Poverty and Public Distribution System – Part – II

This is second part of the article by Nagar. In order to access the first part of the two part article on poverty and public distribution system please click here.

So, How poor are the poor that need PDS support?

Two important points to be noted here are:

• A ration card entitles the card holder to 5 kg of Wheat/ Rice/ Coarse grain per person per month, whose name is on the card.

• The scale of issue that was initially 25 kg per family per month was increased to 35 kg per family per month with effect from 1st April 2002 under Antodaya Anna Yojana.

Until recently- till the central government brought the policy of ‘One nation, one card’, the cards were issued by the state governments. Thus an individual could obtain and benefit from subsidised supplies in multiple states. Since the data are recent, it is assumed that the numbers are free of duplication in so far as the number of ration cards is concerned.

It works out to 3.28 beneficiaries per card. And quite a few of them get as much as 35 kg per month- that is way more than a family of this size can consume in a month. And now look at the percentage distribution of Ration Shops:

It would also be fair to assume that over the years, both the rural and urban incomes have increased, that people have more money in hand to spend on non food items- modern day necessities such as a smart phone, a two wheeler- a motorcycle or a scooter, a fan- air cooler- air conditioner, a colour tv etc. 

Whereas you do not go and peep inside someone’s house to check if they possess any of these gadgets, the rate of growth of cell phones and internet connections do point to the fact that most households are today fairly well placed to afford these modern day necessities. 

But paradoxically they are still too poor to afford basic food grains from open market and ‘Q’ up for free or subsidised rations. 

And now let me throw another element in the mix- minimum wages. 

According to the Ministry of Labor and Employment, the minimum wage in India remained unchanged at Rs 178.00 /day in 2021. Another source ,however, provides the wage rate separately for agricultural and non agricultural labourers as follows ( for September 16, 2021)

And these rates are for unskilled labourers. In $ terms (@74.55), the lowest of these wages translates to $ 2.61. If we assume that the skilled labour rates are at least 50% higher, the minimum wage works out to $3.92 per day. 

The World Bank Poverty Line, however  defines extreme poverty as living on less than $1.90 a day, measured in 2011 purchasing power parity prices. So, by that measure there is no extreme poverty in India. 

Add unemployment level to this equation. The present unemployment rate (February 22, according to CMIE) is 6.57%. Thereafter, the estimate of the World Poverty Clock that 7% of Indians live in extreme poverty appears more or less reasonable. 

So, how much does an unskilled labour family earn in a month? Assuming that a man works for 20 days and the woman 15 days, a couple earns nearly ₹8000/ month. Let us just keep this figure in mind. 

Now the question comes, why 67% Indians still need/ depend on PDS? 

PDS was originally started in the era of food shortages (the ’60) and was aimed primarily at the urban poor. Over the years, it has witnessed expansion- Targeted Public Distribution System (TPDS) and  Antodaya Anna Yojna (AAY) to include more of rural poor, especially the most vulnerable designated as the BPL households. The third expansion of AAY came in 2005-6 and brought a total of 2.5 crore households (38% of BPL) under the AAY. 

Thus the actual number of households under BPL should be 6.58 crores and that represents 4.7% of India’s current population and not 21.9% as we are made to believe. Shocked? 

 A bigger shocker is this report from The Hindustan Times, Feb, 18, 2021 which reports from a press conference of Mr. Piyush Goyal, the minister for civil supplies.

It says; “Currently, the government supplies highly subsidised food grains at ₹1-3 per kg to over 81 crore people through public distribution system (PDS).Under the NFSA, which was passed in 2013 during the previous UPA regime”.

81 crore people- that is (60% of our population) are getting heavily subsidised food grains?

If we have 21.9% under poverty line, why are these additional 40% getting heavily subsidised food grains?

And if we go by the actual number under BPL- 4.7% of India’s current population, then why on earth almost 76% are getting the subsidised food grains?

They are neither poor nor we have shortages to warrant the luxury of mindless subsidisation of this magnitude.

Then, on who’s expense we are celebrating this ‘poverty’? 

 It has been clearly noted in the National Food Security Portal of the Government of India that the PDS is ‘supplemental’ in nature and is not intended to make available the entire requirement of any of the commodities distributed under it to a household or a section of the society’. Yet, through PDS the government continues to pump highly subsidised food grains in the market through a network of nearly 5.5lakh outlets of which around 85% are independent shops and undefined outlets. Isn’t it shocking? 

Here let me provide you with a quick calculation. I am taking Wheat and Rice as a test case. It is based on a ‘supplemental’ quantity of 35 kgs of food grains per month per family. We have earlier seen that even the poorest unskilled labour family makes at least ₹8000/ month. And by the way, how can 35 kg per family per month can be ”Supplemental”?                         

Parameter	Wheat	Rice*
PDS entitlement kg	35	35
Sale Price Rs	2	2
Market Price Rs	20	23
Subsidy per Kg Rs	18	21
Monthly Subsidy Rs	630	700
Subsidy as days wage	2.5	2.78
* Non Basmati short grain rice

So, first we have 62% Ration card holders – disguised ‘poor’, who can very well afford buying all the grains they need at market price, yet avail subsidy (so we have this massive subsidy going to these so called poor) and then we have 85% of outlets that can never be supervised/ monitored to stop the pilferage of heavily subsidised food grains. 

 To me it appears that through PDS, We have created a perfect recipe for large scale institutionalised corruption in public domain, a monster that will never die. Everyone is happy- the farmers who sell their produce at MSP and get subsidised food in return; 85% undefined and individual PDS outlets who get to siphon off supplies (meant for subsidised sale) in open market and make a killing; politicians who capitalise on the plight of the so called ‘poor’, especially as the elections near and, the ever Non accountable FCI. The real loser is the last man in the row, who would be quite happy to pay additional money equal to his 2.5- 2.8 day’s wage rather than wait for endless hours over multiple rounds at the ration shop and be at the mercy of the shopkeeper to get his legitimate quota of subsidised ration that in fact is more than his normal family needs. 

What would happen if the PDS issue price is revised? 

 And what would happen if the sale price of food grains under PDS is brought at par with the MSP and is revised at tandem with the MSP revision? The ration card holding will sharply decline (as no one would want to Q up before a ration shop to get sub-standard grains at market price), all the pseudo poor will disappear and, for once we will know the exact extent of poverty that needs to be tackled.  Many PDS outlets will close shop (unless they decide to continue as normal retailers) as they won’t be able to make a killing by siphoning off subsidised supplies to petty shop keepers and Chakkiwallas. 

The government, on the other hand will be able to save millions of rupees and use the saved funds to get ‘special ready to eat/cook formulations’ (especially developed to fit into the dietary habits of various regions) produced on large scale to feed the real poor and needy and for use in school feeding programs. The real intended beneficiary will not have to be at the mercy of the ‘Ration ki Dukaan’. 

 And my firm conviction is that, with this one action- just one of bringing the sale price of food items at par with MSP, we as a nation  will no longer take pride in being a poor country. Let us live with a sense of dignity, we may not be affluent but we are not poor either as our politicians want to keep us. The much touted “Garibi Rekha” will disappear without a trace. 

It is high time we take concrete steps to shake off the disgusting ‘poverty’ tag once for all.

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