The public distribution system (PDS) needs to be overhauled to rein in rising prices, a paper titled Understanding inflation and controlling it by chief economic adviser Kaushik Basu said this week.
Also, new policy actions and demand management through both fiscal and monetary measures are the need of the hour to check spiraling inflation, the paper has revealed.
A huge amount of grain meant to be given to the poor through the PDS gets diverted — as they are either sold off at illegal high prices or wasted — leading to a surge in fiscal expenditure and causing inflation pressures across the board.
“We have to think of a major overhaul of our public distribution system and give subsidies, as far as possible, by making direct transfers to the poor, who should then be allowed to buy their food from any store, private and public,” the study has pointed out.