Sunday, March 6, 2011

170 - Behind the success story of universal PDS in Tamil Nadu - The Hindu

Behind the success story of universal PDS in Tamil Nadu
August 10, 2010

Rice at Re.1 a kg is an essential part of Tamil Nadu's Public Distribution System.

Technological interventions, innovative and fool-proof delivery mechanisms, constant reviews and fixing responsibility at each level ensure that an effective delivery system is in place.

The Public Distribution System in Tamil Nadu is a success story, in its coverage as well as its pricing. Each family, whether below the poverty line or not, is entitled to 20 kg of rice at Re. 1 a kg. The State Government opted for universal coverage for both practical and good political reasons. Effective targeting of Below Poverty Line (BPL) families was felt to be an administratively difficult task, and there was a genuine risk of the people most in need of food security being left out. The State is now deservedly held up as a model for effective implementation of a comprehensive food security system.

When the DMK Government took office in 2006, one of its first steps was to supply rice through the PDS for Rs.2 a kg. This was a key election promise of the party. In September 2008, the PDS price was reduced to Re.1 a kg of rice.

From May 2007, in addition to rice, kerosene, and sugar, Tamil Nadu has been issuing wheat, wheat products, pulses and palmolien to cardholders — under the Special Public Distribution System. It is the only State do so.

At present, the monthly offtake of rice under the PDS is 317,000 tonnes, though the Central allotment is only 296,000 tonnes (supplied at Rs.5.65 a kg). The additional quantity of rice needed is being met from the open market sales scheme (OMSS) allotment by the Food Corporation of India and also from other State Civil Supplies Corporations (the price ranges from Rs.11.50 to Rs.15.70 a kg). In the case of sugar, the requirement is of the order of 33,055 tonnes as against the Central allotment of 10,832 tonnes. As the Central allotment is not sufficient to meet the demand from cardholders, the State is purchasing sugar from the open market at the prevailing rates. By streamlining the distribution, Tamil Nadu is able to meet the demand of kerosene to a certain extent. Moreover, distribution of free LPG connections has helped bring down the offtake of kerosene in the PDS.

By selling rice and other commodities at prices much lower than the price fixed by the Central Government, the State Government has been incurring substantial expenditures by way of food subsidy. From Rs. 734.85 crore during 2003-04, the subsidy increased to Rs. 1,017.78 crore in 2004-05, Rs. 1,559.64 crore in 2005-06, Rs. 1,833.02 crore in 2006-07, Rs. 1,961.06 crore in 2007-08, and Rs. 2,795.85 crore in 2008-09. During 2009-10, Tamil Nadu had to enhance the subsidy to Rs. 4,000 crore. This was because it had to provide for an increased offtake of rice over and above the Central pool allocation, and also for the purchase of sugar and pulses from the open market. The allocation for 2000-11 is pegged at Rs. 3,750 crore as there is an expectation that the market prices of sugar and pulses will come down.

The success of the scheme in Tamil Nadu relies heavily on groundwork. The mammoth task of minimising diversion and reaching 317,000 tonnes of rice to more than 1.97 crore cardholders who draw rations from about 31,439 outlets in 32 districts (including the newly formed Ariyalur and Tiruppur) involves technological interventions, drawing up innovative fool-proof delivery mechanisms, old-fashioned policing, surprise checks and constant reviews, and fixing responsibility at each level.

The movement of stock from the 310 warehouses across the State to the PDS outlets begin from the 20th of the preceding month (August 20 for September, for instance). By the end of the month, 60 per cent of stocks for the next month reach the PDS outlets. By the 5th of the month of issue, the whole quota reaches the shops. At any given point in time, Tamil Nadu maintains six months' supply of rice, wheat, and other commodities in its warehouses. The movement from the warehouses to the PDS outlets is through trucks — which are tightly controlled by route charts. The charts display the route the truck has to adhere to, details of commodities it carries, and the shop to which the goods are to be delivered. Any elected representative or government official who notices any deviation from the route is authorised to check the vehicle and report to the nearest police station.

Control rooms have been opened in all districts, including in Chennai, to receive information on diversion of PDS commodities. As a trial measure, a GPS-based vehicle movement monitoring system has been implemented in Thiruvallur and Krishnagiri districts to track the movement of vehicles carrying PDS goods. Similarly the State Government has introduced an online godown monitoring system for enabling online capture of all transactions in warehouses in a phased manner. To prevent mass diversion of goods by lorry drivers, every vehicle is accompanied by a department assistant who is provided with a special SIM card attached to a BSNL tower and through this the movement of the vehicle can be tracked from the control room in the Civil Supplies Corporation.

Further, SMS-based fair price shop stock monitoring has been set up by the Cooperative Department to track the stock of every commodity at each fair price shop on a daily basis. This enables officials to identify stock levels at each shop every day and move stocks swiftly as needed. Under the present network, it is possible to identify a shop that may be involved in diversion of stocks by keeping tabs on sudden increases in rice offtake in a month. When there is an abnormal increase in the offtake, vigilance teams swing into action to find out whether the increased offtake is genuine or bogus.

Handheld billing machines with a GPRS connection have been installed in all fair price shops in Chennai to enable real time monitoring of sales and stocks. A usual complaint of cardholders is short measurement and to avoid this fair price shops are being supplied electronic weighing machines. In the present setup, cardholders can register their complaints against the shopkeeper through an online service.

A majority of fair price shops in the State are run by the Cooperative Department. In fact, Tamil Nadu is the only State where fair price outlets are run either by the Government or by its agencies. This system has proved to be advantageous since the wholesaler is a government corporation and all the retail shops are either Government-run cooperatives or under the control of the Civil Supplies Department. Most shops run on a loss. The Government routinely provides about Rs.300 crore as subsidy to run the Cooperative shops (to cover establishment costs, wages, etc). Tamil Nadu is the only State to do this, says Food Minister E.V. Velu.

Despite all these measures, some shop keepers indulge in malpractices; and where these are discovered criminal prosecution is launched against them. Similarly, vehicle permits and driving licences are cancelled if the vehicles and drivers are found indulging in the diversion of commodities.

For the universal PDS across the State, the going has been good so far. The concern is that with the United Progressive Alliance Government set to prescribe 35 kg of rice or wheat a month at BPL prices for each Below Poverty Line family and also set to bar Above Poverty Line families from accessing rice or wheat at subsidised rates at PDS outlets, Tamil Nadu's subsidy burden will rise hugely.

Keywords: Public Distribution System, Tamil Nadu, BPL, APL, food security