THE PDS IMPACT ON HOUSEHOLD EXPENDITURE

THE CONTEXT: Under the National Food Security Act (NFSA), 2013, the PDS provides subsidized food grains to up to 75% of the rural and 50% of the urban populations. This helps households’ free up resources for other essential expenditures, potentially diversifying their food consumption.

THE PARADOXES:

  • Impact of PDS on Household Expenditure Diversification: The issue is whether the subsidized grains provided through the public distribution system enable families to devote additional resources to other nutritious food items like vegetables, dairy products, legumes, eggs, and meat. This shift towards a diet would play a vital role in enhancing the overall nutritional well-being of households.
  • Representativeness and Accuracy of HCES Data: The survey’s objective is not to provide precise estimates of the proportion of households receiving benefits under every scheme. There are concerns about inclusion and exclusion errors. One must carefully interpret the survey estimates and compare them with administrative data to understand the accurate coverage and impact of the PDS.
  • Imputation of Values for Free Items: The National Sample Survey Office (NSSO) has recently begun to assign a value to food and non-food items that households receive for free. This calculation helps determine two measures: the Monthly Per Capita Consumption Expenditure (MPCE) and the MPCE with imputation, which includes the value of complimentary items. The estimation uses market prices for items but not for discounted goods obtained through the Public Distribution System (PDS).
  • Implications for Poverty Measurement: There is a need to reconsider where the poverty line should be drawn, whether based on expenditure or total consumption value, including free items. In-kind social transfers, such as those provided by the PDS, have implications for the well-being of households at the bottom of the consumption or income distribution.
  • State-Level Variations and Policy Implications: Different states show varying impacts of social welfare programs on household consumption, requiring individualized analyses and policies. Understanding these differences is crucial for designing effective interventions to improve food security and reduce poverty.

THE WAY FORWARD:

  • Improving Targeting Mechanisms: Utilize Aadhaar-based identification and integrate various databases to identify eligible households accurately. This can reduce inclusion errors by ensuring that only those who meet the criteria receive benefits. States like Andhra Pradesh and Tamil Nadu have successfully implemented biometric authentication systems to reduce leakages and improve targeting accuracy.
  • Diversification of Food Items in PDS: Expand the PDS to include pulses, edible oils, and other nutrient-rich foods. This can help improve households’ overall nutritional intake. The Karnataka government has piloted the inclusion of millets and pulses in the PDS, which beneficiaries have received well.
  • Enhanced Monitoring and Evaluation: Conduct regular third-party audits and household surveys to monitor the distribution and consumption of PDS items. Implement GPS tracking to transport food grains to prevent diversion and ensure timely delivery.
  • Community Participation and Awareness: Conduct community-based awareness campaigns to educate beneficiaries about their rights and the process of reporting grievances. The “Social Audit” mechanism in Andhra Pradesh, where community members audit the PDS distribution, has significantly improved transparency and accountability.
  • Policy Reforms and Flexibility: Allow states more flexibility to adapt the PDS to local needs, including region-specific food items. Decentralization and flexibility in the PDS can lead to better customization and efficiency in addressing local needs.

THE CONCLUSION:

The Household Consumption Expenditure Survey (HCES) 2022-23 provides valuable insights into the impact of the PDS on household expenditure patterns. The imputation of the value of free food and non-food items reveals that in-kind social transfers significantly enhance the consumption value for poorer households, influencing discussions on poverty estimation.

UPSC PAST YEAR QUESTIONS:

Q.1 “The incidence and intensity of poverty are more important in determining poverty based on income alone”. In this context, analyse the latest United Nations Multidimensional Poverty Index Report. 2020

Q.2 There is a growing divergence in the relationship between poverty and hunger in India. The shrinking of social expenditure by the government is forcing the poor to spend more on non-food essential items, squeezing their food – budget. – Elucidate.2019

Q.3 What are the major challenges of the Public Distribution System (PDS) in India? How can it be made effective and transparent? 2022

MAINS PRACTICE QUESTION:

Q.1 Discuss the impact of the PDS on household consumption patterns and poverty alleviation, with reference to the findings from the Household Consumption Expenditure Survey (HCES) 2022-23.

SOURCE:

https://www.thehindu.com/opinion/op-ed/the-pds-impact-on-household-expenditure/article68397604.ece

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