Study projects Bihar as new PDS poster boy

Study projects Bihar as new PDS poster boy

Along with Chhattisgarh and Orissa, Bihar recorded highest improvement.

In 2011-12, the grain offtake from Food Corporation of India’s (FCI) godowns amounted to 51.4 million tonnes (mt) at an all-India level.
In 2011-12, the grain offtake from Food Corporation of India’s (FCI) godowns amounted to 51.4 million tonnes (mt) at an all-India level.

Bihar, along with Chhattisgarh and Orissa, have recorded the highest improvement among all states in the operations of their public distribution system (PDS), measured by the extent of grain leakages taking place.

Development economists Jean Dreze and Reetika Khera estimate that only 9.3 per cent of the foodgrains channeled through Chhattisgarh’s PDS network failed to reach the intended consumers in 2011-12. This is a substantial reduction relative to the 51.8 per cent leakage for 2004-05.

But even more dramatic is the improvement in Bihar, where the estimated PDS grain leakage fell from 90.9 per cent to 24.4 per cent between 2004-05 and 2011-12. In Orissa, too, this figure came down from 76.3 to 25 per cent.
Dreze and Khera — known for their espousal of the National Food Security Act (NFSA), MGNREGA and other such entitlement/welfare programmes — have calculated leakages by comparing household purchases from the PDS based on National Sample Survey (NSS) data with the offtake of grain from the Central pool.

Thus, in 2011-12, the grain offtake from Food Corporation of India’s (FCI) godowns amounted to 51.4 million tonnes (mt) at an all-India level. But the corresponding household purchases from the PDS, according to the NSS data (68th round) for the same year, was only 30 mt. The difference (21.4 mt) represented the grain diverted into the open market.
Using this methodology, the two economists have shown the total PDS grain leakage for India to have reduced from 54 per cent in 2004-05 (based on NSS 61th round data) to 41.7 per cent in 2011-12.


While most states — particularly the three earlier-mentioned ones — have registered lower grain leakages, some like Gujarat and Karnataka have witnessed quite the opposite.

“The most impressive, and not-so-known, story is of Bihar. It suggests how effective PDS reform is possible even in the worst-governed states,” say Dreze and Khera.
Their findings are, however, in variance with another study by Ashok Gulati and Shweta Saini of Indian Council for Research on International Economic Relations. The latter has estimated grain leakages at 46.7 per cent for all-India and 68.7 per cent in the case of Bihar. “Gulati and Saini have multiplied the average per capita PDS purchase from NSS data by the number of persons having ration cards. This is incorrect as the NSS average is over all households. So, you need to multiply the average purchase by the total population and not just those with ration cards,” claims Khera.

She backs this up with the findings of a 2013 survey of 2,400 households across four districts of Bihar: Katihar, Gopalganj, Nalanda and Gaya. This survey, by Rohini Somanathan and Himanshu Kumar of the Delhi School of Economics, reveals these households to have secured on an average 21.65 kg of PDS grain, as against their monthly entitlement of 25 kg.

“The preparation of a new list of ration cards covering 75 per cent of rural households and also issuing grain against deposit of bar-coded coupons for tracking purchases has led to improvements in Bihar’s PDS that nobody imagined five years ago. The state government has made strenuous efforts at implementing the NFSA, perhaps in anticipation of the assembly elections,” adds Khera.

Gulati disputes these claims, while noting that the grain leakage figure for Bihar based on the Dreze-Khera methodology works out to 75 per cent in 2009-10. “It means grain diversion has come down spectacularly in such a short period of time. If the PDS suddenly is seen as functioning so well, why is it that Nitish Kumar was the first chief minister to demand direct cash transfer in place of the existing system of physical grain procurement and distribution?” he says. Gulati was part of a high level committee for restructuring of FCI under Shanta Kumar.