Of wasted subsidy, and freebies for ration-card holders

Like millions of others, I am a middle-class ration-card holder. I heard on a pre-budget TV  talk-show the other day that 60 percent families rated above poverty line (APL) hold  ration-cards , while half the population below poverty line (BPL) has no access to the public distribution system (PDS). Maybe, the unmindful middle-class need to explain. It is not as if the middle-class card holders draw subsized rice, wheat and kerosene from fair-price shops. A ration-card, we need, for other reasons ; it is a widely  accepted document as proof-of-identity. We use it for opening a bank account, getting a phone or gas connection; for property registration, for school admission, job application , and, I guess, for filing nomination papers for contesting elections.

If govt. decides to  de-list ration-card from acceptable proof-of-identity/address documents , nearly 60 percent of ration-cards would disappear from the books. Apart from reducing food subsidy outlay, scrapping so many cards from PDS records would lesson the scope for diversion of PDS supplies to the black-market. Besides, such drastic reduction in ration-card holders  would impact questionable populist state govt. schemes benefiting the card-holders  In Tamilnadu the ruling DMK doles out to ration-card holders  free TV sets, gas-cylinders, and Pongal festival dhoti-saree. A sizeable part of such freebies reach  the card-holding middle-class that promptly converts it into cash.. A Karunandhi-TV, they say, could  fetch Rs. 1000 to  Rs.1,500 , and a free LPG cylinder is snapped up by  restaurants and pavement stalls. Chief minister M karunandhi is quoted in the media as saying his govt. would continue the dole-out ‘as long as poor people existed’  in the state.

Karnataka food and civil supplies minister, Ms Shobha Karandlaje, refers to a food mafia, of transport contractors and food-grains depot managers, engaged in blackmarketing PDS supplies. Ration-card holders in the state number 1.6 crore families, of whom only 98.5 lakh are certified as BPL families. Even among the certified lot there are bogus card-holders.

The centre spends on food subsidy Rs.82,000 crores, much  of which doesn’t reach its intended beneficiaries  – BPL families. An obvious, if expensive, solution is computerizing PDS network for  transparency. Given the scale of wasteful food-subsidy estimated by various agencies, you don’t need to be an analyst to say that  much of the digital technology investment made on  PDS can be recovered through effective subsidy  administration.

Apart from putting an IT system in place, regular evaluation and monitoring of the subsidy administration, in co-operation with state governments, require the kind of outlay that calls for budgetary allocations. A social sector evaluation budget may well be an imperative, if we need to plug gaping holes in PDS, to evaluate how food subsidy released by the centre is put to work on field, and to monitor the social impact of food-subsidy. An elaborate system of performance reporting needs to be factored in,  at all stages, from procurement of food grains till they reach end-users of subsidized items.

G V Krishnan

Once a newsman, now a ‘was’man retaining his touch with written words.  Have of late been bitten by the Photobug.

Image Source: [http://im.rediff.com/money/2010/sep/14food2.jpg]