Food Security and the Public Distribution System. Pranab Banerji

Size: px
Start display at page:

Download "Food Security and the Public Distribution System. Pranab Banerji"

Transcription

1 Food Security and the Public Distribution System Pranab Banerji

2 Evolution of the PDS Genesis: food problem of late 50s & 60s Green revolution Economic reforms 1991 Revamped public distribution systems (RPDS) 1992 (1752 DDP, DPAP, ITDP etc. blocks) Targeted public distribution systems (TPDS) 1997, 2000 (BPL, AAY, APL)

3 Objectives of Food Policy Assuring remunerative rates for farmers Supply of food grains at reasonable prices to consumers (through the PDS) Poverty alleviation

4 Main Activities Market interventions, imports, buffer stocking and regulation Public Distribution System: Procurement, Storage, Movement, Distribution, Delivery

5 PDS: Responsibility of cetnre and states Centre s responsibilities Procurement Storage Transportation Bulk allocation of food grains Subsidies States responsibilities Identification of BPL families Issue of ration cards Allocations with in the states Intra state transportation Licensing of FPSs Supervision & Monitoring

6 Procurement Objectives: remunerative prices, service PDS, buffer stocks Minimum support price Procurement of wheat, paddy and levy rice CACP s recommendations and MSP Fixing of procurement prices at levels higher than the CACP s recommendations has led to the procurement of an additional quantity of 12.8 mt of wheat and 3.4 of rice.

7 CACP prices and MSP (Wheat) (Rs./quintal) Year Price recommended by CACP Price announced by Govt

8 Minimum support price (Rs./quintal) Years Wheat Paddy Common Grade-A

9 Procurement of rice for central pool (in lakh tonnes) Years Procurement FCI State Agencies Total

10 Procurement of Rice, Kharrif ( ) in lakh tonnes States Andhra Pradesh Chhattisgarh Haryana Madhya Pradesh Maharashtra Orissa Punjab Tamil Nadu Uttar Pradesh Uttaranchal Others Quantity Procured % of Quantity Procured to Total Procurement

11 Procurement of Wheat ( ) in lakh tonnes States Quantity procured FCI State Agencies Total Haryana M.P Punjab Rajasthan U.P

12 Food Subsidy of the Central Government Year Amount (Rs. Crore) % of total Govt. Expenditure

13 Objectives of buffer stocks Meet the prescribed minimum buffer stock norms for food security For monthly releases of food grains for supply through the Public Distribution System/Welfare Schemes To meet emergent situations arising out of unexpected crop failures, natural disasters etc. For market intervention to augment supply so as to help moderate the open market prices.

14 Issues in buffer stocking Base level stocks PDS & welfare schemes Stabilization factor Minimum & maximum stocks Sources of stock

15 Normative stocks for the central pool (With effect from April 2005) In Lakh Tonnes DATE RICE WHEAT TOTAL 1 st April st July st Oct st Jan

16 Actual & Minimum buffer stocks (in lakh tonnes As on Actual Stock Total Minimum buffer norms

17 Distribution & Delivery Identification of BPL households:inclusion, exclusion & ghost cards Licensing of fair price shops: issues relating to viability Market prices and off take Leakages

18 CIPs of wheat Effective from to till date BPL APL AAY (w.e.f ) CIPs of Rice Effective from to till date BPL APL AAY (w.e.f )

19 Limitations of TPDS GOI spends Rs to transfer Re 1 to the poor About 57% of subsidized grains does not reach the target group Implementation of TPDS is plagued by large errors of exclusion and inclusion. PDS is a less efficient mode of income transfer to the poor. The Economic costs of grains are higher than the market prices in most of the States Only 23% of sample FPSs are viable. The rest survive on leakages and diversions of subsidized grains.

20 Targeting Errors (% of households) States Exclusion Error Inclusion Error Shadow Ownership Error Karnataka Madhya Pradesh Tamil Nadu Uttar Pradesh

21 Viability of FPS Nationally only 38.9% of the selected FPSs made a positive net income over their monthly recurring cost, while 22.7% could mop up a return of annualized 12% of their working capital and only less than a third of the latter could mobilize an income sufficient to justify the ownership and running of a FPS.

22 Factors affecting off take Open market prices Transaction costs Quality Own product Income/wealth

23 Alternatives (Tenth Plan) Restructuring of PDS Food Stamps and Food Credit Cards Decentralization of Operations Operation of Buffer Stocks and FCI Private Trade in Food grains TPDS, NPDS or UPDS?

24 Thank you