Public Distribution

System

Introduction• India food security system• Public distribution of essential commodities has been in existence in India since inter-war period• Extended to tribal blocks and areas of high incidence of poverty in 1970s and 80s• General entitlement scheme for all consumers without any specific target till 1990s• Revamped Public Distribution System (RPDS) was launched in June 1992• The Targeted Public Distribution System (TPDS) was introduced with effect from June, 1997• Operated under the joint responsibility of the Central and the State Governments

Revamped Public Distribution System

• Launched in June, 1992

• Cover 1,775 blocks wherein specific  area specific

programmes such as the Drought Prone Area

Programme (DPAP), Integrated Tribal Development

Projects (ITDP), Desert Development Programme

(DDP) were implemented

• Designated Hill Areas (DHA) identified in consultation

with State Governments for special focus, with respect

to improvement of the PDS infrastructure

• Distribution in RPDS areas were issued to the States

at 50 paise below the Central Issue Price

Target Public Distribution System• Launched in June, 1997

• Introduced, with the intention to benefit about 6 crore poor families, for

whom a quantity of about 72 lakh tonnes of food grains was earmarked

annually

• Government of India increased the allocation to BPL families from 10

kg. to 20 kg of foodgrains per family per month at 50% of the economic

cost and allocation to APL families at economic cost w.e.f. 1.4.2000

• End retail price fixed by the States/UTs after taking into account

margins for wholesalers/retailers, transportations charges,  levies, local

taxes etc.

• States were requested to issue foodgrains at a difference of not more

than 50 paise per kg over and above the Central Issue Price for BPL

families

• Flexibility to States/UTs given in the matter of fixing the retail issue

prices under TPDS except with respect to Antyodaya Anna Yojana where

the end retail price is to be retained at Rs.2/ a kg. for wheat and Rs.3/ a

kg. for rice.           

National

Food Security Act, 2013

Highlights of the National Food Security Act, 2013

This Act of Parliament received the assent of the President on 10th September, 2013.

Priority households are entitled to 5 kgs of foodgrains per person per month, and Antyodaya households to 35 kgs per household per month.

The combined coverage of Priority and Antyodaya households (called “eligible households”) shall extend “up to 75% of the rural population and up to 50% of the urban population”.

The PDS issue prices are given in Schedule I: Rs 3/2/1 per kg for rice/wheat/millets. These may be revised after three years.

Provisions for nutritional security and entitlements to special groups

Target Group Entitlement

Pregnant woman/ Lactating Mother Meal, free of charge, during pregnancy and six months after child birth Maternity benefit of Rs 1000 per month for a period of six months

Children (6 months-6 yrs) Age appropriate meal, free of charge, through the local anganwadi

Children (6 years-14 yrs) One mid-day meal, free of charge, everyday, except on school holidays, in all schools run by local bodies, Government and Government aided schools, up to class VIII, so as to meet the nutritional standards

• Revitalisation of Agriculture: increase in investments in agriculture, including in research & development, ensuring remunerative prices, credit to farmers, crop insurance, etc;

• Procurement, storage and movement related interventions: incentivizing decentralized procurement including procurement of coarse grains, augmentation of adequate decentralized modern and scientific storage etc;

• Reforms in TPDS: application of information and communication technology tools to improve PDS system, leveraging ‘Aadhaar’ for unique identification of beneficiaries for proper targeting of benefits under this Act etc, ensure transparency12;

The Act also proposes the following steps:

Modus Operandi under NFS Act

Central Pool maintained by Central Government

Transported to designated depots in Each State as per allocations

Intra-State allocation and delivery to FPS by State Government

Local authorities responsible for implementation and monitoring

Operational Challenges

• Production

• Procurement

• Stocks

• Distribution : TPDS

ProductionFood grains production in India (1950-51 to 2010-11)

Source: Directorate of Economics & Statistics (DES), Ministry of Agriculture

Comparative performance of growth of GDP and agri - GDP

Source: CSO; Data at 2004-05 prices

Intra year inflation in Rice and Wheat

Source: eaindustry.nic.in Note: 2009-10 was a drought year

ProcurementConcentrated procurement of Rice and Wheat (2009-10 to 2011-12)

Source : Directorate of Economics & Statistics, Ministry of Agriculture

StocksCentral pool stocks with FCI

Source: FCI Note: Stocks are shown as on 1st July of each year.

Distribution : TPDSEstimates of leakages from TPDS

Unit 2004 - 05 2009 - 10

Offtake under TPDS (Rice + Wheat)

Mn Tonnes

29.4 42.4

PDS Food consumed by the population, NSSO

Mn Tonnes

13.2 25.3

% Leakage of Food 54.1% 40.4%

Source: NSSO Survey (66th Round), Department of Food & Public Distribution

Financial Challenges

• Financial obligations under NFS Act

• Total expenditure over next three years

Financial obligations under NFS Act - Food Subsidy

Food Subsidy : Total and as % of GDP – agri (current prices)

Source: Expenditure Budget, Various years & CSO

Difference between Economic cost and Issue Price

Source: FCI, Ministry of Consumer Affairs, Food & Public Distribution

Other expenditures to fulfill the obligations under NFS Act:

• Investments required for enhancement of agricultural activity

• Increased requirement of marketing and processing infrastructure

• Increased requirement of storage/ warehouse capacity

Macroeconomic impacts of NFSB

provisions

Forcible low-level equilibrium trap for Indian agriculture

Restricted Private initiative in Agriculture

Increase in subsidies Vs Investments

Inflationary pressures on food prices

CCTs as an alternative model

• Motivate and enable parents to invest in their children’s education and health

• To the extent that there are positive externalities from household-level investments in human capital, these positive externalities will accrue to society as a whole

• Successful examples of Brazil and Philippines

Conclusion

• diversified demand patterns need to be

appreciated

• food security not limited to availability

of foodgrains

• malnutrition is a multi-dimensional

problem

• nutrition to be linked with health,

education and agriculture interventions