The National Food Security Bill (NFSB) has been finally tabled in the Lok Sabha. While the United Progressive Alliance (UPA) sees it as a game changer for its electoral fortunes, there is valid scepticism on the ability of the government to deliver on its promises. There are loose ends to be tied up such as restructuring of the public distribution system (PDS), identification of those for whom the law is meant; and putting appropriate regulatory and other measures for the smooth functioning of the system.
These are valid concerns and are important not because key provisions of NFSB relate to PDS but also because PDS is known to be leakage prone and inefficient. However, some of these concerns have lost ground since 2004-05 when most states started reforming PDS by implementing technical fixes along with expanding coverage and reduction in the prices of foodgrains under PDS. Most of the criticism of PDS has emanated from a comparison of the data from the consumption expenditure surveys with the official off-take figures from the ministry of food and consumer affairs (MFCA). The latest round of consumption expenditure for the year 2011-12 was released recently. Data from the survey shows the extent of leakage for rice and wheat, taken together, is 35% only compared with 55% in 2004-05 using the same method. Thus, within a span of seven years the reforms introduced by states have led to a significant reduction in leakages. What is also worth noting is not only the curbing of leakages but also the expansion in access to PDS. Only 23% households purchased cereals in 2004-05 and 39% in 2009-10. This number rose to 44.5% in 2011-12. In 2011-12, 50% of rural and 31% of urban population was purchasing cereal from PDS.
More than the all-India story, it is the states’ performance that inspires hope. The traditionally low or negligible leakage states of Tamil Nadu, Andhra Pradesh and Himachal Pradesh continue to maintain an efficient PDS. However, Chhattisgarh and Orissa have now joined these states in showing a remarkable reduction in plugging leakages. For Chhattisgarh, the extent of leakage is negligible and Orissa managed to reduce it from 25% in 2009-10 to just 15% in 2011-12. Most states have witnessed an increase in the percentage of population accessing cereals from PDS along with a reduction in leakage. This is most visible in states which reduced the prices of PDS foodgrains and/or expanded coverage. These states include Bihar, Kerala, Uttarakhand, Jharkhand, Madhya Pradesh, Assam and West Bengal.
Among the states that have dramatically improved their performance in this respect, one state that stands out is Bihar. A former laggard in this respect, Bihar was the state with the highest leakage and lowest percentage of population accessing PDS has shown a surprising turnaround. Per person consumption of PDS cereals in Bihar was 0.66kg in 2009-10 as against the national average of 1.8kg per person. By 2011-12, per capita consumption of rice and wheat from PDS increased to 2.2kg per person, marginally higher than 2.1kg per person nationally. What about leakages? As against 65% leakage in PDS in 2009-10, Bihar has managed to reduce leakage in 2011-12 to only 12%. While most states including traditional laggards such as West Bengal and Jharkhand have shown improvement in the functioning of PDS, there is one state which needs to be mentioned for deterioration in performance of PDS. The state which turns out to be the worst performer as far as functioning of PDS is concerned is Gujarat. Not only has the percentage of population purchasing from PDS declined from 26% in 2009-10 to 22% in 2011-12, the average consumption from PDS per person has also declined from 0.8kg per person to 0.6kg per person. But the worst aspect of PDS performance in Gujarat is the fact that it is now the state with the highest leakage in PDS in 2011-12: The figure rising from 45% in 2009-10 to 69% in 2011-12. Among big states, Gujarat had the highest leakage in 2011-12.
So how did Bihar achieve a turnaround and why is Gujarat doing poorly? Bihar used simple technological fixes such as computerization, doorstep delivery of foodgrains and global positioning system to track foodgrain movement and improve transparency in the system. It also increased the coverage of households eligible for PDS cereals from 6.5 million to 12.3 million using its own resources. Last year, Bihar budgeted for Rs1,283 crore for food and civil supplies. As against this, Gujarat budgeted just one-third of that sum at Rs476 crore.
While both states have shown remarkable performance on measures such as growth rate, the real yardstick of governance is the ability of state governments to deliver basic services to the poor. A far more important lesson from the experience of poorer states such as Orissa, Chhattisgarh and Bihar is the successful transformation of a leaky PDS into an efficient vehicle for poverty reduction. In all the three cases, it was led by leaders who had political conviction and if these are any indication for how NFSB may be improved, there are certainly lessons to be learnt.