Food Security and the Public Distribution System Pranab Banerji
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Food Security and the Public Distribution System
Pranab Banerji
Evolution of the PDS
Genesis: food problem of late 50s & 60sGreen revolution Economic reforms 1991Revamped public distribution systems
(RPDS) 1992 (1752 DDP, DPAP, ITDP etc. blocks)Targeted public distribution systems (TPDS) 1997, 2000 (BPL, AAY, APL)
Objectives of Food Policy
Assuring remunerative rates for farmersSupply of food grains at reasonable prices to consumers (through the PDS)Poverty alleviation
Main Activities
Market interventions, imports, buffer stocking and regulationPublic Distribution System: Procurement, Storage, Movement, Distribution, Delivery
PDS: Responsibility of cetnre and states
Centre’s responsibilities
ProcurementStorageTransportation Bulk allocation of food grainsSubsidies
States’responsibilitiesIdentification of BPL familiesIssue of ration cardsAllocations with in the states Intra state transportation Licensing of FPSsSupervision & Monitoring
Procurement
Objectives: remunerative prices, service PDS, buffer stocksMinimum support priceProcurement of wheat, paddy and levy riceCACP’s recommendations and MSP“Fixing of procurement prices at levels higher than the CACP’s recommendations has led to the procurement of an additional quantity of 12.8 mt of wheat and 3.4 of rice.”
CACP prices and MSP (Wheat)(Rs./quintal)
6105802001-02
5805502000-01
5504901999-00
5104551998-99
4754051997-98
Price announced by Govt.
Price recommended by CACP
Year
Minimum support price(Rs./quintal)
----7502007-20086105806502006-20076005706402005-20065905606302004-20055805506202003-20045605306202002-2003Grade-ACommon
PaddyWheatYears
Procurement of rice for central pool(in lakh tonnes)
276.56166.80109.772005-2006
128.6918.65110.042006-2007
246.83130.52116.312004-2005
228.28118.55109.732003-2004
164.1091.1472.962002-2003
TotalState Agencies
FCI
ProcurementYears
Procurement of Rice, Kharrif (2005-06)
in lakh tonnes
17.9749.72Andhra Pradesh
7.1719.83Others
1.203.36Uttaranchal
11.3931.51Uttar Pradesh
3.359.26Tamil Nadu
32.0288.55Punjab
6.4517.85Orissa
0.701.94Maharashtra
0.491.36Madhya Pradesh
7.4320.54Haryana
11.8032.64Chhattisgarh
% of Quantity Procured to Total Procurement
Quantity ProcuredStates
Procurement of Wheat (2006-07)in lakh tonnes
0.490.440.05U.P
0.020.000.02Rajasthan
69.4658.8310.63Punjab
0.000.000.00M.P.
22.2919.602.69Haryana
TotalState Agencies
FCI
Quantity procured States
Food Subsidy of the Central Government
5.17212002002-03
4.83176122001-02
3.61121252001-02
3.0392002000-01
3.1187001999-00
3.2375001997-98
2.4651661996-97
2.7849601995-96
2.845091994-95
3.955371993-94
2.2727851992-93
2.5628501991-92
2.3324501990-91
% of total Govt. Expenditure
Amount (Rs. Crore)Year
Objectives of buffer stocks
Meet the prescribed minimum buffer stock norms for food securityFor monthly releases of food grains for supply through the Public Distribution System/Welfare SchemesTo meet emergent situations arising out of unexpected crop failures, natural disasters etc.For market intervention to augment supply so as to help moderate the open market prices.
Issues in buffer stocking
Base level stocksPDS & welfare schemesStabilization factorMinimum & maximum stocksSources of stock
Normative stocks for the central pool
(With effect from April 2005) In Lakh Tonnes
DATE RICE WHEAT TOTAL1st April 122.0 40.0 162.01st July 98.0 171.0 269.01st Oct. 52.0 110.0 162.01st Jan. 118.0 82.0 200.0
Actual & Minimum buffer stocks(in lakh tonnes
200.00188.0001.01.2006
200.00177.061.01.2007
168.00216.9401.01.2005
168.00244.1401.01.2004
168.00482.0201.01.2003
168.00580.3201.01.2002
Minimum buffer norms
Actual Stock
TotalAs on
Distribution & Delivery
Identification of BPL households:inclusion, exclusion & ghost cardsLicensing of fair price shops: issues relating to viability Market prices and off take Leakages
CIPs of wheat
Effective from 1.7.2002 to till date
BPL APL AAY
415 610 200(w.e.f.
25.12.2000)
CIPs of Rice
Effective from 1.7.2002 to till date
BPL APL AAY
565 830 300(w.e.f.
25.12.2000)
Limitations of TPDSGOI spends Rs. 3.65 to transfer Re 1 to the poorAbout 57% of subsidized grains does not reach the target groupImplementation of TPDS is plagued by large errors of exclusion and inclusion.PDS is a less efficient mode of income transfer to the poor. The Economic costs of grains are higher than the market prices in most of the StatesOnly 23% of sample FPSs are viable. The rest survive on leakages and diversions of subsidized grains.
Targeting Errors(% of households)
5.2712.4919.61Madhya Pradesh
10.5013.2526.75Uttar Pradesh
10.2049.65--Tamil Nadu
20.5842.4323.38Karnataka
Shadow Ownership Error
Inclusion ErrorExclusion ErrorStates
Viability of FPS
“Nationally only 38.9% of the selected FPSs made a positive net income over their monthly recurring cost, while 22.7% could mop up a return of annualized 12% of their working capital and only less than a third of the latter could mobilize an income sufficient to justify the ownership and running of a FPS.”
Factors affecting off take
Open market pricesTransaction costsQualityOwn productIncome/wealth
Alternatives (Tenth Plan)
Restructuring of PDSFood Stamps and Food Credit CardsDecentralization of OperationsOperation of Buffer Stocks and FCIPrivate Trade in Food grainsTPDS, NPDS or UPDS ?
Thank you
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