Dreze’s letter to PM: PDS is reviving; why hasty shift to cash?

His survey shows poor prefer food, not cash, in well-functioning PDS areas

GN Bureau | July 22, 2011

A group of research scholars and student volunteers led by development economist and former NAC member Jean Dreze has written a letter to the prime minister asserting that its survey shows that the public distribution system (PDS) is witnessing “an impressive revival” across the country.
“The days when up to half of the PDS grain was “diverted” to the open market are gone”, it says.

The group surveyed more than 106 randomly selected villages in nine states – Andhra Pradesh, Orissa, Chhattisgarh, Himachal Pradesh, Tamil Nadu, Rajasthan, Uttar Pradesh, Jharkhand and Bihar – to arrive at their conclusion.

The letter points out that all the states, except Bihar, took major initiatives to improve PDS and that these efforts are showing results. “We also found that the PDS had become a lifeline for millions of rural households. A well-functioning PDS virtually guarantees that there is always food in the house”, it goes on to add, advocating that there is a good case for “near-universal PDS”.

The survey also looked at the option of cash transfer in the draft food security bill and says in the areas where PDS system is functioning well and among the poor households a majority of people opposed cash transfer, in place of food. The reasons varied: poor banking facility, misuse of money, possibility of spike in prices by the traders etc.

Only in Bihar and parts of UP where PDS is not working people showed substantial interest in cash transfer.

Therefore, the letter appeals to the prime minister “to ensure that the National Food Security Act includes the strongest possible safeguards against a hasty transition from food entitlements to cash transfers”.



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