Shifting from PDS to coupons or cash transfers: FAQs


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:

  1. The PDS absolutely does not work… Or does it?
  2. PDS does not reach the right people
  3. Corruption in the PDS: well alternatives work better?
  4. Giving people a choice with coupons and cash transfers
  5. Other assorted arguments (Identification problems, cost of administration, and other problems with the PDS, and do we have a reason to believe that the alternatives well solve them)
  6. The politics of PDS reforms

About Vivek Srinivasan

I work with the Program on Liberation Technology at Stanford University. Before this, I worked with the Right to Food Campaign and other rights based campaigns in India. To learn more, click here.

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