Policy Wise

Professor Ila Patnaik has a fine post on the public distribution system.

In 2003-04, 14.07 million tonnes of subsidized grain was issued to the 16 large states for delivery to BPL families. Only 5.93 million tonnes was delivered to BPL families. A whopping 8.14 million tonnes of subsidized foodgrain did not reach the poor. In states with high leakages this meant that the unintended subsidy or additional cost of delivery of food grains was shockingly high. For example, in Bihar, while the intended subsidy was Rs 4.52 per kg, if we take into account the total subsidy to what actually reached the poor, the subsidy ended up being Rs 50.98 per kg due to leakages and diversions. In Punjab, while the intended subsidy was Rs 4.22 per kg, it ended up being Rs 40.15 per kg of foodgrain. [link]

As Professor Patnaik’s figures show, the majority of the food subsidy meant for the poor is diverted. A whole industry has been built around the public distribution system or other such subsidies, most noticeably the subsidy on kerosene. Yet, the Communists demand that the PDS system, this cesspool of corruption be further strengthened.

What is required is dismantaling of the entire public distribution system. Instead, food stamps or food credit cards should be used to divert subsidizes to the real poor.
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