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Targeting the Poor orPoor Targeting: A Case for Strengthening the Public
Distribution System of India
Rahul Prahlad Mane
Journal of Asian and African Studies 2006; 41; 299
DOI: 10.1177/0021909606065788
The online version of this article can be found at:
http://jas.sagepub.com/cgi/content/abstract/41/4/299
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Abstract
As part of the structural adjustment programme the Government of India, in
1997, introduced the Targeted Public Distribution System (TPDS) with the
objective of targeting the food subsidies to the poor and reducing fiscal deficit.
While the universal Public Distribution System (PDS) had several limitations, the
Targeted PDS has only worsened the problem of adequate access to food for the
poor. This article examines the limitations of income targeting based on the
official poverty line under the TPDS. The article argues that the TPDS has
worked counter-productively to the policy objective of reaching the poor. As per
the National Sample Survey (19992000) and the National Family Health Survey
(19989), a significant proportion of the poor and food insecure suffer from
severe malnutrition and calorific deprivation. With a large section of the
population falling out of the TPDS the article suggests policy alternatives to
ensure better access to food for the poor and vulnerable.
Keywords food security India public distribution system policy poor
poverty schedule caste schedule tribe targeting
Introduction
A country is truly food secure only when it is able to provide adequate food to
all its citizens as matter of right, without inflicting any humiliation on the poor
(Parikh, 1998). Ensuring sustainable access to food1 for all households has been
one of the most formidable challenges faced by India since independence. While
there has been vast improvement in the production and procurement of foodgrains, institutional arrangements of reaching this food at affordable prices to
the poor has been a matter of policy concern. In terms of food grain production
India displayed impressive growth in the 1990s. Food grain procurement leapt
from an average of 20 million tonnes per year in 19917 to 25 million tonnes in
300
1998, 30 million tonnes in 1999, 35 million tonnes in 2000 and 40 million tonnes
in 2001. By 2002, the Food Corporation of India2 (FCI) had accumulated buffer
stocks of almost 70 million tonnes of food grains3 (Dreze, 2003b). The public
distribution system (PDS) was initiated as an instrument of transferring food
subsidy with an approach that was universal4 in principle. This however was
ineffective in reaching the poor, and even during the regime of the so-called
universal PDS, in 1992 India had the second highest rate of undernourishment
in the world (Dreze, 2003b). Of all children under the age of three, 52 per cent
were underweight and 20 per cent were severely underweight. Among adults
the prevalence of undernourishment was estimated at around 50 per cent
(Muller and Patel, 2004). The PDS suffered from several limitations, for
example, problems of leakage, inclusion of the non-poor, corruption at different
levels, high administrative costs, poor monitoring systems, lack of accountability
and inactive beneficiary participation. In an effort to accommodate the two
major criticisms of the universal PDS that (1) the PDS failed to reach the poor;
and (2) the universal PDS was too expensive (Muller and Patel, 2004), the
Government of India in the year 1997, introduced the Targeted5 Public Distribution System (TPDS) as part of its structural adjustment programme.
Objective
The purpose of shifting to a targeted policy was to target the subsidies to the
poor and reduce fiscal deficit. The objectives of this article are: (1) to examine
if the TPDS has facilitated adequate access to food for the poor; (2) to identify
limitations of income targeting in a country where incomes are not directly
observed and highlight problems arising due to poor targeting of the public
distribution system; and (3) to explore alternatives for expanding the scope of
targeting to facilitate sustainable access to food for the poor and food insecure.
Hypothesis and Research Question
The targeted public distribution system has been implemented in the past seven
years. The research hypothesis is that while the universal PDS was plagued with
several problems, the TPDS has only further marginalized the poor. Poor targeting has negatively influenced their access to food making them severely vulnerable to chronic hunger. The research question therefore is: does the TPDS
facilitate adequate access to food for the poor?
Methodology
The article analyses the role of TPDS in improving access to food for the poor
and food insecure; it reviews available literature and analyses the empirical data
of two previous studies on the issue of targeting the PDS; it examines problems
301
302
Eligibility
Subsidy
Quantity
Off-take of
Commodities
Targeted PDS
Universal PDS
poor for delivery of foodgrains and for its distribution in a transparent and
accountable manner through the fair price shops. In doing so, says the
Committee of Food subsidies that thrust, should be to include the really poor
and vulnerable sections. In addition, other qualitative criteria were also
adopted such as household occupation, land operated or owned, housing
conditions, number of earners, and possession of various types of durables such
as TV, refrigerators, motor cycles, tractors and so on. However, the surveys have
missed out many poor families (Srivastava, 2004).
In addition, several practical administrative problems exist in implementing
this definition of poverty as there are no regular official estimates of the actual
income of households. As the CAG13 Report No 3 of 2000 (HLC,14 2002):
A study of the TPDS in Uttar Pradesh by the World Bank based on the UPBihar Survey of Living Conditions conducted in 19978, found that 56 per cent
of households in the lowest quintile and 63 per cent of households in the next
quintile did not get BPL cards.16
Comparing the data17 from the National Sample Survey (NSS) 55th round
(for 19992000) as well as from the NSS 50th round (for 19934), the High Level
303
Urban areas
Committee Report (HLC, 2002) points out to the problem of lower per capita
purchases (Table 2) both in urban and rural areas under the TPDS.
Another noticeable fact is that under the TPDS prices20 drastically increased
both for the BPL and the APL families from 1997 to 2000 (see Figures 1 and 2).
In the period from June 1997 to April 2000 wheat prices available to APL
families increased by 50 per cent while the prices for rice increased by 45 per
cent. In the case of BPL families the prices for rice increased by 40 per cent and
those of wheat increased by 45 per cent after 1999.
According to CAG (2000), the monthly household income transfer due to
public distribution system (PDS)21 was less than Rs. 30, except in the
North-Eastern states. Even after introduction of the TPDS, average income
Figure 1
Central issue price for rice for BPL and APL households (19972002)
1200
1000
800
600
400
200
06/01/1997
12/01/1997
01/29/1999
04/01/2000
07/25/2000
07/12/2001
04/01/2002
07/01/2002
304
12/01/1997
01/29/1999
04/01/2000
07/25/2000
07/12/2001
04/01/2002
07/01/2002
transferred per household per month for BPL population was between Rs. 22
to Rs. 46 across different states.22
Further, while the procurement of foodgrains increased by 117 per cent (from
19.6 to 42.7) between 1991 and 2001, public distribution of foodgrains dropped
drastically by 37 per cent (from 20.8 to 13.2) during the same period (Table 3),
indicating that significant households were excluded from the system.
One of the objectives of the TPDS was to reduce subsidies. In 20012, out of
the total food subsidy only 25.7 per cent was targeted towards BPL and 2.3 per
cent towards APL households, while the subsidy towards carrying cost23 alone
was 66.5 per cent. We have seen that prices of both rice and wheat went up
significantly, implying that the net subsidy to the poor was reduced due to poor
targeting and rise in prices. However, the total subsidies (Table 4) increased
by 76 per cent in real terms and by 52 per cent as a percentage of the total
government expenditure from 19967 and to 20023.
This ballooning of total subsidy24 is on account of the sharp rise in stocks, and
the accompanying rise in carrying costs. It is evident that the introduction of the
TPDS has not reduced food subsidy.
Nutritional Status and Incidence of Hunger
This section of the article analyses the nutritional status in the country because
nutritional estimates can help in conceptualizing the overall wellbeing of the
population and in assessing the level of food security at household level. Here,
305
Table 3
Net availability, procurement and public distribution of foodgrains (in million tonnes)
Year
Population
(millions)
Public
distribution
1951
1961
1971
1981
1991
2001
363.2
442.4
551.3
688.5
851.7
1033.3
48.1
72.0
94.9
113.4
154.3
171.4
8.0
4.0
7.8
13*
20.8
13.2
52.4
75.7
94.3
114.3
158.6
156.2
3.8
0.5
8.9
13.0
19.6
42.7
Table 4
Food subsidy of the central government
Year
Amount (Rs.Crore)
19901
19912
19923
19934
19945
19956
19967
19978
19989
19992000
20001
20012
20023
2450
2850
2785
5537
4509
4960
5166
7500
8700
9200
12125
17612
21200
2.33
2.56
2.27
3.90
2.80
2.78
2.46
3.23
3.11
3.03
3.61
4.89
5.17
the aim is not to suggest a causal impact between poorly Targeted PDS and inadequate nutritional status of the population in general. Nutritional estimates
indicate the enormity of the problem and suggest that if implementation of
TPDS is adequately streamlined it could make a positive impact on the
nutritional status of the poor in particular in the long run. The National Family
Health Survey 19989 reports that, half of all Indian children are undernourished, and about half of all adult women suffer from anemia, the burden of
undernourishment is distributed very unequally across the population whereby
the condition of women, children, and tribals is particularly alarming (Right to
Food Campaign, 2003). As per the NSS data25 on nutritional intake in India
there has been a long-term decline in per capita calorie consumption on average.
In 19992000 in rural areas the mean daily calorie intake was 2000 while as per
norms it should be 2400 (Chandrasekhar and Ghosh, 2000). There is a lot of
regional variation in average calorie intake, and calorie deprivation (Table 5)
has increased significantly from 1983 to 2000.
306
States
1983
1999/2000
1983
1999/2000
Andhra Pradesh
Bihar
Gujarat
Haryana
Himachal Pradesh
Jammu and Kashmir
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal
2204
2189
2113
2554
2636
2569
2260
1884
2323
2144
2103
2677
2433
1861
2399
2027
2021
2121
1986
2455
2454
2631
2028
1982
2062
2012
2119
2381
2425
1826
2327
2095
68.5
67.6
72.6
54.1
44.5
44.5
64.0
81.5
62.5
73.1
70.9
46.2
54.2
80.6
58.4
76.0
80.7
74.9
80.5
55.1
56.5
39.7
78.9
81.2
78.4
83.3
74.6
62.8
56.7
86.5
64.5
75.6
The worst affected are the poorest of the poor the labour households.
Households both from farm and non-farm labour form the largest chunk of
occupation class suffering from hunger, both seasonal and chronic. It is important to note that a large segment of labour households is constituted by the
backward castes27 (Table 6) and these social classes suffer most from hunger,
both in rural and urban India (Sagar, 2003).
There are several estimates about malnutrition and starvation in India.
The FAO in its report The State of Food Insecurity in the World (2003) (available at http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/006/j0083e/
j0083e00.htm) has estimated that the number of hungry people in India
increased by 19 million from 19972001. Gill et al. (2003) estimate that hunger
tends to be chronic rather than acute, with 233 million (19982000) undernourished in calorific and micronutrient terms (against 215 million in 19902),
with particular problems among women, adolescent girls and under-fives while
undernourishment is severe among Scheduled Castes. In yet another study
(Saxena, 2002) explains:
Malnutrition is widespread, with 207 million people in 19968 unable to access
enough food to meet basic nutritional needs, over 50% of children below five
years are underweight, with girls suffering particularly badly, and anaemia
prevalent among almost 50% of women in the age group of 2049 years.
307
Table 6
Percentage of hungry households among different social groups all India 19992000
Rural
Urban
Type of hunger
Type of hunger
Social groups
Seasonal
Chronic
Total
Seasonal
Chronic
Total
ST
SC
OBC
Others
All
5.2
3.9
1.7
1.8
2.6
0.8
1.1
0.4
0.8
0.7
6.0
5.0
2.1
2.6
3.3
2.6
1.4
0.6
0.3
0.6
1.8
0.6
0.3
0.2
0.3
4.4
2.0
0.9
0.5
0.9
All these estimates refer to one single fact: that hunger29 and malnutrition are
prevalent on a mass scale in India, and there are still areas in the country where
deaths by starvation30 occur every year.
Poor Targeting Exclusion Errors!
In the context of limited public resources targeting is often presented as a means
of giving more to the poor. The overall impact of a programme depends both
on the number of poor households covered and the level of benefits they receive
(Coady et al., 2003). Let us now review the findings of two independent research
studies to understand the errors of targeting in two States of India. Dutta and
Ramaswami31 (2001) have compared two States,32 Andhra Pradesh which has a
greater outreach of PDS (57 per cent households) and Maharashtra33 where
PDS has a limited outreach (33 per cent households).
It is evident (Table 7) that T2 errors of wrong exclusion are very high in
Maharashtra, 49.9 per cent in the rural sector and 51.34 per cent in the urban
sector, indicating that errors of exclusion tend to be higher in a narrowly
targeted programme like the one in Maharashtra to a near universal programme
as in the case of Andhra Pradesh.34
The second study by Swaminathan and Mishra (2001) refers to the dangers
of narrow targeting. This study was conducted in Maharashtra first in 1995 and
later in 2000 before and after the introduction of the TPDS. This study attests
the fact (Table 8) that with the policy shift from universal to TPDS and the
introduction of income-based targeting errors of wrong exclusion increased
substantially.
There are large welfare costs linked with wrong exclusion of the poor. For
the poor and the food insecure exclusion errors would translate into malnutrition and starvation it could well become a matter of survival.35
308
Maharashtra
Type of error
Rural
Urban
Combined
Rural
Urban
Combined
T2 (inclusion)
T1 (exclusion)
22.35
20.42
4.29
36.40
14.35
22.29
11.30
49.90
4.12
51.34
6.92
49.61
Table 8
Errors of targeting in Maharashtra
Type of error
T2 (inclusion)
T1 (exclusion)
14.6
36.7
6.1
42.6
19934
19992000
Category
Rural
Urban
All India
39.10
38.20
38.86
37.23
32.28
35.97
27.09
23.62
26.30
231.88
75.17
307.05
244.0.3
76.34
320.37
193.24
67.01
260.21
309
310
committees do exist, in practice they are largely ineffective.42 Greater involvement by civil society organizations (Jenkins and Goetz, 2002) in monitoring the
PDSs activities could be a potential solution (Srinivas and Abdul Thaha, 2004).
Policy Interventions for Strengthening the TPDS
Indias nutrition problem thus is not lack of foodgrains at the national level but
a lack of adequate access to food at the household level (Shariff and Mallick,
1999). The various issues discussed in this article suggest that there is a need to
reform the Targeted PDS (TPDS). The public distribution system (PDS) has
several problems and limitations the biggest one is its inadequacy in relation
to the scale of hunger and vulnerability in India. The problem of poor targeting
is of high priority given the scale of malnutrition and chronic hunger that exists
in India. There is a need to identify effective and efficient ways of providing food
to those who need it. Minimizing the errors of wrong exclusion should be
critical to future reform process. The TPDS could be redesigned to impact the
poor in a positive manner (Figure 3).
Figure 3
Issue/concern
Policy intervention
Identification of poor
311
Figure 3 (Continued)
Targeting mechanism
Delivery mechanism
312
Conclusion
The need for targeting is motivated by the intention of maximizing the benefits
of the subsidy to the poor and making efficient use of available resources. In
reality, where targeting is inappropriate and poorly designed, the shift from a
near universal scheme to a targeted one can leave the poor worse off than
before. The rationale for adopting a targeted approach in delivering food
subsides in India is to target the subsidies to the poor but it is evident that
benefits meant for the poor often end up being poor benefits (Sen, 1995). In
some ways the PDS would be meaningful only if the system translates the
macro-level self-sufficiency in food grains . . . into micro-level self-sufficiency.50
In the era of structural adjustment it is virtually impossible for the government
to revert to universal public distribution system (PDS) but if subsidy has to
really reach the poor then income targeting is certainly not an effective alternative. This could be achieved not just by introducing appropriate targeting mechanism but by integrating it with improved monitoring and sustainable delivery
mechanism facilitated by proactive local-level participation. As long as all
these issues remain unresolved and the beneficiary community is seen as a
homogenous entity (targets) waiting desperately for a State benefits, access to
food shall be a distant dream for the millions of malnourished and hungry.
Notes
This policy paper was written when the author was at the ISS, The Hague, The Netherlands for a
Post-graduate Diploma programme in Effective Social Policies for Human Development. Views
expressed in this contribution are of the author, and do not in any way represent the views of either
HUDCO or ISS.
1. Food Security is a State in which at all times, there is enough food in the system. People have
both physical and economic access to food. Food that . . . has required nutrition and there is
no institutional sanction against accessing the available food [authors emphasis] (Mukherjee,
2004).
2. The FCI had two main roles in Indias food security policy: (1) increase domestic production
to achieve food self-sufficiency; and (2) keep buffer stock inventories in case of failing harvests
(Muller and Patel, 2004).
3. One expert has in a lighter vein estimated that if all the sacks of grain were laid up in a row,
this would stretch more than one million kilometers, taking us to the moon and back (Dreze
quoted by Sen, 2003).
4. The PDS was only universal in principal, it was never universal in practice.
5. The need for Targeted Public Distribution System (TPDS) was also felt because the PDS as it
existed in most parts of India failed to serve the population below the poverty line, had an
urban bias, and had negligible coverage in States with the highest concentration of the rural
poor and lacked transparency and accountability.
6. As per the High Level Committee Report (HLC, 2002), headed by Professor Abhijit Sen.
7. The government in 1992 had introduced the Revamped PDS (RPDS). The RPDS relied on
geographical targeting, being introduced with universal coverage in only 1775 blocks in poor
areas mainly tribal and hilly, drought prone and remotely located areas.
313
8. A consensus was drawn at the Food Ministers conference held in August 1996, to work out
the population below the poverty line under the TPDS by adopting the methodology used by
the Expert Group on Estimation of Proportion of the Number of Poor set up by the Planning
Commission.
9. In the Union Budget of 20001, it was announced that APL prices would have no subsidy,
therefore, prices would be equal to economic costs of the Food Corporation of India (FCI) and
the BPL prices would be set at 50 per cent of the economic costs.
10. PDS was not intended to provide full family requirement, however in the case of the food
insecure and vulnerable this could be a limitation because the present quantity is far lower
than the requirements suggested by the Indian Council of Medical Research wherein a person
requires about 11 kg of cereals per month, implying a minimum requirement of 55 kg per
family for a household with five members.
11. Though not in all states.
12. For details see http://fcamin.nic.in/tpds.htm.
13. Comtroller and Auditor General of India.
14. The High Level Committee was chaired by Abhijit Sen. Other members included R. Radhakrishna, Madhura Swaminathan, A. Mohandas Moses, S.N. Kaul, K.M. Sahni, Sanjay Kaul.
15. ORG is a research agency based in India.
16. Kriesel and Zaidi (1999) as quoted in HLC (2002).
17. Data on the quantity and value of rice and wheat purchased from the PDS by persons in different monthly per capita expenditure (mpce) groups.
18. In Kerala an average 185,000 tonnes of foodgrains were sold per month but after the TPDS
the off-take of rice reduced by almost 75 per cent ranging from 40,00050,000 tonnes per
month. Earnings per fair price shop fell from Rs. 3711 before March 2000 to Rs. 1493 in 2001.
As a result 250 to 350 fair price shops have become non-functioning out of a total of 14,261
fair price shops in the State in 2002 (HLC, 2003).
19. Both Kerala and Tamil Nadu had the highest per capita purchase of grain from the former
PDS (excluding the north-eastern region).
20. Wheat and rice are issued by the Central Government at uniform Central Issue Prices (CIPs)
to the States/Union Territories for distribution under TPDS. Two different sets of CIPs have
been fixed for APL and BPL families under TPDS. The end retail price of foodgrains for
supplying under the PDS is fixed by the States/Union Territories after taking into account
margins for wholesalers/retailers, transportation charges, levies, local taxes and so on.
21. For 19929, the estimated cost of transferring one rupee of income to BPL households under
the PDS was as high as Rs. 6.68 (Srivastava, 2003).
22. It was less than Rs. 7 in Punjab (HLC, 2002).
23. Carrying costs include transportation, storage and so on.
24. The subsidy on buffer stocks has risen rapidly from 1998 onwards. In 19989, the subsidy on
buffer stocks was 18 per cent of the total food subsidy; this ratio went up to 35 per cent in
20001. In 20012, the subsidy on buffer stocks exceeded, for the first time ever (HLC Report,
2002).
25. Calculations by Chandrasekhar and Ghosh (2003).
26. As quoted in Chakraborty (2005).
27. For similar studies on the impact of PDS on Schedule Castes and Schedule Tribes see Lee et al.
(2002).
28. As quoted in Vidya Sagar (2003).
29. Interestingly in 2001 millions of tonnes of rotting grain were thrown into the sea, while starvation deaths were reported in several States (Muller and Patel, 2004).
30. See http://www.righttofoodindia.org for details.
314
31. Using the National Sample Survey household consumption data for 19934, they compared
the utilization of the PDS in Andhra Pradesh and Maharashtra. While estimating targeting
errors the study also does not take into account that section of the population who for some
reason or the other does not buy wheat or rice from any source.
32. The study points out that the geographical coverage of PDS retail outlets in Andhra Pradesh
was almost universal whereas the coverage in Maharashtra was not so.
33. In Maharashtra about 30 per cent of the poor (defined as the bottom 40 per cent) are excluded
from the PDS because of incomplete coverage.
34. However, at 23 per cent the exclusion errors are fairly large even in Andhra Pradesh, which
implies that there was several problems with the delivery mechanism, which are later discussed
in the article.
35. On the other hand the costs of wrong inclusion only have financial implications.
36. Poverty in India is officially measured in terms of monthly per capita expenditure of Rs. 49 in
rural areas and Rs. 57 in urban areas at 19737 all-India prices, which could then buy an
energy consumption of 2400 calories/day in rural areas and 2100/day in urban. Official statistics suggest that 26.1 per cent of the population in 19992000 fell below this poverty line, but
more realistic estimates put this at around 30 per cent (Deaton and Drze, 2002).
37. Comparable estimates of Planning Commission of India, GoI.
38. Strictly not comparable because of changes in the methodology of data collection.
39. Parikh (1998) analyses that even a booming domestic economy can aggravate hunger of some
poor people if their incomes do not rise as rapidly as increases in food prices because the
incomes of others in the economy rise even faster.
40. It is worthwhile to note that in Kerala only 25 per cent of population has been identified as
BPL by the Planning Commission while the Kerala government has identified 42 per cent of
households as BPL (HLC, 2002). In Orissa the State government has estimated that in 1997,
66 per cent of the population was below poverty line (BPL) while the Planning Commission
estimated this to be around 48.6 per cent (Sridhar, 2000).
41. As quoted in Planning Commission (2001).
42. A planning commission study concluded about the vigilance committees in Bihar: membership of vigilance committees are seen as positions where money can be made and (t)he
procedure to appoint them is highly politicized, and mostly clients of MLAs (Members of the
state Legislative Assembly) are appointed (Jenkins and Goetz, 2002).
43. And not by government officials.
44. For a detailed discussion on geographical targeting at district level see Jha and Srinivasan (2002).
45. The danger with geographical targeting could be that it may leave out poor people in rich areas.
However, this would have a lesser impact if geographical targeting is done at Taluka/Tehsil or
block level. Also geographically targeting reduces a lot of administration costs.
46. For the costs and benefits of self-targeting see Dutta and Ramaswami (2002) and Alderman
and Lindert (1998). For experiments on self-targeting of food subsides in Tunisia see Tuck and
Lindert (1996).
47. This could be viable in rural areas were local staples like jowar, bajara, shorgum, millet are
preferred over rice or wheat.
48. An alternative approach to PDS adopted by the Deccan Development Society, Andhra
Pradesh provides interesting insights into peoples participation. For details see Srinivas and
Thaha (2004).
49. Efforts made by the Mumbai-based Rationing Kruti Samiti (or Action Committee on
Rationing) in this direction are laudable (Jenkins and Goetz, 2002).
50. Report of the Standing Committee of Parliament, Ministry of Consumer Affairs, Food and
Public Distribution (2003).
315
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