Friday, May 15, 2015

Bihar as poster boy for PDS?

I had a post recently on plugging leakages in the public distribution system (PDS). I cited an article which argued that making the PDS more universal results in lesser leakage.Why? Because there is less incentive to divert from those qualifying to those not qualifying for PDS.

The evidence from Bihar appears to support this, as Jean Dreze argues in a recent article. The application of the National Food Security Act (along with other PDS reforms)- with its emphasis on more universality- appears to be resulting in lesser leakage in Bihar. The state had leakages of the order of 90 per cent. By 2011-12, it was down to around 24%. More recent surveys corroborate this piece of data.

Apart from universality, the manner in which allottees are assigned for ration cards is helping. Earlier, allottees were based on their being identified as being in the BPL category- and this was highly arbitrary. Now, allocation of ration cards is linked to the Socio-Economic and Caste Census. This is more transparent and more inclusive than the BPL identification.

Dreze says that the turnaround in PDS in Bihar is also because the NFSA and PDS are politically charged issues- politicians now have to deliver to appease the electorate.

This reinforces the point made in the earlier post: if PDS is showing such improvement, what would be the case for moving to cash transfers? We would be moving from something that is tried and tested to something that is not. And if we can't plug leakages in PDS, there's more than a fair chance we won't be able to plug leakages in cash transfers either.

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