Effectiveness of the Public Distribution System: A Critical Review

Public Distribution System (PDS) started from 1997 for providing essential commodities like rice, wheat, sugar etc. to a large number of people through a network of 5.35 lakh Fair Price Shops (FPS) on a recurring basis at a subsidized price to boost food and nutritional security in India. Whether the PDS is effective to reach targeted people is under serious concern. The problem arises as supply exceeds demand at Minimum Support Price (MSP) of food grains. Over the last 7 years, the average procurement of food grains (rice and wheat) has been around 25 per cent of production. The rising MSP of foodgrains during the last 7 years which enhances the chance of increased subsidy amount given by government resulting increased quantity of food grains procurement and inflation in input prices at constant Central Issue Prices (CIP). Gulati and Saini [1] evaluated under various studies- since 1999-2000 to 2011-12 which narrates about rising leakages of food grains from 9 per cent in 1999-2000 to 36 per cent in 2011-12. In terms of absolute quantity of grains pilfered, of the total quantity of 25.91 MMT pilfered, UP stands at the top with almost 4 MMT (15.3%) pilfered from PDS in 2011-12. There are 39.6 per cent poor having ration cards and 60.4 per cent poor having no cards. There are 26.3 per cent non-poor having ration cards causing inclusion error. The exclusion error is severe as a Type-II error causing 70.5 per cent total in India. There are many loopholes in PDS, leading to ineffectiveness and inefficiency in achieving its objectives. It needs reforms like the transparent selection of beneficiaries, universalization, end to end computerization, more commodities to be included, an effective grievance redressal agency, ADHAAR based PDS, the inclusion of innovative schemes like food coupon, smart card etc. More or less, the innovative mechanism in PDS has to be assessed before implementation to enhance effectiveness and check further error.