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Reforms

Jul 16, 2003
Exposing the PDS flaws

‘The Hindu’ on July 8, 2003 carried a news item entitled ‘Big drop in PDS rice offtake’. Reporter S Vaidhianathan was referring to Tamil Nadu where elections have been won and lost on the availability of rice in the public distribution system [PDS]. Then how come this sudden reversal?

Two simple reforms changed the scene. First, food coupons were issued to eligible ration card holders who could use them to buy subsidised rice over a wide time window. Earlier they had to buy their quota within the month or it lapsed. Second, only the first 10 kg of rice is made available at Rs.3.50 a kilo. The price goes up to Rs 10 thereafter.

It appears that these two simple expedients have made the racketeers’ trade unattractive. For the smuggler, rice from the PDS rice now costs Rs.10 to buy and so it is not worth his time. For another, the consumer buys his 10 kilo of cheap rice and stops further demands on the system. Monthly off takes have come down some 30%. So the system needs to keep a lower inventory. What this means for the racketeer is that in addition to unattractive margins, available volumes are low as well.

It is clear the PDS never really delivered to the needy but fed a parallel trade. Food coupons empower the needy and give them freedom to time their purchases. They also whittle the elaborate PDS infrastructure.

The myth that the ‘poor’ are clamouring for hand-outs needs to be more completely exploded. What they want is clarity in what they will get and precision in delivery. They then accept that reality and turn their energies to other avenues for their lives. For example, in Tamil Nadu and Andhra Pradesh politically bold decisions to do away with free power for farmers and in fact make them pay the real price has caused no social upheaval. The demand now is for reliable power.

No doubt, intervention on behalf of the poor is needed. But poverty rhetoric that corrodes public life needs to be isolated and exposed.

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