always short on cash, and makes substantial purchases on credit, the possibility of this cash transfer adding up to calorific intake in the family is remote. This will be a regressive step, and will further add to the malnutrition that affects the most vulnerable sections of our society. The solution lies in revamping the PDS, creating a competition even among the PDS dealers, introducing smart cards and tamper proof packaging, enhanced vigilance by public representatives and the civil society, and last but not the least, introducing IT in the entire value chain to ensure that the pilferages are checked at every stage. A regular interface with the PDS dealers and treating them as partners, rather than as adversaries is also important.
There are other implications as well. If the off take from PDS declines, the Minimum Support Price system will also get crumble, and commodity markets will show much greater volatility with adverse consequences for the resource poor. The reason why the prices of wheat and rice are in reign is because of the abundant buffer stocks in place. If these are dismantled, the domestic food inflation on essential cereals will make it extremely difficult for the poorest families to access two square meals a day. One can live without onions, but not without the basic cereals. The arguments that FDI in retail, and opening up the sector to corporates can address these issues is specious, if not downright dangerous. What is the commitment of the FDI to ensuring food security in the JJ clusters? Their entire model is built on people coming to the shop, rather than the shop going to the people, and selling what is profitable, rather than what is essential.
AgriMatters suggests the bull must be taken by the horns. If PDS is not functioning well, it has to be set right. The supply side has to be managed better, civil supplies corporations have to ensure that an entire range of goods with appropriate margins is made available to the dealers, and wherever possible, more than one PDS shop can be opened to ensure completion among dealers and choice for the consumer. Throwing the baby with the bathwater was a medieval saying! Do we go on with it in the second decade of the twenty first century?