Context: Amid Covid-19 the Public Distribution System has played an important role in providing relief to people in the aftermath of the national lockdown.
Role of PDS during lockdown

• Despite gaps, PDS is one of the most effective instruments to reach people in the current situation.
• The COVID-19 survey conducted by the Azim Premji University found that during the lockdown, 89 per cent of rural and 69 per cent of urban respondents reported that they were able to get foodgrains from a government ration shop.
• While only 30 per cent of households said that they received the Jan Dhan transfer.

Population coverage

• Under the National Food Security Act (NFSA), about 60 per cent of the current population has priority ration cards.
• Tamil Nadu, Andhra Pradesh and Telangana have additional coverage which they support through their own budgets.
• Providing an additional 5 kg of foodgrains and 1 kg of pulses for free under the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) was only for the 81 crore individuals currently covered by the NFSA.
• Later as part of the Atmanirbhar package, another 8 crore migrants have been included.

Many left out of the coverage

• There are still many who are left out of the food security net.
• Just to fulfil the NFSA requirement of 67 per cent, the updated population estimates of 2020 must be used in place of the current 2011 numbers.
• Moreover, in the present crisis where many have lost their livelihoods, the requirement would be much more.
• The government has not made the PDS universal.
• There is no announcement of extending the relief measures from July onwards.

So, how much is the expenditure on food subsidy

• Economic Survey 2019-20 has called for reducing the fiscal burden posed by the food subsidy.
• The FCI finances are indeed in a mess with an outstanding loan of over Rs 2.5 lakh crore from the National Small Savings Fund (NSSF).
• But this is a result of mismanagement and off-budget accounting by the government to show a lower fiscal deficit.
• This comes at the cost of the sustainability of the FCI, which has already paid for the grain it has procured.
• Excluding the off-budget borrowings, the food subsidy in the last three years is between 0.53 and 0.59 per cent of GDP.
• Which is much less than what it was in the years preceding NFSA when it was between 0.8-0.85 per cent. Therefore, it is not entirely true that the food subsidy is increasing at an exponential pace.

Issues with replacing PDS with cash transfer

• Cash transfers cannot be a substitute for the provision of subsidised foodgrains.
• There are a higher number of fair price shops than bank branches.
• Although most people now have a bank account, many of these accounts are dormant.
• The transaction costs of withdrawing the cash are high.
• Withdrawing the PDS is also not favoured by state governments.

Road Ahead
With all its faults, PDS is still the backbone of our food security framework. There is scope for improvement, no doubt, but to replace it with cash transfer would be a premature move