Editorial 1 : Fixing a leaky PDS
Introduction: It is argued that free ration under current PDS system supports the individual household, and hence it can be seen as an investment in Human Resources rather than waste of money. On the contrary there is a flip side of this argument which upholds that free ration under current PDS system is not sustainable.
What are the issues with current PDS system?
- The free ration should support the extremely poor and not almost 57 % of entire population.
- Rather than free ration under PDS system, which leads to almost 28% leakage; direct cash transfer option should be undertaken.
- The free rice and wheat have not solved the ‘nutritional security’ problem of India.
1.The unsustainable coverage of beneficiaries under PDS
- World Bank (2022) data shows that 12.9 per cent of Indians live on less than $2.15 (PPP) a day, an extreme level of poverty.
- The NITI Aayog report (2024) says that 248 million people came out of poverty in the last 9 years, with the multidimensional poverty index (MDPI) declining from 29.17 per cent to 11.28 per cent between 2013-14 to 2022-23.
- The current PDS covers almost 57% of population, which should be limited to extremely poor 15% of population.
- Provide grains to population above poverty line at half the minimum support price of those grains.
- This would release some funds for investment in agri-research and farm-infrastructure.
2. PDS leakage
- Analysing the unit-level data of the Household Consumption Expenditure Survey (HCES) of August 2022 to July 2023, which gives the amount of rice and wheat people have received under the PDS as well as any top-up by state governments.
- This is then compared with the off-take from the Food Corporation of India (FCI) for distribution under NFSA (PMGKAY), plus tide-over, non-NFSA state-level allocations, aligning it with the reference period of August 2022 to July 2023.
- The findings reveal a significant discrepancy — 28 per cent of the allocated grains, amounting to approximately 19.69 million metric tonnes (MMT) of rice and wheat, fails to reach the intended recipients.
- The leakage of 28 per cent of rice and wheat translates to a loss of about Rs 69,108 crore, calculated at the economic cost of these grains to FCI.
- And this is an annual loss, which will keep increasing year after year, as the costs rise.
- High-Powered Committee on grain management under Shanta Kumar has already pointed out 46% leakage in 2015.
- In 2016, GOI brought Point-of-Sale (PoS) machines at Fair Price Shops (FPS) to plug leakages, almost 90% of FPS has PoS machines, that brought leakages down from 46% to 28 %.
- The leakages vary sharply across states (see infographics).
- Arunachal Pradesh, Nagaland and Gujarat are the top three states in terms of PDS leakages, although at all-India levels, leakages stand at 28 per cent.
3. Nutritional Security
- HCES data shows that the share of spending on pulses and vegetables declined in 2022-23 compared to 2011-12.
- The National Family Health Survey (2019-21) data shows that 35.5 per cent of children under five are stunted, 19.3 per cent are wasted, and 32.1 per cent are underweight.
- To address malnutrition, we need to convert at least some of the FPS into “nutrition hubs.”
- They can offer a diversified range of produce, including eggs, pulses, millets, and fruits, alongside cereals.
- Using a digital food coupon system, beneficiaries could redeem these coupons at nutrition hubs for a wider array of nutritious options.
Conclusion: In summary, the PDS needs a major overhaul. Providing free food to such a large portion of the population is unsustainable. Individuals above the poverty line should share a portion of the cost of subsidized food grains. The funds saved can be used to improve agricultural practices. To minimize losses and ensure transparency, direct cash transfers and digital food vouchers for healthier options can be introduced through the FPS network.
Editorial 2 : The finance CoP
Introduction: Over the next two weeks, the world’s eyes will be on climate negotiators, particularly those from developed nations. They must accelerate efforts to combat climate change and shield vulnerable communities. This year’s UN Climate Change Conference (COP) marks a significant milestone, as it will, for the first time in 15 years, establish guidelines for climate finance.
CoP 29: The “Finance CoP”
- At Copenhagen in 2009, developed countries agreed to mobilise $100 billion every year by 2020 to help developing countries address climate-related challenges.
- They managed to deliver on the promise partially, that too by 2022.
- Meanwhile, the Global South’s financial burden has increased several times from what was estimated at Copenhagen.
- CoP 29, which begins in Azerbaijan’s capital Baku on Monday, is expected to set up a new financial target, and funding mechanism.
- That’s why even before it has commenced, the Baku meet is being described as the “Finance CoP”.
The optimism from CoP 29
- Despite the pessimism stemming from the constant failure of developed countries to fulfil past commitments, the Baku negotiations begin on a stronger footing compared to any other CoP.
- At the last two meets, delegates had agreed to set up a Loss and Damage Fund to help countries deal with extreme weather events.
- Financial targets, 15 years from Copenhagen, are backed by stronger scientific analyses.
- Most developed country governments, especially EU members, agree that mechanisms need to be instituted to raise $1 trillion every year to protect the most vulnerable.
- Developing countries, by and large, agree on this target.
The challenges in climate financing
- Near unanimity on the amount of money needed to stem climate change, however, does not extend to who will bear the costs, and by how much.
- In February, India took the lead in demanding that developed countries should commit to raising $1 trillion every year till 2030.
- At climate meets in the run-up to Baku, the North has given strong signals that it is not ready to bear this cost by itself.
- CoP 29 is likely to see tough negotiations on including India and China in a climate-funding mechanism.
- Donald Trump’s election as US President could queer the pitch further — he has again threatened to withdraw his country from the Paris Pact.
- Painting India and China as climate villains was a key feature of Trump’s “America First” approach in his last term at the White House.
- There is no indication that he will adopt a different stance in his second term.
Conclusion: New Delhi should stand to its principled position on the responsibility of developed countries to address climate change. This position, in fact, has acquired greater moral heft with India doing much better on its Paris Pact commitments compared to most developed countries. At the same time the world should see the consequences of climate change and work in the direction of resolving the financing issue, through negotiation.