[rti_india] pds mess - fair price shops made unfair - star of mysore, thursday, august 04, 2011 [1 Attachment]

[Attachment(s) from Syed Tanveeruddin included below]

The mess called PDS - Star of Mysore, Thursday, August 04, 2011

How fair price shops have been made unfair …

An Article By Dr. R. Balasubramaniam (Special Investigation Officer on PDS for Karnataka Lokayukta)

There has been so much excitement about the recent 'Mining report' submitted by the former Lokayukta Justice Santosh Hegde that very few noticed another significant report that he had turned in a day earlier (i.e. on Tuesday, July 26, 2011).

This was the report on the investigation of Public Distribution System (PDS) in Karnataka that he commissioned me to investigate using his suo moto powers in September 2010.

While the mining report identified cumulative losses of around Rs.16,000 crore over the last few years and Rs. 1,800 over the last one year, the report on the PDS identified an annual economic loss of Rs. 1,737 crore. For all the noise that many are now creating about the Lokpal Bill and mining report, it is indeed puzzling why no one has expressed concern over this large scale looting of the money meant for the poor.

This article is an attempt to familiarise the readers about the PDS in India and Karnataka and the leakages and inefficiencies that I identified in my 10-month investigation.

The PDS is the largest food distribution network in the world. It is the government's major economic policy for ensuring food security to the poor. It has a network of more than four lakh Fair Price Shops (FPS) that distribute commodities at a cost of more than Rs. 15,000 crore to 16 crore households. The PDS infrastructure is such that the Central government is responsible for storage, transportation and bulk allocation of food grains, while the State is responsible for implementation / monitoring of FPSs and the identification of Below Poverty Line (BPL) population. Until 1997, PDS provided food subsidies to all consumers without any economic guidelines.

Financial cut-off was introduced in 1997 by the Central government. In order to target the consumers that need the food subsidies the most, the population was divided into two primary categories: Above Poverty Line (APL) and BPL, based on the poverty line defined by the Planning Commission. The BPL population receives food grains at highly subsidised prices in comparison to APL that receives food grains at prices closer to open market prices.

Another scheme was later introduced by the Central government: Antyodaya Anna Yojana Scheme (AAYS)-1, which provides even more highly subsidised commodities to the extremely poor and disadvantaged; six such disadvantaged groups or communities are given high priority under this scheme.

The truth is today, 57% of the PDS food grain does not reach the intended people. The Planning Commission has itself identified that for every Rs. 4 spent on PDS, only Re. 1 reaches the poor; which means 75% never reaches the poor.

The Food Subsidy Bill for 2006-07 for the Government of India was Rs. 242 billion; 36 million tons of grain was procured that year, and 31.6 million tons was distributed through ration shops. With such huge quantities of grain and large sums of money involved, it is natural that our political and bureaucratic class conspires to keep the system inefficient and easy to manipulate.

As per the Planning Commission, the total number of BPL families in Karnataka is 31.29 lakh whereas the Government of Karnataka claims that there are 96 lakh BPL families! Keeping the State's own poverty assessment criteria as the base, I found 44 lakh families who could be genuinely categorised as BPL.

How was this mess created? Between the months of December 2008 and March 2009, the Government of Karnataka under the directions of the highest political office mandated that any family could be called BPL, provided a self-declared affidavit saying that they were poor was given. Nowhere else in the world is poverty determined by a self-declared affidavit, but then Karnataka does have many firsts.

This was done keeping the May 2009 Parliament elections in mind. After reaping the benefits of such an overtly political but clearly shortsighted decision, the public exchequer and the citizenry are now left to grapple with the mess.

Today the Government has managed to distribute 1.6 crore ration cards whereas the total population of the State is itself only 1.2 crore families ! (Please note its families' population not individual population numbers) This means there are nearly 40 lakh ghost and ineligible cards.

After creating this mess, the department cleverly transferred the responsibility of cleaning it up to the citizens. They are now trying to cross-verify it by asking people to produce their ration cards along with electricity bills in urban areas and copy of the taxes paid on their property in rural areas.

Since the State claims it has 65 lakh more BPL families (it calls it extra BPL), it must dip into its own funds to meet the excess food security it wants to extend. So when the Centre gives rice at Rs. 5.40 per kg to the State, Karnataka further subsidises this by Rs. 2.40, so that it can sell rice to the BPL cardholders at Rs. 3 per kg. The Centre also gives rice at Rs. 8.30 a kg to APL families, but since Karnataka has slotted most of the APL families also as BPL, it is bound to give them rice at Rs. 3 a kg too. It does this by spending another Rs. 5.30 a kg for APL families. In other words, Karnataka subsidises the rich far more than it does its really poor !

The takeaway from PDS irregularities report is not only that undeserving people are accessing subsidies, but also that the really poor are being short-changed.

Since there is only a constant amount of ration (rice, wheat, sugar, kerosene) from the Central PDS, the Karnataka government devised a new system to be able to distribute ration to about 80% of its population it had declared BPL. Instead of the per family norm followed in every State, Karnataka introduced a new unit system. One unit is any person who is above 10 years of age. Every unit was entitled to four kgs of rice, and no family was allowed to claim rice for more than five units, or five family members. This meant the government never gave more than 20 kgs per month to a family, even though Central law stipulates that every family should get 29 kgs rice per month, whether it has five or two members.

The Karnataka chapter of the Right to Food Campaign has challenged this in the Karnataka High Court. Last year, the court declared the unit system illegal.

The two big sources of loss are "over-allotment loss" and "distribution leakage loss". Over-allotment losses that occur due to the Government not knowing how many families are currently active, this accounts for about 38% (Rs. 54.4 crore) of total losses every month. Distribution or leakage losses account for 39% (Rs. 56.6 crore), which occurs during wholesale transport. The rest is attributed to "active suspect loss," which occurs due to families suspected to be ineligible drawing rations, transport cost losses and stolen subsidy loss. Total loss is Rs. 144.8 cr. every month.

One of the reasons why such leaks occur is because the entire system is deliberately allowed to be opaque and most documentation is manual, leaving huge room for manipulation. The State Government, sometime ago, said that it would usher in a "point of sale system", which computerises the process. The process was mysteriously suspended six months ago.

Apart from various issues that the investigation went into, I found that at field level, most FPSs were open only for 4-6 days a month. Few followed the timings prescribed by the State. Giving bills for the transactions undertaken was more the exception rather than rule. Most FPS owners spoke about the 'mamool' that they had to dole out each month.

If the Government makes up its mind, setting right the system can be done within 6 months. My fear is that in the context of such large scale inefficiency, the proposed Food Security Bill will only widen the system of corruption and maladministration and give our corrupt officials and politicians further fodder to chew on.

(The above article ends here itself.)

[The author of the above article is the Special Investigation Officer on PDS for Lokayukta and Founder of Swami Vivekananda Youth Movement.]

So, in the light of the above mentioned irregularities it is in our national interest to universalise / universalize the Public Distribution System (PDS) in all the Indian states as in the two states of Tamil Nadu (TN) and Chhattisgarh where the Universal PDS is already working very well.

Tanveer

(Syed Tanveeruddin)