THE BLACK HOLE IN ASSAM PDS

Police recently seized food grain including 250 quintals of rice, 28 quintals of wheat and six quintals of sugar allotted under Public Distribution System (PDS) from a godown of a roadside Dhaba along the National Highway No. 37. It was fodder for the news hounds and was published in the local newspapers in Assam. This was, in fact, not a stray incident but one of numerous incidents that frequently find space in various local dailies exposing the nexus between a section of government officials, black marketeers and corrupt elected representatives who are involved in the diversion of PDS food grain and other PDS items worth thousands of crores of rupees in the state to the black market. While these corrupt government officials, traders and elected representatives are minting money from this illegal diversion, lakhs of poor and downtrodden people for whom the PDS food grain and other items are meant have been deprived of their due and are forced to live in hunger and poverty in the state.

When Assam has been facing acute shortage of food grain owing to poor agricultural practices and low productivity, huge quantities of food grain allotted to Assam under the Public Distribution System (PDS) continues to be siphoned off to the black market. A National Council for Applied Economic Research (NCAER) 2008 evaluation taken from the Ministry of Food, Consumer and Public Distribution System (PDS) showing percentage diversion of rice from PDS quota, allocation and offtake of rice for years 2007-2008, 2008-2009 and 2009-2010 under Targeted PDS; reveals that 44.97 per cent of 475,000 metric tonnes of rice allotted to Assam under the PDS for Below Poverty Line (BPL) families, 83.28 per cent of the PDS rice meant for Above Poverty Line (APL) families and the entire 100 per cent 235,000 metric tonnes of PDS wheat are diverted and sold in the black market.

Interestingly, Assam topped the list in terms of diversion of PDS food grain to the black market prepared by NCAER, which was presented during the meeting of Core Group of Central Ministers and Chief Ministers, under the Ministry of Food, Consumer Affairs and Public Distribution Department of Food and Public Distribution held in New Delhi on the 8th of April this year. Contrary to this, the NCAER evaluation has shown Rajasthan to run the most effective PDS system with zero diversion of rice and wheat in all AAY, BPL and APL categories. The performance of New Delhi, Madhya Pradesh, Uttarakhand, Kerela and others, too, is far better than Assam.

Food grain does not reach the actual target group in the state which is living in the lowest strata of society despite the fact that the off take of food grain by the Assam government remains very high. Food grain off take amounted to 98.3 per cent of 1208.45 metric tonnes of rice during 2009-10; 99.9 per cent of 1181.892 metric tonnes of rice during 2008-09 and 104.8 percent of 1132.948 metric tonnes during 2007-08. The figures relating to off take and the percentage of diversion shown by the NCAER evaluation have clearly shown the government’s failure to nail the racketeers involved in the process.

In the state as many as 57,86,706 families have been bought under the PDS system with the issuing of BPL cards to 19,06,000 families and APL cards to 38,80,706 families as on the 11th of March this year, according to statistics tabled on the floor of the Assam Assembly. BPL cards are issued to those families whose annual income is less than Rs. 15,000/. The AAY cards are issued to those 5 per cent Indian families who can not manage even a square meal a day. The state ranks 26th in human resource development index and 21st in the poverty index in India according the Human Development Report 2001.

According to statistics tabled before the floor of the Assam Assembly in March this year, under the PDS system an AAY family is entitled to get 35 kgs of rice at the rate of Rs.3/, while a BPL family is entitled to get 35 kgs of rice at Rs. 6.50/- Rs.7.00/. The Fair Price rate per liter of kerosene is Rs.9.00/- Rs. 10.00/, sugar – Rs.13.50; wheat – Rs.8.00/ and salt – Rs.3.50/- Rs. 4.470/.

While statistics of the state government are very clear about the number of families under the PDS and rate of food grains and kerosene distributed to them, there is no monitoring system to assess whether the PDS materials have reached the poor particularly at a time when skyrocketing hike in prices of all essential commodities have made their lives miserable. With the NCAER evaluation, which revealed the huge diversion of the PDS food grain to the black market it is sure that, these families are subjected to continuous deprivation of their right to get basic food through the PDS thus making the government’s economic policy to ensure availability of food grain to the public at affordable prices and to enhance food security for the poor redundant.

The 1993-94 poverty estimates revealed that 36 per cent of the total population in the country is poor. This came down to 27.5 per cent as per 2003-04 poverty estimates. The Tendulkar Committee’s (2009) poverty estimate was 37.2 per cent of the total population. Although the total number of BPL cards issued by different states numbers 11.12 crore; of late, the Saxena Committee has estimated that 50 per cent of the Indian population lives under poverty situations.

The PDS has been proved as an important constituent of the strategy for poverty eradication of the vast number of poor in the country who still constitute over 330 million and are nutritionally at risk. In India, the PDS with a network of about 4.99 lakh Fair Price Shops (FPS), under the joint responsibility of Central and State governments, is perhaps the largest distribution network of its type in the world. As the Central Government looks after the issues of procurement, storage, transportation and bulk allocation of food grain, the respective state governments bear the responsibility of distributing the food grain to the consumers through the network of Fair Price Shops (FPSs). The operational responsibilities including allocation within the state, identification of families below poverty line, issue of ration cards. Supervision and monitoring the functioning of FPSs also rests with the State Governments.

While the state government has completely failed to curb black marketing and diversion of PDS food grain, the frequent hike in prices of all the essential commodities in the open market has made the lives of these people who come under the target group of the PDS system miserable. For instance, the price of common rice per quintal in 2001 was Rs. 780/- Rs. 950/ in the whole sale market while it was Rs. 9.50/- Rs. 11.00/ per kg in the retail market. The same has gone up to Rs. 1350/- Rs. 1600/ per quintal in the wholesale market and Rs.16/- Rs.18/ per kg in the retail market in 2010. During this period, the rate per quintal of sugar has gone up to Rs. 3450/- Rs. 4480/ from Rs. 1500/- Rs. 1620/ in the wholesale market. In the case of wheat the price rose to Rs. 1620/- Rs. 1830/ per quintal from Rs. 710/- Rs. 1820 per quintal. The targeted beneficiaries of the PDS have to procure food grain from the open market as availability of PDS items in the fair price shops is highly irregular and even when it is made available is much lesser than the requirement due to the pilferage.

The state government that failed to curb hike in prices of all essential commodities has admitted its inability to control food-price on the grounds of less productivity in agricultural products with negative monsoon circle, increase in price in all agriculture productions, increase in transportation cost by the railways and others.

Noted economist and columnist Dr. Jayati Ghosh argues that there are many reasons why the targeted schemes for the BPL fail. The most significant of all is that there are the well-known errors inherent in targeting, of unjustified exclusion of the genuinely poor and unwarranted inclusion of the non-poor. She points out that all successful programmes of public distribution across societies have been those which provide universal or near-universal access. “This provides economies of scale; it reduces transaction costs and administrative hassles involved in ascertaining the target groups and making sure it reaches them; it allows for better public provision because even the better-off groups with more political voice have a stake in making sure it works well; it generates greater stability in government plans for ensuring food production and requirement” she says. Dr Ghosh cites the example of Kerala, Tamil Nadu and Andhra Pradesh to argue that among the states of India, those that “have a better record of public food distribution are those that have gone in for near-universal access.”

Dr. Ghosh further argues that the notion that a universal scheme that provides subsidised food to all households is too expensive is not tenable. If all households in the country were provided 35 kg of food grain, that would amount to around 90 million tonnes and at the current levels of subsidy the cost would be Rs. 1,20,000 crore. “This may seem like a lot, but the current food subsidy already amounts to around Rs. 50,000 crore, so this is an additional Rs.70,000 crore - or around 1.5 per cent of the GDP. Surely this is not too much to allocate to ensure that no one goes hungry in what should be a civilised society.” In any case, compared to nearly 3,00,000 crore given away as tax benefits and other concessions to the corporate sector over the past year, this Rs. 70,000 crore “becomes a trivial amount.” Besides, this is also the amount spent in hosting the Common Wealth Games, she adds.

Based on the NCAER findings about diversion of the PDS items, the opposition Asom Gana Parishad (AGP) has alleged the occurrence of a whooping Rs 10,000 crore PDS scam during the two consecutive terms of the Congress-led government in Assam and has moved the Prime Minister Manmohan Singh to order a probe by the Central Bureau of Investigation (CBI) to nail the corrupt. The Assam Food and Civil Supplies Minister Nazrul Islam, rushed to dismiss the allegation leveled by the AGP but conceded that diversion of 15 to 25 per cent of the total PDS items does occur. The supply department also maintains that NCAER survey was not based on facts and that the figures are misleading.

With the Assembly elections around the corner and the questions of food security and right to food becoming urgent political issues across the country, the issue of siphoning off of PDS items to the black market is likely to snowball into a larger issue in Assam in the coming days.