The Hindu Editorial Analysis- 13th July 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The PDS impact on household expenditure

Why in News?

The Household Consumption Expenditure Survey (HCES): 2022-23 examines the impact of India’s Public Distribution System (PDS) on household spending patterns.

• It includes imputed values of free items received, providing insights into consumption diversification and poverty estimation implications based on comprehensive data.

Public Distribution System (PDS) and the National Food Security Act (NFSA) 2013

• Purpose: Provide cheap food grains to ensure everyone has enough to eat.
• Who Benefits: 75% of people in rural areas and 50% in cities can get these cheap grains.
• Savings: People save money on grains and can spend it on other things like vegetables, milk, and protein-rich foods.

How PDS Affects Household Spending

• Study: The Household Consumption Expenditure Survey (HCES) 2022-23 looks at how families spend money when they get free food from PDS.
• Spending Diversification: It checks if families spend the saved money on other food items like vegetables, pulses, and proteins.

Survey Accuracy and Methods

• Coverage Check: The survey checks if the right people are getting PDS benefits and if any eligible people are missing out.
• Detailed Data: The NSSO report gives detailed information on how households benefit from social programs, helping to understand the impact better.

Valuing Free Items in HCES: 2022-23

• Value Estimation: For the first time, the NSSO estimated the value of free food and other items households get, to better understand what families actually consume.
• Spending Calculation: The survey calculates Monthly Per Capita Consumption Expenditure (MPCE) with and without the value of free items to show actual consumption.

How Values Are Estimated

• Unit Prices: Typical prices are used to estimate the value of free items, not the cheap prices from PDS.
• Food Focus: Most of the estimated value (94% in rural areas, 95% in cities) comes from food items, affecting the overall consumption numbers.

Survey Insights

• Income Groups: The survey divides households into different income groups based on their MPCE, showing economic differences.
• Income Distribution: For example, the poorest 5% have much lower MPCE (₹1,373 in rural areas, ₹2,001 in cities), affecting poverty estimates.

Poverty Estimation Impact

• Poverty Line Debate: There's a discussion on whether poverty lines should be based on spending or total consumption, including free items.
• Social Help: Free items from PDS improve consumption and well-being for poor families.

Conclusion and Policy Ideas

• PDS Importance: The HCES: 2022-23 shows how important PDS is for food security and family welfare.
• Better Poverty Estimates: It suggests using detailed consumption data, including free items, for more accurate poverty estimates.