Food Security and PDS, Economy Traditional | Indian Economy for UPSC CSE PDF Download

Food Security and PDS 

• The first serious food crisis that India faced was the severe Bengal famine of 1943 when millions died of starvation. 
• This led to introduction of rationing by the government for equitable distribution of scarce food supplies. 
• The partition of 1947 further worsened India's food problem as the country received 82 per cent of population but only 75 per cent of acreage under cereals and 69 per cent of irrigated land. 
• The partition of the country and separation of Burma made India dependent on foreign countries for wheat and rice.
• The food problem of India has varied in the last 68 years. During independence time India faced shortage of particularly rice and wheat. 
• The government, therefore, emphasised on increasing domestic supplies through increased production and more imports.
• After mid-1950s and during 1960s when food prices began rising rapidly though there were adequate stocks the government shifted its priority to control of foodgrains prices. 
• For this government of India entered into an agreement with the USA in 1956 — known as PL-480 agreement for the import of 3.1 million tonnes of wheat and 0.19 million tonnes of rice for the next three years. 
• Thus from 1956-66 the food policy of India was based on imports from USA which helped stabilising food prices in the country. 
• Moreover PL-480 imports helped in our agricultural and industrial development. 
• It was during this period that new agricultural strategy was introduced which heralded green revolution in Punjab, Haryana and Uttar Pradesh. 
• These are the states which form the backbone of our PDS and have effectively protected the country from any serious foodgrains crisis.
• In 1970s government adopted a policy of stockpiling foodgrains with a target of 5 million tonnes, During 1980s and 1990s government had accumulated over 30 million tonnes of buffer stock in foodgrains. 
• These huge reserves of foodgrains ultimately helped the government in successfully tackling the three years of poor foodgrains production, culminating in the widespread drought of 1987-88.
• The food problem of today is not in the form of shortage or of high prices but of how to enable the lower income groups to purchase the available foodgrains at affordable prices; and how to make use of the huge food stocks to help accelerate the process of economic growth.
• For this government has been implementing food for work programme since 1977-78.
• It is also implementing a scheme to provide foodgrains to the weaker sections especially in the tribal areas, at prices well below the already subsidised prices in PDS.

Nature of the problem

The nature of food problem in India has three aspects:

1. quantitative inadequacy : 
2. qualitative deficiency; and 
3. high prices of foodgrains.

Quantitative Inadequacy

• Over the years, the total domestic production of foodgrains has been inadequate (other than what and rice) in relation to demand. According to Food and Agricultural Organisation (FAO) the overall per capita per day requirement of foodgrains is 440 gm. 
• Though average per capita available has increased, large income inequalities render the per capita availability among the poor much less than the average for the entire population.
• The gap between the actual requirement and actual production can be contributed to two factors:
• Fast growing demand for foodgrains : It has been due to high rate of population growth; high income elasticity of demand for food (increase in income has resulted in increase in demand for foodgrains) among poor; and rapid urbanisation
• Slow rise in domestic production : The factors responsible for this are : 

1. slow rise in productivity; 
2. large fluctuations in foodgrains production; 
3. inadequate marketed surplus due to uncertain production, greater consumption demands of farmers, inadequate marketing facilities, etc.; 
4. wastage due to lack of proper storage and warehousing facilities; 
5. hoarding and speculative practices by traders in the hope of creating shortages and hence price rise.

Qualitative Deficiency

• The food of an average Indian is deficient in nutrients like proteins, vitamins and minerals. 
•  As a result many people are malnourished and suffer from diseases like weak eyesight, scurvy, rickets, etc. 
• This qualitative deficiency is due to preponderance of foodgrains and the inadequacy of nutritive foods like pulses, milk, etc.. in the diet.

High Prices of Foodgrains

• The third aspect of food problem in India has been the high prices of foodgrains. A rise in prices adversely affects the poor who do not get the minimum supplies of foodgrains even when supply of foodgrains is adequate, for want of purchasing power.

Government’s Food Policy

• From the beginning our food policy has been directed towards equitable distribution and reasonable prices through increasing production, improving the distribution system, meeting shortfalls through imports, stabilising prices, controlling demand and reducing poverty.

Increasing Production and Supply

Among the measures adopted for increasing production and supply of foodgrains etc.: 

1. technological improvements comprising provision of better inputs like HYV seeds, fertilisers, pesticides, water, power and machinery, adoption of double and multiple cropping practices etc.; 
2. institutional improvements like agrarian reforms, provision of institutional finance, building of a strong marketing structure, etc.; 
3. organisational improvements; 
4. imports as and when needed to augment supplies of foodgrains; and 
5. procurement on regular basis to build up government stocks and also to feed PDS.

Improving Distribution of Foodgrains

The various measures adopted by the government to bring about an equitable distribution of foodgrains particularly among the vulnerable sections of the population in the country are :

1. Public distribution system (PDS), functioning through a wide network of fair price shops, has expanded its distribution of foodgrains from nearly over 2 million tonnes in 1956 to nearly 20 million tonnes now.
2. At times when food situation was serious, the country was divided into zones with a view to make each zone as self-sufficient as possible. Free trade of foodgrains was allowed within zones whereas nutritional trade was under the government control. Ever since this zonal system of distribution was started in 1957, the government policy has often fluctuated from control to decontrol of foodgrains movement. However presently with large increase in production of foodgrains, the government has removed all controls over prices and movement of foodgrains.
3. The government even undertook monopoly wholesale trading in wheat in 1973 when the food situation was very serious but had to give it up in 1974 because of its failure to implement the scheme successfully.

Stablisation of Prices

Measures undertaken to stabilise foodgrains prices included large imports of foodgrains, extension of internal procurement and stepping up of government purchase of foodgrains for release through fair price shops, measures to curb hoarding and profiteering and fixation of maximum control prices. Price stability is brought about by various measures such as:

1. Fixation of minimum support prices which are in the nature of long-term guarantee to producers and which are maintained by the government by being prepared to buy all that is offered at this price. It prevents the prices going below this minimum in case of a glut in the market.
2.  Another aspect of price fixation is the government's policy of procurement at announced prices for building reserves and for feeding PDS.
3. Fixation of issue prices usually lower than the procurement prices at which foodgrains are supplied to the fair price shops.
4. Foodgrains supplied at the fair price shops are subsidized by the government to keep the prices at reasonable levels.
5. To protect the prices from the market fluctuations buffer stock operations are undertaken. 
6. The idea behind buffer stock is that during excessive supplies, the government purchases and stocks foodgrains to prevent prices from falling below minimum support prices and in the event of severe shortages and when prices tend to rise, releases are made from the stocks to ensure lowering of prices. 
7. This help in maintaining prices stability.
8. State trading is also undertaken to reduce the distribution costs, and to prevent speculative trading by private traders. For this government undertook monopoly wholesale trade in wheat in 1973, but it was given up in 1974 in favour of partial State trading for administrative reasons. 
9. The other legislative measures like Essential Commodities Act (1974) etc., also aim to curb speculative trading.

Controlling Demand

The government has adopted following measures to control demand:

1. Rationing has been introduced to regulate demand  for consumption when there is shortage in foodgrains; coverage of rationing is extended and the per capita ration is reduced.
2. The stocks of wholesale and retail traders and the consumers are kept at a minimum level. The stocks of wholesale and retail traders are required to be declared and kept at minimum required for normal trading. Consumers too are not required to keep more than the prescribed amount.
3. As increasing number of  mouths are to be fed, government's long term measure is to reduce the population growth by providing facilities and incentives to the people to adopt family planning.

Public Distribution system (PDS)

PDS Defined - Public distribution system (PDS) refers to distribution of essential commodities such as wheat, rice, sugar, edible oils and vanaspati, kerosene, soft coke, controlled cloth etc., through fair price shops at government controlled (below market) prices to consumers (particularly vulnerable sections).

Objectives

The basic objectives of PDS in India are :

1. To provide essential consumer goods at cheap and subsidised prices to consumers particularly to weaker sections and thus insulate them from the impact of rising prices.
2. To reduce fluctuations in prices
3. To maintain minimum nutritional status of our vast population by achieving an equitable distribution of essential consumer goods.
4. The scheme of PDS is anti-inflationary in nature. 
5. It is devised to help both the consumers and the producers through the purchase of enlisted foodgrains, enhancing support prices for various crops and by maintaining uniform price levels across the length and breadth of the country.

Distribution

• Under PDS, Centre makes the allocations and States are entrusted with the responsibility of distributing these allocated foodgrains (from or through Central agencies) within their respective territories through Food and Civil Supplies Departments, Civil Supplies Corporations, Essential Commodities Corporations etc. 
• The essential goods are ultimately sold to the consumers by fair price shops (the lowest level).

Success of PDS
Factors responsible for the success of PDS are:

1. Equity : Poorest should not suffer for want of purchasing power and PDS should be expanded particularly to cover backward, remote and inaccessible areas.
2. Stability : There should be no fluctuations or decline in the foodgrain production.
3. Food security : There should be adequate stocks of commodities selected for distribution. For ensuring this government resorts to timely imports when domestic supplies are anticipated to be inadequate to match the internal demand.
4. Communication : There should be appropriate link between production, procurement, transportation, storage and distribution of selected commodities.

Drawbacks

1. Universality : PDS is highly subsidised in India and since foodgrains etc., under PDS are accessible to all equally (universal), it leads to heavy burden of subsidy on government.
2. Discriminates against poor : Under PDS, coarse grains like maize, jowar, bajra, etc. which are the main consuming items of the poor are not supplied.
3. Urban bias : There has been indeed an urban bias in PDS for a considerable period of planning. However, with the expansion of PDS in rural areas, this basis has been corrected to some extent.
4. Limited benefit to poor : PDS purchases data reveals that poor are benefiting very less from PDS. Moreover, ration cards are issued only to those households who have proper residential addresses, whereas a large number of poor who are homeless or don't have proper residential addresses are left out of the PDS. Hence PDS does not meet the requirements of all the poor.
5. Low income-levels of fair price shop keepers : This makes the shopkeepers vulnerable to corruption.
6. Regional disparities : Considerable regional disparities exist in the distribution of PDS benefits. For example, Delhi with a population share of one percent consumes 60% of PDS supplies. whereas States like Bihar, Jharkhand, Uttar Pradesh, Rajasthan and Madhya Pradesh, Chhattishgarh which have much larger population and much larger incidence of poverty, their percentage share in national PDS supplies is very low. 
7. This shows that PDS is weakest in States with high poverty incidence and also major bulk of foodgrains is either bought by the nonpoor or goes to the open market.
8. Price rise due to PDS : An all round price rise has been observed due to PDS operations because as government procures as large amount of foodgrains every year, supply to market is reduced which in tern encourages traders to raise the prices in open market to unusually high levels. 
   This price rise acts against the interests of the poor because as the PDS meets only a fraction of their requirements they are forced to buy goods from the open market where prices are high.
9. Leakages and corruption : Due to the absence of effective monitoring and supervision system there is large scale leakage and prevalence of corrupt practices in the system.

Revamped PDS

• The Revamped PDS (RPDS) was launched in June 1992 in around 1700 blocks falling in the drought prone, desert, integrated tribal development project areas and certain designate hill areas. 
• The main emphasis of RPDS is on streamlining and strengthening the distribution system to make it reach the consumers living in the most backward regions of the country. In these areas, additional commodities like tea, soap, pulses and iodised salt are distributed by the State governments. 
• Foodgrains — rice and wheat are provided to States/UTs for RPDS blocks at prices Rs 50 per quintal less than the issue price for normal PDS.
• The major drawbacks identified in RPDS are ; 

1. proliferation of bogus cards; 
2. inadequate storage facilities; 
3. ineffective functioning of village committees; and 
4. failure to issue ration cards to all eligible households.

Targeted PDS

• The government in February, 1997 announced the launch of a dual price formula in the PDS, called Targeted  Public Distribution System (TPDS). 
• The two  tiered TPDS will provide 10 kg of grain per month  to  families living below poverty line (BPL) - with annual income of Rs. 15,000 or less. Special cards has been fixed at Rs. 3.50 per kg for rice and Rs. 2.50 per kg for wheat.
• For card holders who are above poverty line (APL) the revised issue prices will be Rs. 6.50 and Rs. 7.50 for fine and superfine varieties of rice and Rs 4.50 per kg for wheat.

Linking PDS with Public Works Programme : 

• Both PDS and Rural Works Programmes (RWPs) like Employment Guarantee Scheme and Employment Assurance Scheme, are anti-poverty Programmes. 
• Employment programmes provide purchasing power. 
• Employment programmes have several advantage over PDS. 

1. They are self targeting meaning only the target group of unskilled manual workers who show highest poverty and highest person-day unemployment participate in employment programmes whereas PDS is universal in character; 
2. Employment programmes enable poor to earn wage-income; help in building up rural assets as these programmes are generally associated with soil conservation, construction of tanks and canals etc; 
3. Increase bargaining power of unskilled labourers; and help in motivation collective action by the poor etc.

Economic Cost of Foodgrains

• The economic cost of foodgrains consists of three components, namely the MSP including central bonus (the price paid to farmers), procurement incidentals, and the cost of distribution. The economic cost has witnessed significant increase in the last few years proportionate to the increase in the MSPs—increase of 1 unit in MSP leads to a 0.48 unit increase in economic cost in case of wheat. 
• The economic cost of wheat and rice in 2019-20 are estimated to be ₹35 and ₹25 per kilogram, receptively (which were ₹20 and ₹15 per kilogram, respectively in 2010-11). High economic cost necessitated a detailed review of the open-ended procurement policy, especially in states that offer high bonus on top of MSP and those that impose high taxes and statutory levies, as well as stocking and distribution policies. 
• In this regard, the government set up a High Level Committee (HLC) in 2015 (Shanta Kumar as its Chairman) to suggest inter-alia restructuring or unbundling of the FCI with a view to improve its operational efficiency and financial management.