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PDS Has Had a Spectacular Run. That May Not Last

Context

2020-21 was one of Indian agriculture’s finest moments, as memorable as 1967-68 that inaugurated the Green Revolution. Agriculture was the only sector to grow 3.3 per cent in 2020-21, even as the economy overall contracted by 4.8 per cent.

Relevance

GS-III: Issues related to Direct and Indirect Farm Subsidies and Minimum Support Prices; Public Distribution System – Objectives, Functioning, Limitations, Revamping

Dimensions of the Article

  • Increase in grain offtake under PDS
  • Provisions under NFSA
  • PDS reforms in states
  • Challenges
  • Way Forward

Increase in grain offtake under PDS

  • NFSA along with PMGKAY has led to a massive jump in grain offtake through the PDS.
  •  More importantly, this increase has largely taken place in the poorer states.
  • UP, Bihar and Jharkhand together accounted for 21.6 per cent of national grain offtake in 2012-13, which was pre-NFSA.
  • Sales of rice and wheat under various government schemes totalled 92.9 million tonnes (mt) in 2020-21 and 105.6 mt in 2021-22.
  • This was as against an average offtake of 62.5 mt during the first seven years after the implementation of the National Food Security Act (NFSA) in 2013-14 and 48.4 mt in the seven years preceding the legislation.

Provisions under NFSA

  • The NFSA legally entitles up to 75 per cent of India’s rural and 50 per cent of the urban population — translating into some 813.5 million people — to receive 5 kg of grain per person per month at highly subsidised rates of Rs 2/kg for wheat and Rs 3/kg for rice.
  • In the wake of the Covid-induced economic disruptions, a new Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme was launched giving NFSA beneficiaries an extra 5 kg grain per person per month free of cost.
  • PMGKAY was implemented for eight months (April-November) in 2020-21 and 11 months (May-March) of 2021-22.

PDS reforms in states

  • Only a handful of states — Kerala, Tamil Nadu and Andhra Pradesh — had well-functioning PDS till the early 2000s.
  • In the late-2000s, Chhattisgarh initiated reforms to curb diversion/leakages by entrusting the running of fair price shops to cooperatives and local bodies (as against private licensees), making timely allocation and supplying grain directly to PDS outlets (bypassing middle-level distribution agencies), and using IT to track dispatches right from procurement centres to points of sale.
  • Chhattisgarh’s example was emulated by Odisha, followed by Madhya Pradesh and West Bengal — all by 2015-16.
  • The three poorest states are the latest entrants to the list.
  • The accompanying charts show the offtake of rice and wheat both at the all-India level and for the three poorest states as per the NITI Aayog’s National Multidimensional Poverty Index — Bihar, Jharkhand and Uttar Pradesh (UP).
  • UP particularly has seen its grain offtake soar from 9.5 mt to 17.3 mt in the last two years.
  • Out of the 17.3 mt (10.7 mt wheat and 6.6 mt rice) distributed in 2021-22, 7.8 mt comprised free grains under PMGKAY.
  • The PDS, indeed, turned out to be the only effective social safety net during the pandemic.
  • Some states went beyond rice and wheat.

Challenges

  •  The expansion of the PDS, especially post-NFSA, was underwritten by the superabundance of rice and wheat in government granaries.
  • Official wheat procurement is likely to halve this time from last year’s record 43.3 mt, because of a poor crop singed by the abnormal spike in March temperatures.
  • Rice stocks are far more comfortable, though the precarious supply situation in fertilisers raises questions about the prospects for the coming kharif season.
  • Looking ahead, the Food Corporation of India’s stocks can probably sustain the pre-2020-21 annual offtake levels of 60-65 mt – enough for NFSA, but certainly not schemes such as PMGKAY.

Way Forward

The PDS was originally meant to protect ordinary people from extraordinary price rises. Whether it can do that at a time of renewed global inflation remains to be seen.

Source – The Indian Express

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