India
PDS leaks cost exchequer Rs 69,000 crore per year: report | India News – Times of India
Analyzing data from the Household Consumption Expenditure Survey (HCES) and FCI’s monthly offtake figures from August 2022 to July 2023, the paper estimates that 20 million tons of rice and wheat are not reaching the intended beneficiaries.
“This is an annual loss. Where will it go? Perhaps it will be diverted to the open market or even for export,” said Ashok Gulati, professor of Infosys at ICRIER, who wrote the policy brief along with Raya Das and Ranjana Roy.
The paper states that this spill of 20 million tonnes of rice and wheat translates into a significant financial burden, costing the exchequer Rs 69,108 crore, considering the economic cost of wheat and rice for that year.
“While this figure represents a significant improvement over the 46% leakage reported in 2011-2012, it still indicates that a substantial portion of free/subsidized grains are not reaching the intended beneficiaries,” the paper said, citing the 2015 report from a government-appointed panel that was put on the back burner. It was also said that the introduction of point-of-sale (POS) machines in fair price stores (ration shops) in 2016 helped close some of the gap, but the leakage is still significant .
It says Arunachal Pradesh and Nagaland in the northeast, followed by Gujarat, are the top three states in terms of IBS leakage.
The lack of digitalization in the northeastern states has been identified as one of the major reasons for the higher leakage.
The paper states that Bihar and West Bengal have achieved significant reduction in IBS leakage over the past decade. In Bihar, the figure fell sharply from 68.7% in 2011-2012 to just 19.2% in 2022-2023. West Bengal saw a decline from 69.4% to 9%.
In UP, IBS leakage is estimated at 33%, with the state topping the list in terms of absolute quantity of grains leaked, the paper said. Himachal Pradesh, Uttarakhand and Maharashtra are experiencing high levels of siphoning, with grains often being diverted to the open market, the paper added.
The article states that linking beneficiaries’ ration card with Aadhaar for PDS has increased the effectiveness of distribution, but leakage in PDS still remains a concern.
“Despite the implementation of digital tracking systems, leakage persists, highlighting the need for not only better monitoring but also structural reforms to tackle PDS corruption,” the paper said.
It has proposed major reforms to the PDS system, including improving the accuracy of beneficiary targeting and exploring a transition to food stamp or voucher systems and direct cash transfers, “which could increase transparency, reduce inefficiencies and could guarantee nutritional security”.
India operates one of the largest PDS in the world, providing free profits, including rice and wheat, to about 814 million people.
