Vivek's Info » General Interest

Paradise lost? The destruction of gorgeous birding area by Delhi

Vivek S. — Thu, 19 Jan 2012 16:30:44 +0000

Delhi and its surrounding areas host thousands of birds, both permanent residents and visitors from Europe, Russia and other areas. Wetlands, the thickly wooded ridge, old buildings and a variety of other habitats enable hundreds of species of birds to thrive in the area. The wetlands present one of the most heavenly sights that one gets to see in the grater Delhi area, and it is getting encroached, polluted and destroyed. This news item by CNN-IBN documents one beautiful wetland that has been given to builders, so that ugly buildings can replace a beautiful habitat for hundreds of birds and other animals. It will be yet another case of paradise lost.

Link to the CNN-IBN report: http://ibnlive.in.com/videos/222397/up-mayawati-sells-wetlands-to-private-builder.html

For pictures of the birds in places around Delhi: see http://www.flickr.com/photos/ishjaap/ & http://www.flickr.com/photos/49403400@N08/sets/72157624517591791/detail/

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Classrooms without walls

Vivek S. — Wed, 21 Dec 2011 15:52:21 +0000

After watching a news report on the appalling number of schools in India without even a building to house it in, I saw an advertisement mentioning “My classroom has no walls, I have no ceiling”. I would have thought that it were a fundraising advertisement to build schools, but for the white smiling face in the ad. It turns out in this strange world that classrooms without walls can also be sold as an opportunity.

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Poverty as a choice: Response to a friend

Vivek S. — Wed, 31 Aug 2011 06:52:34 +0000

This is a response to a long and rambling comment by a dear friend.

Dear Venki: thank you for being an avid reader, even if it is against your best instincts J I can always take some words of encouragement from a "senior" of my high-school days. Your words were encouraging and I am keen to accept the personal remarks. That said, I will have to respond to your worldly wise(?) comment about poverty being purely a choice. That is a little too tempting, considering that much of our relationship is built on arguments. Let's get an argument out of the way. If you were to say that every individual - rich or poor, Ph.D. or barely literate - irrespective of her circumstance has the space to take initiative, to be enterprising and to advance her well-being - I will have no quarrel with it. If you were to extend that argument to say that space for personal improvement means that the context in which we live does not matter to our well-being, I will have to quarrel with you. Do young parents in our dear city line-up at midnight to get an admission form for Pre-KG because specific schools don't matter? Is it silly of people to pay a lot more to live in neighbourhoods with a good school in the US? After all, one can get a much bigger-better house for the same price in a "crappy neighbourhood" (to use a popular American term), if the neighbourhood does not matter. There are way too many things that we do for our children in preparing them, no matter what choices they would make in their lives later. Such preparation, investment and consistent support that we will provide will make them what they will be, and such things have made us what we are. While choices matter, we are also a product of the environment. The question I need to ask you is whether you recognise that the majority of people in India were raised under oppressive circumstances: from having to be hungry in childhood, to living amidst violence, and being curtailed of the most basic civil liberties imaginable. Even in our parent's generation bulk of the boys and girls of this country were chided for wanting to go to school. What good will education do to these children is a popular cultural phrase that millions of children had to hear growing up. Will our children grow up and make the 'same choices otherwise' if they hear it again and again? Will we let them hear such remarks? Will they choose to focus in school irrespective of whether they are well fed or starving? I have been stubbornly individualistic and protective of my realm of choices. This involved going against the things that are 'done' in our culture in matters including education, employment, choice of entertainment, fashion, and marriage – some of which, you would agree are of a consequence. I do tend to think that I have worked hard - not always – but quite often. I believe that thoughtful choices and hard work have mattered in keeping me happy, and I would vehemently disagree with anyone who would claim that they do not matter. But then, how can I ignore what a creature of privilege I have been? Wonderful parents, inspiring teachers, supportive friends, and incredible random strangers have lent a hand time and time again. Let us take you, for example. The discussions I have had with you and our other close friends in our formative years opened my world to all sorts of things. You guys inspired me to learn words voraciously and to play with them. We started a magazine together. Today, you appreciate my writing. I have struggled to improve it, but what would it be if it were not for all of you? We read, we debated, we engaged, and we were passionate about so many things under the sun. You mention the passion in the writing. Where would passion be if it were not nurtured in companionship? I have made choices, but not without encouragement, tips, support, teaching and affection. In making the rather abstract comment about poverty being a matter of choice, you mention in essence that others do not matter. In saying that, you are ignoring an essential aspect of human lives. In saying that, you are negating the good influence that you have been in the lives of others. I can't let you do that my friend. P.s. Ok, that was a little too much. Our common friends will recognize the rather partial representation of our engagements, but then extreme arguments do seem to help with my whacky friends. Hope you enjoyed the read!

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Corruption in the PDS & will coupons or cash transfer work better?

Vivek S. — Thu, 26 May 2011 18:09:24 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

The level of corruption in the public distribution system has been one of the rallying points in the cry for change. The following are some of the corruption related arguments for change:

There is large scale corruption in the system

It is undeniable that there is a lot of corruption in the PDS, and something needs to be done about it. In arguing that we should shift from PDS to coupons or cash transfers, we have to ask if the chances of corruption will be lower in the proposed systems compared to what we have. There is little evidence to make that argument. India has a number of cash transfer programs such as old-age pensions, maternity benefits, family benefit, etc. P. Chidambaram introduced a well-publicised coupon system in one of his budgets, and there are other benchmarks for the suggestions being made today. If one wishes to do so seriously, they could examine the level of corruption in such programs and compare it with the PDS. The proponents of PDS reform have not offered any evidence as to whether these alternatives work. There are scattered references to a cash transfer program in Mexico, and in other parts of the world completely ignoring the reality at home. I suspect that there are two reasons why we see no evidence that cash transfers work better: nobody has chosen to carefully evaluate the alternatives for the lack of interest in such an exercise, and in part because the unpublicized official evaluations of coupon experiments are not flattering making it difficult for proponents to use them for their purposes. The proposed reform is thus not evidence-based in the Indian context; it is a purely ideological project based on the mainstream economics today. The fact that the proposed reform is mainly an ideological project should not deter us from the possible merits of the reform proposals. If a well considered idea has a promise, it is well worth giving a shot. Is the reform proposal a well-considered idea?

Corruption is entrenched in the PDS

One serious argument is that moving to channels that we know to be less corrupt than the PDS could be a strategic way of reducing corruption. This is certainly a serious argument to consider, especially given the deeply entrenched culture of corruption in the PDS. While I do believe that corruption is deeply entrenched in the PDS, I do not believe that the system is irredeemably lost. Many State governments have demonstrated that they could make the system work if it becomes a political priority, Chhattisgarh being an important example. Beyond the PDS, one can take the example of Bihar that was considered a hopeless government, but a determined CM has shown how things can turn around dramatically with some political will. Where the political incentive is to make money off such programs, the odds are that a proposed alternative would suffer equally. Proponents have also argued that the banking system is less corrupt, and so using that channel would help in reducing corruption. It may well work in areas where there is a good banking network. It would be a move worth considering in urban areas, but then the use of banks does not eliminate every scope for corruption. Ghost beneficiaries could continue to exist, those who issue periodic identification documents to beneficiaries could charge them, shortages in overall allocation could be created (as it gets created in PDS), which could then be used for arbitrage. Other possibilities abound.

It does not work since the subsidy is not given directly

One curious argument that found its way to the economic survey 2009-10, and has been repeated by some prominent economists is that the PDS does not work since the subsidy is not given directly to the citizen, but is instead routed through intermediaries. The idea that cash transfers or coupons will eliminate intermediaries is silly. We don't expect beneficiaries to have the direct access to the coffers of the Ministry of Rural Development from where beneficiaries will directly take their allocation of cash without the interference of any official whatsoever. Cash transfer will have its own set of intermediaries. If intermediaries are the problem, then replacing the PDS with coupons is the silliest idea possible. First of all, there will have to be a system of distributing the coupons periodically to the beneficiaries. This will necessarily involve multiple layers of the government. Beneficiaries will then have to collect their entitlements from a grocery store or other shops, which are nothing but intermediaries. Private shopkeepers will not have the same kind of accounting formalities, or any other measure of accountability that ration shop dealer will have to maintain. In essence, the grocery store is an intermediary with little accountability. The grocery store owner will in turn have to submit the coupons to a government agency which will reimburse her. This additional channel will create its own set of opportunities for corruption. In all, the coupon system only represents more intermediaries and less accountability.

The system is too large to monitor

There have been reports in the media that the Chief Minister of Delhi, Ms. Shiela Dixit, advocated cash transfers since the PDS is too large to be monitored effectively. This is curious in a lot of ways. Delhi is one of the smaller states, and the size argument should be the least problem there. It should be even less of a problem compared to other states, considering the fact that the state has fantastic transport and communication infrastructure that makes monitoring easier. Curiously, the argument of size has not been offered on Public Works Department or other departments that are much larger in the state. Will we even consider eliminating them? Delhi also has a well established right to information movement that has focussed on the PDS from the beginning that would assist a well-meaning Chief Minister in the quest to monitor. Delhi’s RTI activists have met the Chief Minister time and again with well-documented information about corruption in specific ration shops, only to find the CM stonewalling. If monitoring is THE problem, we would expect the Chief Minister to act on the information she was given. Alas, that is not the problem. How do we know that cash transfers will work better in her government? Do we know that existing cash transfers in Delhi work a lot better? Sheila Dixit has been a wonderful Chief Minister for Delhi in many ways, but in this case her arguments cannot be less convincing.

The promise of right to information

Given that the PDS involves straightforward entitlements to specified beneficiaries, the right to information movement offers a terrific tool to contain corruption in the system. Using the right to information, it is possible to identify precisely whether there is corruption in the system, who is corrupt and by what magnitude. There is much that could be done to strengthen the RTI regime including proactive provision of information via notice boards, the Internet, mobile phones and other means. If control of corruption is a goal, then we have to focus on means that we know to work, and means that have a promise instead of focusing our attentions on ideological projects with no demonstrated or theoretical reasons for the alternatives to work better. The bottom line is that there is no doubt that there is a lot of corruption in the PDS and that something has to be done about it, and there is scant reason to believe that the proposal to change to coupons or cash transfers will reduce the level of corruption. The government of Chhattisgarh offers to send a text message to anyone who wishes to monitor ration shop, whenever grains are delivered to such shops. In addition, they have introduced stricter norms of documentation including the requirement that delivery trucks have to take a picture of the truck in front of the ration shop and send an MMS to the State government. Such measures, along with the fact that the State government has responded more actively to complaints about the PDS have contributed to a major improvement in the system. The power of right information can be extended even further using digital technologies more effectively. A lot could be done to redress grievances about the PDS, which will automatically have an impact on how the system functions. For example, setting up independent ombudsman, imposing penalties to officials who do not comply with PDS regulations, initiating independent call centres that could receive and officially lodge complaints, training the judiciary to respond to at least large-scale complains on the PDS, et cetera could be done. Those calling for reforms have paid scant attention to other alternatives for better accountability. It is particularly surprising when Chief Ministers and other powerful officials call for the reform, especially when we know that they could do a lot to change how the system works without radically reforming the system, if only it were their priority.

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The politics of PDS “reforms”

Vivek S. — Thu, 26 May 2011 18:05:54 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

Some scholars have pointed out that the motivation to dissolve the PDS comes from the ideological belief that the government should not be engaged in providing public services, and of course the material appeal this has for the rich. The quest for PDS reform started in the context of India’s liberalization and globalization. Pushed by multilateral agencies, the PDS was converted into a targeted system in 1997. The motivation of these reforms was not one of protecting people from hunger – but the zeal to eliminate most public services. Some of the loudest support for PDS reform today has come from people who have generally shown little concern otherwise for policies to protect people from hunger. The sudden zeal shown by these enthusiasts for cash transfers and other alternatives to PDS is only bound to give the politically conscious observer the belief that such calls to reform are mainly to undermine the PDS, and not to create a system that works for the poor. The offer of an alternative can thus be a smokescreen to dismantle what is well established. I do believe that there are well meaning people who are proposing such reforms. I guess that they would be well advised to think of creating a strong framework of rights within which coupons or cash transfers can be but one alternative that could be introduced slowly. Similarly, a lot of push for so-called public-private partnerships comes from large consultancies, and associations of large corporations. Dismantling the PDS and creating alternate forms of delivery can be a source of profits for many organisations. One cannot ignore the fact that a lot of political support for reforms is ultimately garnered by such groups whose main motivation is not one of making the system work for the poor.

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Coupons and cash transfers give people a choice unlike the PDS

Vivek S. — Thu, 26 May 2011 18:00:06 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

Paying cash instead of grains will give people a choice

Another strong argument for coupons or cash is that the recipients will have the choice to spend it on what matters most to them. Proponents of reform have argued that the Indian policymakers tend to be paternalistic, and often argue that if the government gives cash instead of grains, poor people may misuse it, including by drinking it away. They have argued that it's important to trust poor people to make choices that matter most to them. I fully subscribe to that argument. Even if there is a condition that beneficiaries should only buy food using the cash transfer, having the option of buying cheaper grains instead of rice or wheat offered in the PDS could be attractive to many a poor family. Ashok Gulati argued that such choice could also bring about diversity in diet, which is a desirable goal. If choice is something that we really care about, it is possible to introduce it in a limited extent in the ration shop itself. Beneficiaries often have the choice of getting rice or wheat, choosing kerosene over other alternatives, et cetera. The range of goods that are sold through the PDS could be increased, and a limited set of choice could be easily introduced within that system. PDS reformers of a different brand have argued for a long time that the range of goods available through the PDS should be expanded, some of which should be sold commercially, in order to make the ration shop the more viable. Such a system exists in Kerala. While the range of choices may be increased at the ration shop, cash transfers are clearly superior alternative from the perspective of choice.

Poor people will use the cash transfer for the intended purpose

In response to the argument that men in poor families may use the cash for alcohol instead of food some have pointed out that 92% of the people who received cash to buy bicycles bought them in Bihar. This was given as an incentive to send girl children to higher secondary school. The assessment that money was used to buy-cycles as intended seems to be correct. That said, it is a poor analogy to how cash transfers for food will be used. In the example, girl children were expected to buy bicycles and provide proof of the purchase to the school teachers. Such a mechanism would be totally infeasible in the case of monthly quota of food grains. Kaushik Basu among others have argued that cash transfers should be made to adult women in the household, and this has proved around the world to result in higher spending by the families on food, education, health and other desirable ends. I feel that this is a much more serious basis of arguing for cash transfers than the bicycle example. Similarly, I am sympathetic to the argument that we have to trust the beneficiaries to use it for what they consider are the best reasons, even though it will result in some cases of what the society can judge reasonably to be a misuse of such benefits.

Coupons give a choice of shops

Another choice argument made by the proponents of reform is that cash transfers and coupons make it possible for the beneficiaries to go to an alternative shop in case the one that they're dealing with is corrupt. Today people are tied to a particular ration shop, and if the shop does not deliver they cannot do much about it. The idea that people should be allowed to take their entitlements to a different place is powerful, and that can actually put a lot of pressure on corruption. While that idea is powerful, it has strong limitations in a lot of rural areas that are serviced by very few shops. The coupon system in particular will be vulnerable because of the fact that a private shopkeeper will have to recover her money from the government by providing the coupons, which could involve delays, corruption, et cetera. This may prevent most shopkeepers from taking coupons, while the rest can merrily charge what they want without any accountability to the holders of the coupons. Shopkeepers can cite this as an excuse and charge what they want from the coupon holders. Since there will be no obligation for the shopkeepers to sell the goods at a particular price, they can hold the coupon holders to ransom without any legal accountability . In other words, they can do exactly what a ration shop dealer would do in terms of charging excess price but the act will be totally legal. It would be a case of eliminating a crime by eliminating the law. The coupon system makes corruption a very attractive proposition since legal accountability is considerably reduced in public-private partnerships. The argument of choice of shops hinges on the idea that there will be unrestrained competition between shops. In most areas the choice of shops will be limited and the possibility of collusion is large. Further, officials can easily ensure that honest shopkeepers do not get reimbursed on time and thus keep them away from the system. If the profit motive of a shopkeeper will drive competition, it can also drive collusion and corruption to the last penny that can be extracted. The removal of legal accountability, accounting norms and other features that now govern ration shops will only increase the attractiveness of corruption with the coupon arrangement. Such a risk will be lower in the case of cash transfers, though it is possible that beneficiaries will be tied to either a bank or some intermediary from where they will have to collect the benefits; instead of paying a bribe at the ration shop, they will pay this at a different place. The idea of giving a choice of shops could be done in a limited fashion within the PDS without compromising on accountability mechanisms. In urban areas, users can be given the choice of going to any ration shop, and this can be made possible easily with the use of smart cards. An official in Tamil Nadu told me that they consider such a proposal within the current PDS with respect to Kerosene, where the subsidy is high. They proposed to open kerosene bunks that can provide an alternative to ration shops, and under measurement could be controlled more easily in mechanised kerosene bunks. Running ration shop involves overheads, and the possibility that people may go to some other ration shop to collect their entitlements will threaten excessively corrupt ration dealers, and create a similar kind of pressure that coupons and cash transfers will accomplish.

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Shifting from PDS to coupons or cash transfers: Assorted arguments

Vivek S. — Thu, 26 May 2011 17:56:35 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

Please read other articles in this topic before getting here...

The cost of administering the PDS is high

Some economists have pointed out that the cost of administering the PDS is very high, and it is now possible to transfer cash to people at a cheaper rate. This is one of the strongest arguments for a shift from PDS to cash transfers, in my opinion. The amount of money that could be transferred just by eliminating PDS is substantial, and can go a long way in assisting poor families with it. While making that argument, it is important to realise that an important proportion of the cost goes to transporting grains from surplus states to where it is needed, for warehousing, and other purposes that will not go away just by eliminating the PDS. Perhaps the market will do this more efficiently, but we have not seen that happen with fruits, vegetables and other grains in which the government does not play a major role. I should add that I am not ideologically presupposed to believe that the private sector does everything more cheaply than the government. I would instead like a careful exercise to be made in understanding how the cost of private trade would change if the cost of transferring grains is absorbed by them instead, and if they are more efficient than the government. The capacity that the government has to move around grains also has an impact on collusive speculation, something that we should be wary about in a country where food is a dominant part of the budget for such a large population.

The current system of procurements actually increases the price of grains for poor people who do not have access to PDS

Kaushik Basu made the argument that the government is a major hoarder of food grains, and in the process of procuring food grains and creating major stocks, we end up increasing the prices of food grains in the market. Many poor people do not have an access to the PDS, and have to rely on the market for their food grains, and such procurement and hoarding increases the prices at which they buy. Prof. Basu carefully distinguishes between the need to hold some buffer stocks, and excessive hoarding that would lead to a major increase in the food prices. This is an important argument, but if we focus on excessive hoarding by the government, it is important to realise that it is not inherent to the PDS. The massive stocks that have been televised widely are mainly a recent phenomenon following the ill-advised move to target the PDS to a narrow section of the population in 1997. Such targeting removed a large number of users from the system, and simultaneously the price of grains even for officially poor was increased over the market price, making it unattractive for anybody to buy through the system. On top of this, there was also an increased procurement in the following years from the farmers, which altogether led to a massive accumulation of stocks well over the official buffer stock levels. One cannot blame the PDS for it. [Kaushi Basu’s article talks about the entire food grains system, and not just the PDS. He is thus not arguing that the increase in stock is due to the PDS. I am not arguing against his position, but would like to clarify that his concern cannot be added as an argument against the PDS].

We should give some new ideas a shot

The unceasing restrain of those proposing these reforms is that we should "experiment" with new ideas when we are confronted with a poor system. There can be no argument against trying new ideas, and being creative. Unfortunately cash transfer is not a new idea, and it is not terribly creative. As I have argued elsewhere in this series, India already has many different forms of cash transfers. The idea of coupons has been experiment with. We not heard about the performance of these alternatives, and we perhaps never will, at least from the proponents of reform.

Cash transfers should be conditional

Ashok Gulati wrote about making cash transfers conditional upon families sending their children to school. While this may be a suitable arrangement as an added support for families to send children to school, it is a very poor basis to determine food support for families per se. A conditional transfer of that sort is better done through scholarships, school feeding and other school-based programmes. Basic services such as food and health should not be offered with strong conditionalities attached to them.

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PDS does not reach the right people, let’s shift to cash transfers or coupons

Vivek S. — Thu, 26 May 2011 17:50:12 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

Many have argued that half the PDS entitlements reach the “non poor”. I believe that resources are scarce, and the government should spend the money on people who need it most. We should thus be concerned if resources are being spent on those who do not need it. In considering whether resources reach the right people, we should remember that we have a rather poor system of identifying the poor. The poverty-line based on which we classify a person as poor is woefully out of date and so people who would be identified by the society as living in abject poverty could be officially classified as ‘non-poor’. As a result, the argument that PDS entitlements reach people who do not need is grossly exaggerated. In addition to the definition problem, even those who could be officially classified as poor often get excluded given the problems with identification. Proponents of reform are correct in identifying identification to be a problem; but then, they focus mainly on the non-poor being identified (which is an exaggerated problem), whereas my concern is that the poor are often left out in targeted systems. Further, proponents of reform have made no argument on why the shift to coupons or cash transfers will improve the identification situation. There is absolutely no reason either in theory and practice for the shift from the PDS to lead to an improvement in this dimension. In fact, shifting to cash transfers will only worsen the identification problem: The quality of PDS grains, the need to wait in line to get the grains, and other reasons make the PDS inherently unattractive to most middle-class and rich people. As a result a lot of people who are well-off select themselves out of the PDS, which would not work with a cash transfer program. Further, there are rich possibilities of providing different sets of grains (e.g. coarse grains) that may find a larger set of takers among the poor than those who have the means. Cash offers no such means of self-selection.

UID will solve the identification problem

On a related note some have argued that the introduction of Unique Identity Cards will solve the identification problems for cash transfers. The idea that the use of unique identity cards would solve the identification problem is perhaps the most ill thought solution for the problem of identifying who all need food support. The use of biometric identification will have a limited but significant impact in reducing the number of ghost cardholders, and perhaps in ensuring that the same person does not get multiple entitlements. UID offers no way of identifying whether a person is poor are not. In addition, if the UID is able to offer any help in identification, it can do so equally well for PDS as for cash transfers.

The PDS does not work, let’s shift to coupons or cash transfers This is a part of a series of articles on...
Coupons and cash transfers give people a choice unlike the PDS This is a part of a series of articles on...
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The PDS does not work, let’s shift to coupons or cash transfers

Vivek S. — Thu, 26 May 2011 17:45:39 +0000

This is a part of a series of articles on the proposal to shift from PDS to coupons or cash transfers. To see the introduction, click here .

In evaluating alternatives including cash transfers, it is first important to identify both contributions and failures of the system. Proponents of reforms today have focused exclusively on the problems, without dwelling on the things that it has done. There is a reason why the PDS is so popular in Tamil Nadu, Kerala, Andhra and increasingly in other states including Chhattisgarh. In all these cases the PDS has worked and means a lot to the life of poor people. It has failed in other parts of India, and sometimes miserably. Given that the basic structure of PDS is the same across India, one should ask whether the failure of the PDS is due to the design of the system, or whether it is due to larger problems in how these states function. If it is the former, it makes immense sense to reform or even replace the system. If it is the latter, we may spend a lot of resources and energy into replacing the system only to find that the alternative will suffer the same fate in the states where it does not deliver. One problem with the arguments to replace the PDS lock, stock and barrel is that they do not ask serious questions as to why the PDS has failed in some parts of India; and instead they assumes that the PDS has been a failure overall. Apart from the fact that the PDS has functioned well in some states, we should also take into account some of the inherent advantages in its design compared to cash transfers. For example, it is more versatile at critical times such as galloping food inflation in its ability to get the government to absorb some costs, compared to cash transfer programs or anything else. While it is possible in theory to adjust the amount of the cash transferred by taking into account inflation, such a process is politically unlikely to respond to massive food inflation unlike the PDS, where there is a prefixed commitment to provide the entitlements at a certain price. Further, such as system will automatically respond to differing levels of inflation across regions of India, whereas the cash transfer system will have to have a massive input of information about differing levels of prices in every region, and it has to be accompanied by very complex arrangements to provide different amount of support to people in different regions. The PDS also provides some means of social intervention when there is coalition among traders to artificially increase the price of grains. It has served as an outlet of grains bought by the government to insure farmers with a minimum price for their produce. The PDS also serves to transport grains from many of the grain surplus states into places where it is required. I will not claim that these functions cannot be done by alternate arrangements; but, if we have to evaluate the system, we have to take into account what it has done along with what it has not; and we have to take into account what the costs of doing it through an alternate system would be. The calls for replacing the PDS have generally been accompanied by a dismissal of the PDS system as an unqualified failure that accomplishes nothing. The reality of the PDS is far more nuanced.

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Shifting from PDS to coupons or cash transfers: FAQs

Vivek S. — Thu, 26 May 2011 17:41:57 +0000

Nehru inspecting food at a ration shop (Courtesy: Life)

The Public Distribution System (PDS) in India has come under a vigorous attack in the recent months. There have been calls to dismantle the system and to replace with alternatives such as providing coupons or cash transfers. Without any doubt the PDS has serious problems, and performs abysmally in some parts of India. Unfortunately, these are also among the poorest regions where the need for protection from hunger is the greatest. Considering that the PDS is supposed to contribute to something as fundamental as food security, such poor functioning must be addressed. In the recent past there have been discussions about replacing the PDS with a coupon system or with cash transfers. The coupon system involves giving beneficiaries food coupons that could be used in any grocery shop to get food entitlements. Prof. Kaushik Basu, the Chief Economic Advisor to the Prime Minister of India, among others, have argued that beneficiaries should be allowed to use the coupons to buy anything – and not just food. The cash transfer system involves depositing cash into the bank accounts of the beneficiaries that they could then use for any purpose. I believe that the PDS should be reformed where it does not work, and I would even support eliminating the system if there are superior alternatives. Our commitment should be to the goal of eliminating hunger and ensuring that everyone has at least the basic necessities to live on, and not to the means, especially if it fails miserably. In this context of the current debates, I would like to ask if the PDS has completely failed, if the alternatives being proposed likely to succeed, and if those the only alternatives that we have. In a series of articles, I look at various arguments for and against the proposed shift from the PDS to a system of coupons or cash transfers. You can read them by clicking the links below:

The PDS does not work, let’s shift to coupons or cash transfers This is a part of a series of articles on...
Shifting from PDS to coupons or cash transfers: Assorted arguments This is a part of a series of articles on...
PDS does not reach the right people, let’s shift to cash transfers or coupons This is a part of a series of articles on...
The politics of PDS “reforms” This is a part of a series of articles on...

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