PDS leaks call for systemic reform

A recent study of the country’s Public Distribution System (PDS) has found that nearly 28% of the foodgrains supplied through the system did not reach the beneficiaries, causing a loss of about Rs 69,000 crore to the exchequer. The study has quantified the leakage as 20 million tonnes of rice and wheat. That would be enough to feed the entire population of some countries. The study was based on data from the Household Consumption Expenditure Survey (HCES) and the FCI’s (Food Corporation of India) monthly off-take data from August 2022 to August 2023. The study was done by a team led by Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices (CACP). The leakages are systemic and need to be addressed to ensure better food security and optimum use of public resources.

India’s PDS is the world’s largest and provides subsidised grains to over 800 million people. Providing food security to such large numbers of people is a major achievement but the government has the responsibility to ensure that the grains reach all intended beneficiaries. A leakage of 28% is high and needs to be plugged. The leakage varies from state to state. States such as Arunachal Pradesh, Nagaland, and Gujarat report the highest rates of leakage, while UP tops the list in absolute terms, with an estimated leakage rate of 33%. Among the southern states, Tamil Nadu has a high leakage rate of 15% while Karnataka is at 6%. The study has noted that the leakage has come down from 46% in 2011-12 to the present level, but more needs to be done.

It was the linking of the ration card with Aadhaar that helped reduce the leakages. The introduction of Point of Sale (PoS) machines in fair-price shops was another factor. However, there is a need for improved tracking and systemic reforms. The study has suggested better beneficiary targeting, transitioning to food stamps or vouchers, and direct cash transfers “which could enhance transparency, reduce inefficiencies, and ensure nutrition security.” The grains leaked from PDS are often diverted to the open market or for exports. They distort the market and impact food price levels, apart from denying food to the deserving. The government’s food subsidy bill for the current year is budgeted at Rs 2.05 trillion. It is important that such huge spending is done most efficiently so that it is not wasted. There should be the will to make it leakage-proof and the best available technologies should be used for that. It is also important to weed out undeserving beneficiaries from the system.