Latest News

Blog Details

PDS: The Indian food security system was established by the Government of India under the Ministry of Consumer Affairs, Food and Public Distribution to distribute subsidized food and non-food items to India's poor. This scheme was first launched in February 1944, during the Second World War, and was launched in the current form in June 1947. Major commodities distributed include staple food grains, such as wheat, rice, sugar and kerosene, through a network of fair price shops (also known as ration shops) established in several states across the country. Food Corporation of India, a Government-owned corporation, procures and maintains the PDS (public distribution system). In coverage and public expenditure, it is considered to be the most important food security network. However, the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality. The average level of consumption of PDS seeds in India is only 1 kg per person per month. The PDS has been criticised for its urban bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to much corruption in the process of extricating the poor from those who are less needy. Challenges: • The supply response has been inadequate and along with weather induced shortages in the food economy, have resulted in significant challenges for inflation management. • A country with growing population and a sustained growth momentum, food security challenge is also a challenge of improving agriculture productivity. • It has been rightly pointed out that we need to increase production in the regions where acreage and productivity have lagged behind so far. We did achieve our self-sufficiency in food by the Green Revolution, but we now need that second revolution that will take us to a new trajectory where we can feed all and feed them with a view to ensure nutrition balance as well. • Power, water, rural roads, national highways, storage, warehousing and cold chains have to be the focus areas for productivity improvement in the agriculture economy of the country. • We also need more support in R&D and extension technology in agriculture from both private and public institutions. • Improved production of food-grains has to be backed by our capacity to procure more food-grains. The willingness of State Governments and their efforts to enhance institutional capacity as well as tying up finances required for procurement both will be required. • The main challenge before the Public Distribution System today is reaching the food-grains to the actual beneficiaries without leakages and diversion on the route to grass-root level. For this a massive modernization drive is required. • Digitizing the database of beneficiaries and computerization of the entire food supply chain will remain the main stepping stones on which we can make the PDS successful. • Modernization of TPDS is the foremost priority of Government of India. It is a complex and challenging task as PDS operates in 35 States and UTs through more than 5 lakh Fair Price Shops across diverse operating environments. • PDS faces challenges like leakages and diversion of food-grains, inclusion/exclusion errors; fake and bogus ration cards; lack of transparency; weak grievance redressal and social audit mechanisms, viability of Fair Price Shops, etc. Way forward: • Leveraging Aadhar is one of the critical components in reforming the PDS. The beneficiaries of PDS can be enrolled into the Aadhaar system. The use of the Aadhaar number in PDS will reduce “duplicates”, “fakes” and “ghost beneficiaries” in PDS databases which will result in reducing wastage and diversion in the system. • Portability of benefits in PDS is of critical importance due to the migrant nature of India’s poor population who are the most important targets of the food security Act. An Aadhaar enabled system makes access to PDS benefits portable across a State and also the country. • A strong community ownership would require the setting up of a responsive grievance redressal mechanism. While, the use of ICT based technologies will help, there should not be any duplication of efforts and agencies involved. • The Common Service Centers set up in various States should be optimally used and the support of multilateral organizations like World Food Programme (WFP) could be taken for capacity building and spreading of awareness among the stakeholders. Universal Basic Income: Universal basic income (UBI) is a model for providing all citizens of a country or other geographic area with a given sum of money, regardless of their income, resources or employment status. The purpose of the UBI is to prevent or reduce poverty and increase equality among citizens. UBI is also known simply as basic income. According to the advocacy group Basic Income Earth Network (BIEN), the essential principle behind basic income is the idea that all citizens are entitled to a livable income, whether or not they contribute to production and despite the particular circumstances into which they are born. Can basic income work in India? The Economic Survey of India 2016-17 discussed UBI as a viable alternative to a plethora of state subsidies targeting poverty alleviation. According to the ESI, if we considered a basic income transfer of INR 1000 per month (approximately $15/month), we would have 20 million beneficiaries. Conditional on the presence of a well-functioning financial system, shifting to basic income may be the fastest way of reducing poverty (ESI, 2016-17). Even a basic income of $4 per individual per month can reduce India’s poverty level by 16%, from its current level of 22%. The cost to do this would be 2% of GDP, the same amount we currently spend in total on food, fuel, and fertilizer subsidies. Paradoxically, implementing UBI may be easier in India, where we can peg the transfer amount at low levels and still yield massive welfare gains. Additionally, the ESI point out that UBI could effectively end misallocation concerns and eliminate pressure on the government to separate the poor and non-poor by virtue of being universal. Since the mode of transfers are akin to direct benefit transfers (DBT), this reduces bureaucratic oversight. Moreover, UBI would also address the issue of out-of-system leakages. An analysis by Carnegie India summarizes the proposals put forth by several eminent economists on the economic feasibility of UBI in %GDP terms, and which subsidies could be replaced for the same. This idea has also been supported by the IMF, who called for the adoption of a fiscally-neutral UBI to replace food and fuel subsidies. Why isn’t there more support for a shift to the UBI model? Although UBI has been brought to the fore of the policy discussion in India, it may still be politically unfeasible. According to India’s Finance Minister, there is likely to be a continued demand for subsidies over and above UBI, which cannot be supported by the Budget. Furthermore, the most widely offered criticism of UBI is the economic moral hazard argument, suggesting that unconditional, no-strings-attached cash transfers will disincentives labour. However, the ESI dismissed this, citing a study in 6 developing countries in 2015 based on cash-welfare programs that found no evidence of financial aid of the UBI nature discouraging recipients from working or seeking employment. Another frequently used argument against basic income UBI is that it will encourage conspicuous funding, especially by male members, who traditionally handle money in India. The ESI addressed this argument by citing a study conducted in Madhya Pradesh that showed that farmers given free cash transfers re-invested it in their farms to cultivate their crops. However, there is little doubt that we need further evidence to be more confident in our advocacy for (or against) a basic income model. Could UBI be the panacea for India’s current social security landscape? According to an estimate, half of all public expenditure on basic services in India actually trickles down to the masses as real benefits, adding that 56% of the population lacks the means to meet the basic needs of food, energy, housing, drinking water, sanitation, health care, education, and social security. While several social protection schemes have been implemented by the government, with talks of a new universal coverage scheme in the pipeline as per the Annual Budget for 2018-19, India’s social security landscape is far from inclusive. Among other things, the Indian welfare state is a victim of poor design, poor targeting, and poor delivery. For instance, schemes are often designed for workers in the formal sector, despite an overwhelming majority of the workforce being in the unorganized sector. Similarly, targeting is done at the household level, resulting in exclusion of the underserved and marginalized, notably women. UBI potentially solves the pressing issues faced by social security in India. By virtue of being universal, it eliminates any risk of leakage. By leveraging the Jan Dhan-Aadhar-Mobile (JAM) trinity, UBI can ensure efficient delivery. More importantly, UBI is targeted individually, making it a social security measure that could reach even the most marginalized sections of the population. Evidence from UBI pilots conducted in India and abroad, such as the ones discussed above, indicate that UBI potentially brings about positive outcomes of health, education, job creation, and women’s economic empowerment– all domains serviced by traditional social security. Is UBI, beyond doubt, the way to go in terms of social security? No. Is India ready for Universal Basic Income? Perhaps not. We must, however, begin to explore the nuances of shifting to basic income, explore its alternatives, feasibility, and gather evidence to make an informed choice.