UPSC Key: REER, PM-ABHIM and 20 years of 2004 tsunami

• What is real effective exchange rate (REER)?

• What is the difference between REER and Nominal Effective Exchange Rate (NEER)?

• Read about the REER Index.

• How does the REER index reflect the value of the Indian rupee over time? 

• What is the strengthening and weakening of a currency?

• What are the implications of a REER value above 100 for India’s trade? 

• Why is monitoring the REER important and how does it influence India’s monetary policy?

• What factors have contributed to the divergence between the nominal exchange rate and the REER in recent times?

Key Takeaways:

• The real effective exchange rate (REER) index of the rupee touched a record 108.14 in November, strengthening by 4.5 per cent during this calendar year, according to the latest Reserve Bank of India (RBI) data.

• The REER measures the rupee’s value vis-à-vis not only the dollar, but other global currencies as well. In this case, it is a weighted average of the rupee’s exchange rate against a basket of 40 currencies of countries that account for about 88 per cent of India’s annual exports and imports. The REER also adjusts for inflation differentials between India and each of these trading partners.

• The rupee’s REER — an index similar to that for consumer prices or industrial production, with 2015-16 as the base year and currency weights derived from the shares of the individual countries in India’s total foreign trade — fell from 105.32 in January 2022 to 99.03 in April 2023. But since then, it has been on an appreciating trajectory, climbing to 107.20 in October and 108.14 in November this year.

• The main reason for the divergence — the rupee’s simultaneous weakening and strengthening — has to do with the dollar’s behaviour over the past three months, especially post Donald Trump’s victory in the US presidential elections on November 5.

• In other words, the rupee isn’t weakening as much as the dollar is strengthening — against all currencies. The dollar is strengthening because of Trump’s public pronouncements favouring universal tariff hikes (more so, on imports of Chinese goods), deficit-financed income tax cuts and mass deportations of illegal immigrants. 

• Assuming the rupee was “fairly” valued in 2015-16, when the REER was set to 100, any value above 100 signifies overvaluation and the exchange rate not falling enough to offset higher domestic inflation. The rupee is, to that extent, highly overvalued today, making imports into India cheaper and exports from the country less cost competitive. It probably also explains why the RBI is now allowing the rupee to fall — at least against the dollar.

Do You Know:

• The rate at which one can swap between currencies is the exchange rate. In other words, how many rupees would buy you a dollar or a euro.

• In such a market — also referred to as the currency market — each currency is like a commodity itself. The value of each currency relative to another currency is called the exchange rate. These values can stay the same over time but more often than not they keep changing.

Other Important Articles Covering the same topic:

📍Why the Rupee’s fall should not be cause for concern

📍India’s rupee continue to fall against US dollar: what determines exchange rate?

UPSC Prelims Practice Question Covering similar theme:

(1) With reference to the Indian economy, consider the following statements: (UPSC CSE 2022)

1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.

2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.

3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

(2) Consider the following statements regarding the REER Index:

1. The REER measures the rupee’s value vis-à-vis the dollar.

2. 2015-16 is the base year of REER index.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

 

THE CITY PAGE

HC to govt: Sign MoU with Centre irrespective of poll code to implement PM-ABHIM

Syllabus:

Preliminary Examination: Current events of national importance and polity

Mains Examination: General Studies-II: Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these, Government policies and interventions 

What’s the ongoing story: The Delhi High Court on Tuesday directed that the Aam Aadmi Party (AAP) government in the national capital needed to sign an MoU with the Ministry of Health and Family Welfare before January 5 for implementation of the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM), irrespective of imposition of Model Code of Conduct in the run-up to the Assembly elections. 

• What is Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM)?

• How can PM-ABHIM improve health infrastructure to benefit citizens in urban areas?

• What is the Model Code of Conduct (MCC)? What are the key provisions of the MCC?

• When does the Model Code of Conduct come into effect?

• What restrictions does the Model Code of Conduct impose?

• Read Article 324 of the Indian Constitution and learn about the Election Commission of India.

• Is the Model Code of Conduct legally binding?

• What are the issues associated with the MCC?

• How does the Model Code of Conduct affect the implementation of government schemes during election periods? 

Key Takeaways:

• PM-ABHIM is a Central government scheme that aims to strengthen public health infrastructure to respond to future pandemics and outbreaks.

• A bench of Justices Prathiba Singh and Manmeet Pritam Singh Arora reviewed a suo motu petition from 2017, along with other related petitions concerning health infrastructure. Over time, the court has issued several directions to the Delhi government to implement the Dr Sarin Committee report, which focuses on enhancing and streamlining the city’s health infrastructure.

• The Delhi government has chosen not to implement the scheme, although the All India Institute of Medical Sciences (AIIMS) AIIMS director, in a report dated December 10, stated that the scheme was being implemented only for diagnostic labs at the Indira Gandhi Hospital on a pilot basis. A division bench on December 12 directed that National Health Mission officials hold a meeting focused on implementing the PM-ABHIM Scheme in Delhi.

• “….This MoU shall be signed irrespective of a Model Code of Conduct, if any, as the same has been monitored by this court and is for the benefit of citizens of Delhi,” the court said .

Do You Know:

• The MCC of ECI is a set of guidelines issued to regulate political parties and candidates prior to elections. The rules range from issues related to speeches, polling day, polling booths, portfolios, the content of election manifestos, processions, and general conduct, so that free and fair elections are conducted.

• According to the Press Information Bureau, a version of the MCC was first introduced in the state assembly elections in Kerala in 1960. It was largely followed by all parties in the 1962 elections and continued to be followed in subsequent general elections.

• The MCC comes into force from the date the election schedule is announced until the date that results are out. The MCC contains eight provisions dealing with general conduct, meetings, processions, polling day, polling booths, observers, the party in power, and election manifestos.

Other Important Articles Covering the same topic:

📍Explained: Model Code of Conduct comes into effect; here’s what that means

UPSC Prelims Practice Question Covering similar theme:

(3) Which was the first state to implement the Model Code of Conduct (MCC)?

(a) Tamil Nadu

(b) Kerala

(c) Karnataka

(d) Andhra Pradesh

Previous year UPSC Mains Question Covering similar theme:

Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. (UPSC CSE 2022)

 

THE EDITORIAL PAGE

Knowledge as a shield 

Syllabus:

Preliminary Examination: Indian and World Geography-Physical, Social, Economic Geography of India and the World.

Mains Examination: General Studies-I, II, III:  Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclones.  Etc., Government policies and interventions,  Disaster and disaster management.

What’s the ongoing story: Syed Ata Hasnain writes– “Twenty years ago, on December 26, 2004, people rushed to their dictionaries. Google Search was not yet sufficiently popular. no one wanted to express ignorance of the word “tsunami”. 

• What is a tsunami, and how is it formed? 

• What are the key differences between a tsunami and regular ocean waves? 

• How does the Indian Ocean Tsunami Warning System (IOTWS) operate?

• Which regions of India are most vulnerable to tsunamis?

• What initiatives government has undertaken to address tsunami-related disaster management?

• What measures can be taken to reduce the impact of tsunamis on human life and infrastructure?

• Read about the  Indian Tsunami Early Warning Centre (ITEWC) and UNESCO-IOC framework.

• Organisations to look for: National Disaster Management Authority (NDMA) and INCOIS

• Map Work: Tsunami-prone areas in India and in the World

Key Takeaways:

• “As the oceans erupted with a 9.1 magnitude earthquake below the seabed off the coastline of Indonesia, more than 2,30,000 people lost their lives as a result of the wall of water that travelled to the Aceh area of Indonesia, to the resorts along the Thailand coast, the Andaman and Nicobar (A&N) Islands and then the Indian and Sri Lankan coastlines. The destruction of lives and livelihoods was enormous.”

• “The lack of any warning system or proper education about tsunamis was evident as people were caught by surprise when the high waves flooded coastlines around the Indian Ocean basin, making it one of the worst natural disasters in recent memory.”

• “The tsunami struck the A&N Islands within 20 minutes of the undersea earthquake and travelled 1,200 km to Chennai and Sri Lanka in just two hours. An early warning (EW) system could have warned the Indian and Sri Lankan coastlines of the approaching waves. At that time, India’s seismic monitoring network was limited, and the country relied heavily on international seismic data. This led to a delay in detecting the earthquake and issuing a tsunami warning.”

• “Along with the communication gaps, there were knowledge and information gaps as well. Little was known about how a tsunami manifests along a coastline…”

• “The Disaster Management Act of India was finally enacted a year after the tsunami. The government then established the Indian Tsunami Early Warning Centre (ITEWC) at (INCOIS), Hyderabad and it has been operational since October 2007. It comprises a real-time seismic monitoring and sea-level network.” 

Do You Know:

• Tsunami (a Japanese word that means “harbour wave”) is a series of giant ocean waves caused by earthquakes or volcanic eruptions under the ocean. 

• When an earthquake takes place under the ocean, a large chunk of the ocean floor can suddenly move upward or downward, leading to a sudden displacement of a large volume of water, thereby causing tsunami waves. A similar thing can happen when a volcano erupts in the ocean. The lava flowing out of the volcano displaces the water around it and that water can become a large wave.

• Tsunami waves can be hundreds of feet tall and can travel as fast as jet planes over deep waters while slowing down when reaching shallow waters. However, not all earthquakes or volcanic eruptions lead to tsunamis. The formation of a tsunami can depend on a host of factors, including the shape of the ocean floor, and the earthquake’s distance and direction

Other Important Articles Covering the same topic:

📍The day the sea took everything: Remembering the 2004 tsunami 20 years later

📍How the 2004 tsunami changed early warning systems

Previous year UPSC Mains Question Covering similar theme:

On December 2004, tsunami brought havoc on fourteen countries including India. Discuss the factors responsible for occurrence of tsunami and its effects on life and economy. In the light of guidelines of NDMA (2010) describe the mechanisms for preparedness to reduce the risk during such events. (UPSC CSE 2017)

Eliminate, demotivate 

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

What’s the ongoing story: The words, elimination and examination, are almost always intertwined, especially in India, where examinations are primarily elimination tests. The Right to Education Act, 2009, underlined a different approach.  

• What is the ‘no-detention policy’?

• Why was the ‘no-detention policy’ introduced?

• Education falls under which list in the Seventh Schedule of the Indian Constitution?

• Why has the Centre decided to scrap the no-detention policy in schools?

• How will the scrapping of the no-detention policy impact elementary education in India?

• What are the key highlights of the National Education Policy (NEP) 2020?

• What will be the impact of scrapping the no-detention policy on marginalized communities?

Key Takeaways:

• Right to Education Act, 2009 scraped out the humiliation of elimination from the body politic of examination. It came out with the No Detention Policy (NDP) for students up to Class VIII. That was innovative in a country where success is often measured in terms of examination scores.

• After 15 years, much of the radical approach has been diluted. From the next academic year, Class V and Class VIII students in government schools will be held back or eliminated according to their performance. The move is an extension of the amendment introduced by the Centre to the RTE in 2019, when it left the issue of detention to the discretion of state governments. 

• NDP was premised on the theory that detention led to school dropouts… In 2024, as the central government annuls the NDP, the dropout rate has already come down to 12.6 per cent, according to the latest data from UDISE. If the decreasing dropout rate stands in favour of NDP, a 2023 report by ASER, which showed that only a fourth of the enrolled students in the age group of 14 to 18 can fluently read a Class II-level text, vouches for the contrary.

• However, the RTE was not all about NDP. It was envisioned that the students who failed to pass the exams would be given “special care” by teachers to achieve the required level of learning. 

• According to the reports of the Ministry of Education, the government schools, both at the primary and elementary levels, are grappling with a shortage of 8.4 lakh teachers. Responding to a question in the Rajya Sabha in the just-concluded Winter Session, Minister of State in the Ministry of Education, Jayant Chowdhury, cited a few reasons for dropout, including students’ lack of interest and their inability to “cope up with studies”. 

Do You Know:

• Under Section 16 of the Right to Education Act, 2009, schools were prohibited from detaining students up to Class 8. With the possibility of students dropping out if they were detained, the no-detention policy was meant to ensure children received a minimum level of education at least. In the years since then, several States called for scrapping the no-detention policy.

• In 2016, the Central Advisory Board of Education passed a resolution calling for scrapping the policy on the grounds that students were no longer serious about their studies.

• The Act was then amended in 2019, allowing “appropriate government… to hold back a child in the fifth class or in the eighth class or in both classes” if the child fails in the re-examination. This left it to the States to decide on scrapping the no-detention policy.

Other Important Articles Covering the same topic:

📍In schools, the no-fail policy may have failed. What now?

📍Explained: The ‘no-detention’ policy for students of Classes 5 and 8, why it has been contentious

Previous year UPSC Prelims Question Covering similar theme:

(4) Which of the following provisions of the Constitution does India have a bearing on Education? (UPSC CSE 2012)

1. Directive Principles of State Policy

2. Rural and Urban Local Bodies

3. Fifth Schedule

4. Sixth Schedule

5. Seventh Schedule

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 3, 4 and 5 only

(c) 1, 2 and 5 only

(d) 1, 2, 3, 4 and 5

Previous year UPSC Mains Question Covering similar theme:

How have digital initiatives in India contributed to the functioning of the education system in the country? Elaborate on your answer. (UPSC CSE 2020)

The Hasina Factor

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-II: India and its neighbourhood- relations.

What’s the ongoing story: On Tuesday, the Muhammad Yunus-led government made a formal request of extradition to India, which has hosted Sheikh Hasina, the former prime minister of Bangladesh, since she was ousted by a student-led uprising.

• What is the history of India-Bangladesh relations?

• How has the change of regime in Bangladesh affected India-Bangladesh relations? 

• What is the significance of Bangladesh for India?

• What is the extradition treaty?

• What are the areas of cooperation between India and Bangladesh? 

• What challenges exist in India-Bangladesh ties?

• Map work: Location of Bangladesh and Indian states sharing boundaries with Bangladesh.

Key Takeaways:

• Delhi has so far declined to comment on the matter and Dhaka has reportedly affirmed that it will follow up on its request. The two countries have an extradition treaty but its clauses do not oblige Delhi to hand over Hasina. 

• The reasons for India to stand its ground while continuing to engage diplomatically with its eastern neighbour, though, go beyond the letter of the treaty. There is no doubt that Bangladesh’s standing as a democracy has suffered because of Hasina’s authoritarian ways and the country is in urgent need of political reform. However, that endeavour cannot be reduced to the persecution of one person. 

• It would be extremely unfortunate if India-Bangladesh ties are soured by Dhaka’s excessive focus on Hasina. The former prime minister had played an important role in taking the political and economic ties between the two countries to a new high. Her ouster seems to have been followed by a concerted pushback against several of Hasina’s initiatives, including jettisoning a project that would have made Bangladesh a transit point in providing internet services to India’s northeast. 

• The focus of Delhi’s diplomatic initiative should be to impress on Dhaka the arc of India-Bangladesh ties, pre and post-1971, the shared economic and cultural bonds between the people of the two countries, and their common concern in ensuring stability in the Subcontinent. 

• The imperative should be to underline that the ties are meant to serve the people of the two countries who share a more than 4,000 km-long border — not ideologies or personalities.

Do You Know:

• India and Bangladesh signed an extradition treaty in 2013, which was then amended in 2016 to ease and hasten the exchange of fugitives between the two countries.

• According to the treaty, India and Bangladesh are supposed to extradite individuals “who have been proceeded against… or have been charged with or have been found guilty of, or are wanted for… committing an extraditable offence” by a court of the requesting country.

• The treaty says that extradition may be refused if the offence is of “political nature”. But this is limited by the nature of offence. And the list of offences which cannot be deemed as “political” is rather long. These include murder; manslaughter or culpable homicide; assault; causing of an explosion; the use of a firearm with intent to resist or prevent arrest; damaging property with intent to endanger life; kidnapping or taking of a hostage; incitement to murder; and any other offence related to terrorism, etc.

• Article 8 lists out multiple grounds for refusal including cases in which an accusation has not been “made in good faith in the interests of justice” or in case of military offences which are not “an offence under the general criminal law”.

• India has the option of refusing Hasina’s extradition on the ground that the accusations made against her are not “in good faith in the interests of justice”. But this has the potential to adversely impact New Delhi’s relations with Dhaka’s new ruling dispensation.

Other Important Articles Covering the same topic:

📍UPSC Issue at a Glance | Bangladesh Crisis and India: 4 Key Questions You Must Know for Prelims and Mains

📍Knowledge nugget of the day: Interpol Red Notice

📍Could Hasina be extradited 

📍 Why India-Bangladesh extradition treaty does not imply that New Delhi must hand over Sheikh Hasina

Previous year UPSC Prelims/Mains Question Covering similar theme:

(5) With reference to river Teesta, consider the following statements: (UPSC CSE 2017)

1. The source of river Teesta is the same as that of Brahmaputra but it flows through Sikkim.

2. River Rangeet originates in Sikkim and it is a tributary of river Teesta.

3. River Teesta flows into Bay of Bengal on the border of India and Bangladesh.

Which of the statements given above is/are correct?

(a) 1 and 3 only

(b) 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

 

THE IDEAS PAGE

Why MSP matters

Syllabus:

Preliminary Examination: Economic and Social Development

Main Examination: General Studies-II, III: Government policies and interventions, Issues related to direct and indirect farm subsidies and minimum support prices

What’s the ongoing story: Jagjit Singh Dallewal writes– “First, it is important to understand what MSP is and when and why it was introduced. The term MSP stands for Minimum Support Price. The term itself reveals much about MSP because “minimum” means the lowest possible, “support” means assistance, and “price” refers to the price that is meant to provide minimal support.”

• What is the Minimum Support Price (MSP) and how is it decided?

• Who recommends MSP and who takes the final call?

• Which are the Crops Covered under MSP?

• Read about the Commission for Agricultural Costs & Prices (CACP)

• What are the demands of Farmers in the context of MSP in the recent scenario?

• Recommendation of Ashok Dalwai Committee and M. S. Swaminathan Committee on MSP-Key highlights

• Demand for legal guarantee for MSP-Pros and Cons

Key Takeaways:

• “This scheme started about 60 years ago when the country was unable to feed its growing population as a safety net for farmers. It promised that if their crops didn’t sell in the market, the government would buy them at least at this minimum price. However, at that time, the costs of production for the farmers were not factored in…”

• “Traders took advantage of this, and the farmers were exploited. Slowly, the cost of production increased, but the MSP remained far behind. This could be one of the reasons for the rise in farmer suicides.”

• “Now, let’s consider the argument by some that farmers in Punjab do not need MSP. The intellectual class and the Punjab government express concern about the depleting groundwater, but no concrete solutions have been offered. It is even cited that it takes 3,000 to 3,500 litres of water to produce just one kilogram of rice…”

• “Therefore, farmer unions have started demanding a guaranteed MSP law for 23 crops, hoping it will lead to the promotion of crop diversification. With guaranteed MSP for these 23 crops, farmers in Punjab and Haryana will be encouraged to grow crops that provide better profits than wheat and paddy. This will not only address the groundwater issue but also offer a permanent solution to the problem.”

• “In addition to the MSP guarantee law, promoting crop diversification will significantly reduce electricity consumption in agriculture, potentially cutting it by 60 per cent. This will allow for cheaper electricity for household consumers in Punjab. Furthermore, it will help save groundwater, which is crucial for everyone, including farmers, workers, officials, and citizens…”

• “Furthermore, guaranteeing MSP will help address the growing concerns about health hazards. Reports suggest that palm oil, commonly used in many food products, is processed using dangerous chemicals, which can lead to health issues. Therefore, guaranteeing MSP would not only protect the livelihood of farmers but also safeguard public health and the country’s wealth.”

Do You Know:

• During each cropping season, the government announces minimum support prices for 23 crops. Simply put, the MSP for a crop is the price at which the government is supposed to procure/buy that crop from farmers if the market price falls below it.

• As such, MSPs provide a floor for market prices, and ensure that farmers receive a certain “minimum” remuneration so that their costs of cultivation (and some profit) can be recovered.

• The MSPs serve one more policy purpose. Using them, the government incentivises the production of certain crops, thus ensuring that India does not run out of staple food grains.

• Crops covered by MSPs include:

* 7 types of cereals (paddy, wheat, maize, bajra, jowar, ragi and barley),
* 5 types of pulses (chana, arhar/tur, urad, moong and masur),
* 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower, nigerseed),
* 4 commercial crops (cotton, sugarcane, copra, raw jute)

Other Important Articles Covering the same topic:

📍UPSC Essentials: One word a day — Minimum Support Price (MSP)

📍How to make MSP work

Previous year UPSC Prelims/Mains Question Covering similar theme:

(6) Consider the following crops:

1. Paddy

2. Wheat

3. Coffee

4. Raw Jute

5. Sunflower

How many of the above crops have the Minimum Support Price (MSP)?

(a) 1, 2, 3, 4 and 5

(b) 1, 2, 3 and 5 only

(c) 1, 2 and 4 only

(d) 1, 2, 4 and 5 only

 

ECONOMY

How to put PDS items, free social transfers in new retail inflation index: MoSPI asks experts

Syllabus:

Preliminary Examination: Economic and Social Development- Social Sector Initiatives.

Mains Examination: General Studies-II, III: Government policies and interventions, Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security.

What’s the ongoing story: India’s statistical system is grappling with a unique issue — how to include food items under the public distribution system (PDS) and free social transfers in the proposed new Consumer Price Index (CPI) which forms the basis for calculation of retail inflation rate in the country. 

• Know about the Public Distribution System and the National Food Security Act, 2013. 

• What is the difference between food security and nutritional security?

• What is the Consumer Price Index (CPI)? 

• What is the difference between the Consumer Price Index and the Wholesale Price Index?

• What are the issues and challenges associated with the public distribution system?

• What steps should be taken to ensure food and nutritional security in India?

• What is the role of FCI in PDS?

Key Takeaways:

• The contention is how to change the price of PDS items from a positive value to zero or increase the prices of PDS items from zero to some positive value in an ongoing series, or rather the big question about whether the free PDS items be included in the CPI basket?

• For this, the Ministry of Statistics and Programme Implementation (MoSPI) has floated a discussion paper. MoSPI is in the process of revising the base of the CPI by updating weights and basket of CPI and introducing possible improvements in the methodology for CPI compilation. 

• The ministry said there are two challenges in the free distribution of PDS items in the context of CPI compilation: (1) Mid-series adjustments: How to address the reduction in the price of PDS items from a positive value to zero or increase in prices of PDS items from zero to some positive amount during an ongoing series? (2) Inclusion in CPI basket at the start of series: Should the free PDS items be included in the CPI basket?

• In the existing series, the weights of these items are pro-rata distributed on other items of the section (major cereals and products) within the state/UT in the state/UTs where free distribution scheme is implemented for all sections of the society (above poverty line (APL), below poverty line (BPL) and  Antyodaya Anna Yojana (AAY)).

• However, concerns were raised regarding this approach used to include the free distribution in the CPI compilation as this method does not accurately capture the impact of free food grain distribution on inflation.

• The ministry is currently undertaking the base revision exercise that proposes to revise the base year of CPI from 2012 to 2024. Weights and item basket will be derived from Household Consumption Expenditure Survey (HCES) 2022-23.

Do You Know:

• The Public Distribution System (PDS) emerged as a means of managing scarcity by distributing food grains at reasonable costs. It has evolved into an important component of the government’s food-economy management strategy over time. 

• PDS is supplemental in nature, and it is not designed to meet a household’s or a group’s whole requirement for any of the commodities supplied under it.

• PDS is run jointly by the central and state/UT governments. The Central Government, through the Food Corporation of India (FCI), has taken over the acquisition, storage, transportation, and bulk allotment of food grains to state governments. 

• The State Governments bear operational responsibility for allocation within the state, identifying eligible households, issuing Ration Cards, and supervising the operation of Fair Price Shops (FPSs), among other things.

• PDS is inefficient, and its operations are prohibitively expensive.

— The procurement/transportation ratio is too high, indicating ‘wasteful’ movements.

— Storage losses are extremely substantial.

— The lack of trustworthy and dynamic data on consumption and mobility patterns has always been a major barrier for planners in ensuring the effective delivery of important central welfare initiatives to the most disadvantaged members of our society.

— Other concerns include a lack of storage capacity with FCI, corruption and leaks, and quality issues.

Other Important Articles Covering the same topic:

📍 Public Distribution System must be reformed to fix leakage, invest in farming by Ashok Gulati and Raya Das

📍SMART PDS scheme: A bold initiative in digitisation by Sudhanshu Pandey

Previous year UPSC Prelims Question Covering similar theme:

(7) With reference to the provisions made under the National Food Security Act, 2013, consider the following statements: (UPSC CSE 2018)

1. The families coming under the category of ‘below poverty line (BPL)’ only are eligible to receive subsidised food grains.

2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.

3. Pregnant women and lactating mothers are entitled to a ‘take-home ration’ of 1600 calories per day during pregnancy and for six months thereafter.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only 

(d) 3 only

Previous year UPSC Mains Question Covering similar theme:

What are the reformative steps taken by the Government to make the food grain distribution system more effective? (UPSC CSE 2019)

 

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