Some Thoughts on Direct Benefit Transfer for PDS
As
has been recommended by the High Level Committee for restructuring of FCI and
decided by the Government a Pilot Scheme for Direct Benefit Transfer for
foodgrains is to be launched for the Union Territories of Chandigarh, Puduchery
and Dadra & Nagar Haveli. Under this
Scheme, it is proposed to directly transfer the amount of food subsidy to the
bank accounts of eligible beneficiaries in order to enable them to procure
foodgrains directly from the market.
This scheme is indeed laudable in
its objective as it would give choice to the beneficiaries for buying
foodgrains and also take care of the leakages in the Food Supply Chain
Management System. However, the implication
of such a scheme would have an impact on the operations of the Food Corporation
of India as also for the Government’s objective to ensure remunerative prices
for farmers and making available foodgrains in all parts of the country at
prices fixed by the Government. Presence
of a player like Food Corporation of India in the procurement and management of
rice and wheat ensures that prices of rice and wheat in the Open Market are
also controlled. This is evident if one
looks at the rate of inflation for rice and wheat compared to the increase in
prices for pulses and oilseeds. Further,
procurement of almost 30% of the production of rice and wheat by FCI and State
Agencies for the Public Distribution System ensures that farmers get the
Minimum Support Price that is announced by the Government.
Issues
with Direct Benefit Transfer:
1. In case DBT was to be introduced and
beneficiaries were allowed to procure foodgrains from the Open Market there
would always be a risk of varying prices across the country and hence the
admissible food subsidy for DBT will vary from State to State. Thus a beneficiary in Punjab would be
eligible for a lesser quantum of DBT as against a beneficiary in Mizoram.
2. Further, the quantum of food subsidy to
be given as DBT would depend on the prevailing prices and in case foodgrain
prices spiral up on the pattern of the prices witnessed for pulses there would
be a risk of food subsidy going up in an uncontrolled manner. This would have huge impact on the finances
of the State.
3. Further, in the absence of procurement
operations by FCI or State Agencies there would be no mechanism to ensure that
farmers are getting the MSP for their produce.
This might lead to stress amongst farmers.
4. Another issue would be to ensure that
the amount transferred for food subsidy as DBT is actually utilised by the
beneficiaries for procuring foodgrains.
Without a fool proof mechanism it may result in utilisation of the funds
released on expenses other than foodgrains and the likelihood of hunger and
starvation cannot be ruled out.
In
view of the above, the following is suggested for effective implementation of
DBT scheme:-
i)
The key objectives for introduction of DBT
are to ensure an efficient Food Supply Chain Management System and to eliminate
leakages and corruption in the Public Distribution System. The prime reason for leakages is the price
differential between market price and the issue price of foodgrains under
various schemes. If the issue price of
foodgrains is made the same as the economic cost of FCI there would be no
incentive for diversion or leakages.
ii)
Thus FCI and State Agencies would continue
with its procurement, storage and movement operations. However, they would be required to sell the
foodgrains to the State Government at economic cost and thus the Corporation
would be forced to adopt efficient management techniques to ensure that FCI is
able to operate in the market as State Governments would be free to procure from
either FCI or from the open market.
iii)
The Government would fix the Central Issue
Price under various Schemes which will be close to the economic cost of FCI and
the difference between the Central Issue Price and the existing Issue Prices
will be transferred to the bank account of beneficiaries through Direct Benefit
Transfer. Thus, the beneficiaries will
be getting the necessary funds for buying foodgrains.
iv)
The State Government would make available the
foodgrains through network of Public Distribution System at the fixed issue
prices and citizens will pay the issue price which will be close to the
economic cost of FCI.
v)
Another alternative could be that FCI or
Agency of the State Government could undertake home delivery of foodgrains to
the beneficiaries. This can be done by
delivering foodgrains for six months at one go directly to the home of the
beneficiaries. This would require making
30 kg sealed bags @ 5 kg of foodgrains for six months. These bags can be sealed and branded so that
there is no issue with regard to quality and quantity of foodgrains being issued.
Depending on the size of the family of a beneficiary five or six 30 kg bags can
be delivered once every six months and verification of the same be obtained
through Aadhaar based biometric system. Payments can be made electronically through the Jan Dhan Debit cards. This would save the need for the beneficiary to make a trip to the Bank for withdrawing cash. Details of foodgrains issued along with the date and quantity can be made
available on a public website so that anyone can verify the actual distribution
of foodgrains.
Abhishek Singh
(Views are Personal)
