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HindustanTimes Mon,21 Apr 2014

Dead-duck public delivery system making a promising comeback in five more states

Zia Haq and Gaurav Choudhury, Hindustan Times  Chhattisgarh/New Delhi, July 28, 2013
First Published: 00:39 IST(28/7/2013) | Last Updated: 15:45 IST(28/7/2013)

In the killing fields of Chhattisgarh’s Rajnandgaon district -- considered a happy hunting ground for Maoist rebels -- ‘red’ is not the dominant colour. Instead, it is a bright yellow that proudly announces the less-talked-about revolution quietly taking place in the state: a public distribution system (PDS) that works, a rare example of a government scheme that delivers.

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This is Red country, the government official had warned us. “You could go there. Just take some precautions,” Rajiv Jaiswal, a food department bureaucrat said while giving directions over the phone.

Rajnandgaon is one among Chhattisgarh’s several districts witnessing left-wing extremism, the official name for India’s bloody Maoist insurgency. For the record, just five days ago, the district’s highest-ranking police official had been killed.

But the real upheaval in Rajnandgaon -- some 50 miles southwest of Raipur – has not been brought about by gun-toting Maoists.

On the densely wooded road leading to Mohala, an outlying village hemmed in by forests, the first signs of Chhattisgarh’s public-services revolution appeared in the form of speeding food trucks bound for fair-price shops.

Lorries with grains, iodine-fortified salt and lentils are painted bright yellow so that they could be easily spotted by villagers if they were to be unloaded elsewhere.

In contrast to images of Sudan’s scrawny children with distended bellies, hunger in India is less visible to the naked eye because it is often defined by sweeping malnourishment and calorie deficiency.

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Simply put, too little food, lacking in essential nutrients, has resulted in the world’s largest proportion of stunted children with poor brains.

Worse, their poor health actually begins even before they are born: in the wombs of their half-fed mothers.

Prime Minister Manmohan Singh has called it a national shame.

Those who oppose the food security law as a fiscal drain reserve much of their wrath for India’s public distribution system (PDS). They accuse it of being a dead duck, a system prone to pilferage and corruption.

Transportation is just one bit of the long PDS chain. At the consumer end, a network of 500,000 “fair-priced shops” or food outlets is known to shortchange their customers.

GRAPHIC: How the Public Distribution System works

A 2005 survey by the Planning Commission, India’s national think-tank, found 36% of budgetary subsidies on food siphoned off the supply chain. Stocks often move only on paper, not on trucks, and grains would go to feed ghost consumers. Many argue for phasing out the PDS.

Replacing subsidies in kind, such as cooking gas, with cash is an ambitious new scheme that could eventually cover food rations. But that’s a long shot - nearly 40% of all Indian adults still don’t have a bank account, a 2012 report by the Reserve Bank, says.

Yet, the experience from a new grouping of states shows this is no time to write off the PDS yet.

The BIG fix

If large stocks were impossible to track, then scores of export shipments would have gone vanishing while being loaded or unloaded at seaports. Shop-floor assistants in large stores would be ripping off stocks everyday. There would have been no Wal-Marts.

Chhattisgarh, India’s poorest state, has given the PDS the efficiency of a giant retailer and demonstrated that food programmes can be effectively run. A recent study by the Indian Institute of Technology Delhi points to a fast turnaround.

GRAPHIC: How can the government raise revenues to finance the food security programme?

READ: Truth, tale and statistics: poverty data sparks debate

A fair-price shop at Kanekera village in the state’s Mahasamund district reveals new ways of doing things.

Pushplata Sahu, a local saleswoman, inserts a chip-enabled ration card into a GPRS-enabled point-of-sale device, which resembles a credit-card swipe machine. Its small LCD screen lights up with all details of the beneficiary card-holder.

Sahu confidently uses an electronic pen to navigate each section on the touch-screen, tapping in the quantities of items being dispensed, while the transaction is being captured on the food department’s central server in Raipur. When the process is complete, the device generates a receipt. 

This high-tech makeover is however just a last-mile innovation, preceded by a series of far more significant reforms on the ground.

Politicians are often jolted into action when things go so horribly wrong that their electoral chances appear risky. A starvation death in 2004 at Dantewada, an insurgency-ridden tribal outback, became a political hot potato, prompting a wider hunt for solutions.

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A high-level probe found fair price-shops were irregular with supplies, shopkeepers stole PDS items and often maintained timings not suited to the impoverished tribals.

A year later, the government changed the ownership of fair-price shops: from private hands to gram panchayats, or an elected village council and registered local self-help groups.

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“That was the key. Gram panchayats are accountable to the people,” says Samir Garg, a Supreme Court-appointed monitor for state-run food schemes in Chhattisgarh.

This reform eliminated a strong incentive ration dealers had in preventing customers from buying ration, so that they could sell grains meant for the poor in the open market.

Sahu has to receive stocks in the presence of five village elders. Word that food has arrived then quickly spreads throughout the village.

In Chhattisgarh’s 298 centres, where the PDS is automated, customers have the freedom to choose any store, regardless of where they stay.

“It’s like going to another ATM to withdraw cash when one isn’t working,” says AK Somasekhar, the technical director of National Informatics Centre, the state-run agency, which implemented the project.

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A lifeline

The 7th of every month brings cheer in Mahasund district’s Nayapara area. On cycles and on foot, swarming people queue up outside PDS shops.

It’s Chawal Utsav Din or food day, when ration shops dispense the month’s quota of ration. http://www.hindustantimes.com/Images/Popup/2013/7/28_07-pg12-13a.jpg

The sight of day-wage labourer Ramesh Dhuru carrying home a sack of essential commodities lights up his wife Ruplata’s face.

The goodies: 35 kg of rice, 2 kg of lentils, free salt and 2 litres of kerosene.

Their three-year-old son, the eldest of three children, dips his hands into a frugal meal of rice and lentil soup, as his sisters partake.

Bacche din me kai baar khana mangte hain. Pehle bohot bacha ke chalte the (The children want meals several times a day. Earlier, I would be very parsimonious with food,” she says.

POLL: Do you think the food security programme will be successful in India?

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Even with the PDS supply, the family diet is almost always restricted to rice and lentil soup. The Dhurus can’t afford most vegetables. And no milk either. Yet, money that Ruplata saves because of a reliable PDS only goes into buying more grains, as the family’s ration of subsidised grains don’t last the full month.

India is finally paying political attention to fighting hunger, after tolerating it for too long. Last year, the main opposition BJP-led Chhattisgarh government enacted its own food security law. And after much delay, the ruling UPA coalition enacted a National Food Security Law this month to give 67%, or about 800 million Indians, a right to cheap grains.

About 67 of 100 Indians will get cheaper grains after the Food Security Bill | Infographics

However, Ruplata’s lifeline is another man’s “fiscal problem”. The government aims to limit subsidies to less than 2% of the country’s gross domestic product (GDP). http://www.hindustantimes.com/Images/Popup/2013/7/28_07-pg08b.jpg

This means if the value of all goods and services produced in the country was Rs. 100, not more than Rs. 2 would be spent on handouts, such as cheap food for the poor.

Most of those who argue against the food law tend to look only at its absolute costs of Rs. 1.25 lakh crore, which will keep growing.

However, it is also important to look at food subsidies as a proportion of GDP, rather than absolute spending.

For example, an analysis by finance ministry consultant Prachi Mishra shows the national food law’s costs would remain constant at 1% of GDP for the next three years even though expenses will rise by Rs. 33,000 during the same period.

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“The real economic costs of the food bill are not high. There are economic benefits too, in the form of an investment in so-called human capital,” says economist Jean Drèze, whose new book An Uncertain Glory co-authored with Nobel laureate Amartya Sen, compares India’s prosperity to “islands of California” surrounded by a “sea of Sub-Saharan Africa”.

A reformed PDS can lower costs of rolling out India’s new food programme.

According to Reetika Khera, an expert at Indian Institute of Technology Delhi, a new grouping of states has been able to “reform” the PDS, which includes Jharkhand Chhattisgarh, Madhya Pradesh, Odisha and Uttar Pradesh. While most southern states already had a “functional” PDS, the network in eastern states continues to “languish”.

In Chhattisgarh, the PDS is being changed from a system designed to fail to one destined to succeed. 

Drèze says the PDS serves two distinct purposes. One is to protect people from hunger. The other is to bring economic security into their lives in a nation where 90% of the workforce is in the informal sector, wages are very low and employment is far from assured.

“You don’t need a PhD in economics to understand that,” says Drèze.

Chhattisgarh deploys technology banks use for monitoring ATM cash movement to track food rations and deliver handouts to the poor. India’s dead-duck public delivery system is making a promising comeback in at least five more states.

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