Improving India’s Public Distribution System: What Can We Learn from COVID-19?

IMPROVING INDIA’S PUBLIC DISTRIBUTION SYSTEM: WHAT CAN WE LEARN FROM COVID-19?

by Devesh Roy and Mamata Pradhan | June 17, 2020

This post originally appeared on IFPRI's South Asia website.

To read more commentary and insights from A4NH researchers on this subject, visit our COVID-19 page.

India’s Public Distribution System (PDS) has been the anchor of its food security safety net programs for decades. At present, several features of the PDS limit beneficiary access to entitlements, made evident by the unfolding of the COVID-19 crisis. In this blog, Devesh Roy from the International Food Policy Research Institute (IFPRI), and Mamata Pradhan, a Research Collaborator with IFPRI, advocate for reforming the PDS to take account of changing employment patterns. They suggest adaptation to a ration card that permits both portability and divisibility of entitlements, allowing migrant workers and others separated from their families to avail of the PDS to ensure food security. Other reforms are also discussed, such as a shift to DBT, strengthening of inbuilt grievance redressal mechanisms, and provision of information, all of which could also help shift the bargaining power from PDS dealers to the beneficiaries.Kalyani Raghunathan series co-editor  and Research Fellow, Poverty, Health, and Nutrition Division (PHND), IFPRI.

In times of crises, such as the one presented by COVID-19, advocating for universality of safety nets may seem somewhat prosaic. Even the Pope in his Easter Letter proposed that it might be time to introduce a universal basic income (UBI). The Supreme Court of India recently made several cogent arguments about universalization of the Public Distribution System (PDS), though it stopped short of passing an order, deeming it a ‘policy issue’ that only the government can take a call on. At the same time, the Court asked the Centre to consider the feasibility of 'temporarily' adopting the 'One Nation, One Ration Card' (ONORC) scheme during the ongoing situation to enable economically weaker sections and migrant workers stranded in different places to access food from any ration shop of their choice across the country.

These judgements point to COVID-19 and lockdown-specific lessons for the PDS to adapt. The mass exodus of migrants to their villages, with no prospect of income or food, highlights how crises such as the current one can disproportionately affect vulnerable groups, particularly when adequate institutional structures are not in place. With PDS benefits tied to their place of origin, migrant workers in urban areas across the country have been left without access to their entitlement to food.

In response to COVID-19, some states have introduced free food grains for all. While commendable, the system requires those without ration cards to apply for an e-coupon using a website to register themselves. This is a far-from-ideal system for a crisis-time safety net, especially one that is predominantly targeted at those with few resources and low levels of technological literacy.

The current crisis highlights many such inefficiencies in the delivery of India’s welfare programs. While the demand for safety nets has raced ahead, program adjustments must cater to heterogeneous needs, migration patterns, and lack of identification documents. Given the COVID-19 situation and its wide-ranging economic impacts, it is worthwhile revisiting the systemic problems in the PDS and examining ways to accelerate recovery.

The PDS is the world’s largest food subsidy program and has been the cornerstone of India’s social safety net programs. The National Food Security Act (NFSA) of 2013 further broadened the scope of PDS by raising the level of subsidies, expanding coverage, and emphasizing demand, especially in the choice of the food basket. Yet, the PDS has been plagued with charges of corruption, overpricing and delivery of low-quality grains. Even post-NFSA, significant power asymmetries reflected  in the poor delivery of services, time-consuming bureaucratic procedures and ineffective grievance redressal systems characterize the system.

Addressing some of these problems could induce a shift in bargaining power in favor of the beneficiaries. It could also make PDS more resilient, with a greater inbuilt capacity to deal with shocks. Without questioning the imperative of casting as wide a net as possible to ensure access to food during these times, there are both medium- and long-term lessons on the PDS that can be drawn from the COVID-19 crisis.

PDS is a safety net: Accessing it should be costless and effortless

ONORC was launched in January in 12 states and will be extended to 20 states by June 2020. Given the low bargaining power of migrants, the costs of accessing PDS are generally steeper for migrant families because of costs (in form of bribes) associated with getting a ration card. By doing away with eligibility-related costs, the ONORC could benefit migrants significantly and help shift the bargaining power to beneficiaries.

While ONORC provides for portability of benefits, what the current crisis vividly delineates is that portability needs must be complemented with divisibility in the entitlements. Nearly 40 million internal migrants stranded in cities far from their families have contingent needs. One way of meeting these would be to allow small portions of the PDS rations to be seamlessly obtained by different individuals, within a family, located in different parts of the country. ONORC should turn into ONODRC i.e. One Nation One Divisible Ration Card.

Safety nets should deliver on food access, not aim to deliver food

While ONORC has the potential to improve outcomes, particularly for the vulnerable groups, it may perhaps be opportune to ask if Direct Benefit Transfer (DBT) could be more effective in times like COVID-19. A DBT or a food stamp program would augment consumer sovereignty and expand their choices as they could then access both fair price shops and non-PDS outlets. The importance of more choices for beneficiaries could not have been underscored at a more critical time as this pandemic.

Inspections and grievance redressal need to be more than spiritual construct

To ensure smooth functioning, existing systems of inspections and grievance redressal mechanisms constituted within the PDS or in local government structures need to be strengthened. Evidence from earlier research shows that compromises in entitlements are common, inspections are few and grievance redressal mechanisms seldom utilized. Going forward, it is important that grievance redressal be enforced, and is not just on paper.

Some welcome changes have been recently observed. The Delhi High Court has directed the government to post complaint boxes at every PDS and non-PDS food distribution center. During the lockdown period, Bihar’s government cancelled licenses of 36 PDS outlets, suspended 127 dealerships and lodged FIRs against 144 outlets. In Jharkhand, PDS dealers were using ration cards as collateral when the relief packages were announced with greater allocation. These are just a few cases that have come to light.

Reduce the power of PDS dealers due to asymmetric information

COVID-19 accentuates the role of seamless and pertinent information flow within the PDS. As the government allocates free rations for distribution, there is a rising potential for arbitrage by dealers, and the proposed relief measures present a challenge for governance. Hence, as part of governance reform, creating a knowledge base and disseminating information to households could be very important.

India should learn from its past successes. For example, in Chhattisgarh, multiple measures have been taken to improve beneficiary knowledge. Similarly, in Bihar, the information on time and quantity of grain release is publicly available, possibly preventing the dealer or other brokers who otherwise seek rent by posturing that information on grains movement and availability as chimerical. These past experiences point to first-order effects of keeping consumers informed that could prove crucial in this pandemic.

In recovering from this crisis, there are indeed no magic bullets. Yet, if long-overdue changes to programs like the PDS are made, these social safety nets could be made more cost-effective in delivery, both during and after the pandemic, thereby succeeding in turning a crisis into an opportunity.


Devesh Roy is a Senior Research Fellow with A4NH. Mamata Pradhan is a Research Collaborator with IFPRI. The analysis and opinions expressed in this piece are solely those of the authors.

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