PDS plagued by leakage, diversion of grains: World Bank

Last Updated: Wednesday, May 18, 2011 - 22:21

New Delhi: Contending that benefits of public
distribution system have been "limited" for the poor, the
World Bank on Wednesday suggested that the idea of cash transfers
instead of foodgrains can be considered in the long term.

It, however, insisted that the bank is not "taking a
position" on the issue of cash transfer, which has generated a
lot of debate. While the National Advisory Council is
reportedly opposed to the concept, some activists claim it
might ultimately bring private entities into the system.
Unveiling a report on performance of India`s anti-poverty
schemes, World Bank Lead Economist of Social Protection in
India John Blomquist said though the PDS absorbs one per cent
of GDP, it is plagued by leakage and diversion of grains.

"Only 41 per cent of the grain released by government
reached households, as per 2004-05 figures," he said citing
the study which used data from relevant ministries, National
Sample Survey and its own independent surveys.

The report recommends improving implementation of the
programme in short-term while maintaining that in the long
term, households can be given option of a cash transfer,
continuing food-based support for specific situation such as
in areas where access is an issue, for disaster relief and for
specific vulnerable groups.

It pointed to new initiatives like introduction of food
stamps or coupons in Bihar and community participation and
IT-based solutions in states like Tamil Nadu and Chhattisgarh.

To a question whether the Bank is suggesting scrapping of
the PDS system, Blomquist replied in the negative but talked
about how cash transfers are "fundamental pillar" of social
protection system in many countries.
Asked about impact of inflation on cash transfer, he said
a component of inflation adjustment will be needed to insulate
the system from such fluctuations.

He also said there is a potential for engaging private
sector in public-private participation mode for social
protection. He also said debate is open on whether to go for
targeted schemes or opt for universalisation.

On issue of corruption, he said leakages often occur due
to "irregularities" but there are also capacity constraints.

The report recommended overhauling existing targeting
mechanisms, including below poverty line (BPL) figure revision
and pointed to instances of "misclassification" of BPL.

It suggested cash-based social assistance for chronically
poor, connecting cash transfer to core education and health
services and addressing "neglect of urban social protection".

Blomquist said states should be given "greater flexibility
as one size does not fit all". They should get choice in
programme mix of centrally-supported schemes, he said.

The report suggested a formula of three core pillars --
social assistance (largely cash-based transfers), public works
(MNREGA and its expansion to urban areas) and basic social
security (package for those outside organised sector) along
with block grants for states to supplement them.


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First Published: Wednesday, May 18, 2011 - 22:21

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