Public Distribution System And Cash Transfers

Khera, Reetika (2011), Revival of the Public Distribution System: Evidence and Explanations, Economic and Political Weekly, 5 November, Vol 46, No. 44 & 45.

Reetika Khera IIT-Delhi

PDS Survey 2011: The Sample

9 states: Andhra Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Orissa, Rajasthan, Tamil Nadu and Uttar Pradesh Two blocks from two Districts each; six villages in each District Random sample of 12 households in each village

Sample characteristics
All states (%) Range Illiterate 66 33 (HP) 86 (BI) Kachha homes 49 13 (TN) 76 (CH) SC+ST 53 17 (TN)69 (CH/OR) Landless 36 7 (HP) - 73 (BI) Low SLI 70 18 (TN) - 96 (JH/BI) NREGA (days) 29 12 (BI) 55 (TN)
No employment 100 days 37 7 20 (AP) - 62 (BI) 0 (BI/UP) 23 (RJ)

Purchase of PDS grain

Three different questions:
normal purchase last time past three months

High purchase-entitlement ratio

Proportion (%) of entitlement purchased by households in the past 3 months BPL Antyodaya Andhra Pradesh Bihar Chhattisgarh Himachal Pradesh Jharkhand Orissa Rajasthan Tamil Nadu Uttar Pradesh All states 99 45 95 93-100 71 97-100 87 92 77-88 84-88 97 47 97 94-100 68 100 100 88 85-97 85

Evidence from NSS data:

2004-5 vs. 2009-10

Reduction in Leakages in many states:
Chhattisgarh (50% to 10%), Orissa (75% to 30%), Jharkhand (85% to 46%) and Rajasthan (94% to 66%)

More households reported getting grain from the PDS

Overall: 25% to 43% Poorest quintile: 32% to 53%

Explaining the revival: Demandside measures

Trend towards universalization Increase in implicit subsidy
Ranges from Rs. 10-20/kg of rice and Rs. 710/kg of wheat

Diversification of PDS commodities

Pulses and oil

Supply-side measures
De-privatization of PDS outlets
Gram Panchayats, Co-op societies

Door-step delivery
En route diversion becomes more difficult

Regularity and predictability Helplines, use of IT Rationalizing official commissions

Cash vs. Food Question

The question: ;fn jk'ku nqdku esa jk'ku dh txg ij ljdkj vkids cSad esa udn ns] rkfd tks lkeku vki jk'ku nqdku ls [kjhnrs gSa og vki ckt+kj ls [kjhn ik;saA ;g vkidks dSlk yxsxk\ D;k ;g jk'ku nqdku ls [kjhnus ls cgrj gksxk] fd cnrj gksxk ;k nksuks esa dksbZ vUrj ugh\

bUosLVhxsVj % ;g loky losZ dk lcls egRoiw.kZ loky gSA igys mrjnkrk dks loky vPNs ls le>kbZ;sA mUgs viuh jk; cukus ds fy, le; nhft;sA t+:jr iM+s rks mUgs crkbZ;s fd fnYyh esa ,slh O;oLFkk dh ckr py jgh gS] ysfdu ;g Li"V dhft, fd vki dsoy mudh jk; tkuuk pkgrs gSA
The results
Clearly correlated with performance of the PDS

Proportion (%) of respondents who: Prefer food Bihar Uttar Pradesh Rajasthan Jharkhand Tamil Nadu Himachal Pradesh Orissa Chhattisgarh Andhra Pradesh All states 20.8 41.5 59.6 66.0 70.6 81.4 88.3 90.3 91.3 67.2 Prefer cash 54.2 34.1 14.7 22.2 10.5 9.3 5.8 2.1 5.6 17.9 No clear preferencea 25.2 24.4 25.7 11.9 18.9 9.3 5.7 7.7 3.2 14.7

Figure 1: Performance of the PDS and Views on Food vs. Cash

Proportion of respondents who prefer food, village average

0 0

.2

.4

.6

.8

20

40

60

80

100

Purchase-entitlement ratio (proportion of full entitlement bought in the past three months), village average

Reasons for cash/food

Food Food security Access to banks/POs Access to markets Dissipation of cash Under-developed rural markets Cash Corruption in the PDS Quality of grain Fungibility of cash Control over food quality

Food security concerns

10 years ago, when the PDS did not function well, we were forced to sleep hungry. Not anymore! Chaaval chahiye. Paise ka kya karenge, chaatenge? (Vijayshankar Bhoi, Chhattisgarh) Grains can be used even the next month. But if cash is in hand it can be spent on random stuff (Palamammal, TN) Ration milega tho praan bach jayege. Paisa mila toh bhooke mar jayenge! (Loknathnand, SC, TN) Ration milta hai to pet bharta hai. Paisa denge to kha jayenge afsar or asani se khatam ho jayega. (Ansari Begum, UP)

Poorly developed markets

Market mein chaaval milna bahut mushkil hai. As the PDS shop opens thrice a week it is easy to get rations. I am too old to go and search for rice. (Aetwaribai, 60 years, ST widow) If we dont get rice at the PDS, we will be exploited by the Marwaris. (Kusibai, 55 years, ST) Jab tak PDS se gehu mil raha tha, bazaar mein gehun Rs. 10-12/kg tha. Ab Rs. 20/kg hai. (Rajender, Jharkhand)

Access to banks
Bank jane mein Rs. 10 lagenge aur bazaar jane mein Rs. 20 - ye kaun dega? Do din bhi kharab ho jayenge matlab ki dihadi bhi gai (Bhako Munda, ST Jharkhand) Hamare bank mein sirf ek counter hai. Itne saare BPL parivaron ko woh paisa kaise dega. Paisa mila to kachra ho jayega. (Upendra, Chhattisgarh) If I go to bank they will take my thumb print on whatever they want, then I will be in trouble as am illiterate. (Shanti, UP) Travel hassles, bank is not in the village. Also bank officials are unhelpful. I dont find it easy to operate bank a/c since I am illiterate. I prefer food because PDS shop is closer than the bank and we get fixed amount of food. On doubling cash he said, travelling all the way from village to town is a risk. Food security is more important than money. (Venkatramana, AP)

Experience with other cash transfers

If cash is given by the govt. I will definitely not get it properly. For instance already the govt has implemented giving money for marriages, old age pension etc. each of these cases lot of money is given away as bribes to middlemen. I will not get my full money. (Senthamarai Kannan, TN) NREGA ka paisa toh dete nahin, ration ka kaise denge (Naanram, ST, Chhattisgarh) Pension 5-6 mahine mein ek baar aati hai, cash will also be the same..! (Kokila, SC widow, Rajasthan) He does not trust the government with cash transfers as he has not received his Old Age Pension for the past 12 months. If the same happens, with cash for rations, his family will starve. (Bhuria Ganchi, Chhattisgarh)

Transaction costs
Ration humara shortcut hai! (Sudhir Pal, Dumka, Jharkhand) Abhi sarkar tension uthati hai magar paisa mila toh hamein tension uthani padegi. Ration ki dukaan hi hamare liye theek hai. (Nidra, Chhattisgarh)

Womens concerns
Agar paisa mila toh sare nirnaye aadmi lega ab ham log apne aadmi par poore din najar nahin rakh sakte agar hamare aadmi ne bank se paise nikal kar kharch diye toh ham kya karenge? (Nyali Koshy, 28 years, OBC, Mahasamund)

Indexation is not a simple matter

Bacche bhookhe marr jayenge log paise daru par kharch denge. Sarkar paise tabhi badhayegi jab chunav honge. Iske alawa nahi badhayegi! (Ratan Lal, Sirmaur Dist, HP) Will money be given for all products that we get from PDS? Prices will not be stable in the market. It will be very difficult for the govt to give us the appropriate amount. (Suhasini, AP)

Continuing concerns
Corruption
What about APL quota and non-grain commodities?

Lack of adequate grievance redressal

No supplies, harassment by dealer, etc.

Decentralized procurement Procurement of coarse cereals