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Economist urges PM to keep cash off food security Bill

By Sreelatha Menon
July 22, 2011 11:51 IST
MoneyA study on the Public Distribution System by a team led by National Advisory Council member and economist Jean Dreze found only 18 per cent of respondents in a survey, of 1,227 below-poverty line households over 106 villages in nine states, wanted cash in place of food under the  system.

The demand for cash transfers was highest in Bihar at 54 per cent, followed by 34 per cent in Uttar Pradesh and 22 per cent in Jharkhand, where the access to PDS foodgrain was found limited.

However, the study finds the purchase of rationed foodgrain was 84 per cent of the full sanctioned quota in the nine states surveyed.

Dreze has sent the findings to the Prime Minister, saying the study pointed to the need for a revival of the PDS.

And, urged him to ensure the proposed National Food Security Act includes the strongest possible safeguards against a hasty transition from food entitlements to cash transfers. His letter says widespread foodgrain leakage was not true anymore.

"This survey points to an impressive revival of the PDS across the country.

"In all the sample states, with the notable exception of Bihar, there have been major initiatives in the recent past to improve the PDS and these efforts are showing results.

"Most of the sample households were getting the bulk, if not the whole of their foodgrain entitlements ,under the PDS (up to 35 kg per month, at a nominal price).

days when up to half of the PDS grain was 'diverted' to the open market are gone."

The study found 67 per cent of respondents prefer foodgrain to cash transfer.

The demand for cash transfer was high in Bihar and to a large extent in Uttar Pradesh, where Dreze says the PDS has not been in good health.

He says in his letter that though  there were proposals by economists for cash transfers as an alternative to the PDS, the study shows a majority of households were opposed to it.

"We discussed this proposal with the respondents and found a large majority opposed it. The reluctance was particularly strong in areas with a well-functioning PDS, and among poorer households.

"Further, we felt the reasons they gave for opposing cash transfers were generally quite thoughtful and convincing."

The demand for cash was highest in Bihar, followed by Uttar Pradesh and Jharkhand. These were states where people were not able to get the full quota of foodgrain allotted to them.

The study says the purchase of grain by villagers in Bihar was the lowest at 45 per cent of the allotted quota, followed by Jharkhand at 71 per cent and Uttar Pradesh at 77 per cent.

Sreelatha Menon in New Delhi
Source: source