Moving Towards a New Public Distribution System

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PDS is the thing of the past, while future is DBT and Universal Basic Income

While Indians showcase their strengths at the World Economic Forum, Davos, the bigger problem that we need to address is that of avoiding the branding of India as a poor country.

The WEF poverty survey 2017-2018 put 60% of the Indian population below poverty, which is equal to the $ 1.21 per person per day. The Tendulkar committee has also mentioned a figure somewhat the same, and when we add the 10% gross inflation to the prices in 2009-2010, the figures touch Rs 2000/- per person per day.

Now, since Indian economy has had one of the most historic reforms, DeMo and GST implementation, it is time we choose to move towards a more meaningful distribution system .

There has been an argument where the community leaders and economists have suggested that India must move towards Universal Basic Income, and do away with all sorts of public distribution systems.

The PDS has been marred by 70% leakages, as has been found in the official surveys. The number of Indian poor, has though considerably reduced, there remains a greater role to be played by the governments today to combat the woes faced by Indian PDS.

The Indian PDS has also seen non-target delivery of benefits which also adds to the biggest leak, whereby several thousand of people remain in lurch of necessities.

In most cases the PDS suffers because the ability of a third quarter of Indian population to earn a basic sum to feed themselves is an illusory expectation which shall never materialise.

Moreover, the informal employment has its own flaws which need to be addressed, thus just a blunt provision of raw materials at supported prices will not feed the ever increasing population of people.

The Indian state with the impetus that it has been giving to Aadhar, and the linking of accounts, underway, the new systems that must be in place for supporting the downtrodden, are ready to implement.

The future of Indian PDS is Direct Transfer of Benefits, not the Distribution system . The DBT will offer a target, time bound delivery of support which will rid the administration of burdensome mapping, and reach, while the controlled prices may be transferred through the Aadhar itself.

The shift towards UBI with DBT is also called for because, the Indian economic system is now buoyant with new taxpayers, and increased revenues due to GST implementation.

While the actual 37% of the Indian population needs a monthly support of Rs 2000, per month, the expenditure that the government shall incur will be around 2.4 million per annum, which is far less than the PDS system which consumes 2.7 million (USD) per annum and gives a 30% delivery.

The announcement may be expected from the Finance Minister in the budget 2018, where the Indian investors gets a signal that the country has balanced credentials of a middle level income group.

 

 

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