A staggering 28% of grains supplied through India’s Public Distribution System (PDS) never reach their intended beneficiaries and the economic loss to the exchequer is forecast at over ₹69,000 crore annually, a new report by the Indian Council for Research on International Economic Relations (ICRIER) has revealed. The analysis indicates that around 20 million tonnes of rice and wheat, meant to feed 814 million people under government programs, are either diverted to the open market or exported.
"This is an annual loss. Where is it going? Maybe it is being diverted to the open market or even for exports," said Ashok Gulati, Infosys Chair Professor at ICRIER and one of the authors of the policy brief, along with Raya Das and Ranjana Roy.
The report draws on data from the Household Consumption Expenditure Survey (HCES) and the Food Corporation of India’s (FCI) monthly offtake figures from August 2022 to July 2023. It highlights that despite improvements, the leakage of subsidised grains remains substantial, causing both financial and logistical strain.
The 20 million tonnes of annual leakage represent a significant improvement from the 46% wastage reported in 2011-12. Still, it underscores a pressing issue: a substantial portion of free or subsidized grains is siphoned off before reaching the needy. Efforts like the introduction of point-of-sale (POS) machines in ration shops in 2016 have helped reduce leakages but have not eradicated the problem.
States such as Arunachal Pradesh, Nagaland, and Gujarat report the highest rates of leakage, with the northeastern states facing challenges due to a lack of digitalization. Conversely, states like Bihar and West Bengal have shown marked improvements. Bihar reduced its leakage from 68.7% in 2011-12 to 19.2% in 2022-23, while West Bengal’s figures dropped from 69.4% to just 9% in the same period.
Uttar Pradesh, however, tops the list in absolute terms, with an estimated leakage rate of 33%, while Himachal Pradesh, Uttarakhand, and Maharashtra also face high rates of siphoning. The report attributes much of this diversion to grains being redirected to the open market.
The integration of Aadhaar with ration cards has improved distribution efficacy, but significant leakages persist. "Despite the implementation of digital tracking systems, leakage persists, highlighting the need for not only improved monitoring but also structural reforms to address PDS corruption," the report states.
India’s PDS, one of the largest in the world, plays a crucial role in providing subsidized grains to over 800 million people. Yet, the system’s inefficiencies continue to drain resources.
The report recommends structural reforms to enhance the PDS, such as better targeting of beneficiaries and transitioning to food stamps, voucher systems, or direct cash transfers. Such measures, it argues, could improve transparency, reduce inefficiencies, and ensure nutritional security for beneficiaries.
As India strives to address these systemic issues, experts stress the need for urgent action to plug the gaps in one of its most vital welfare programs.
(with ToI inputs)
"This is an annual loss. Where is it going? Maybe it is being diverted to the open market or even for exports," said Ashok Gulati, Infosys Chair Professor at ICRIER and one of the authors of the policy brief, along with Raya Das and Ranjana Roy.
The report draws on data from the Household Consumption Expenditure Survey (HCES) and the Food Corporation of India’s (FCI) monthly offtake figures from August 2022 to July 2023. It highlights that despite improvements, the leakage of subsidised grains remains substantial, causing both financial and logistical strain.
The 20 million tonnes of annual leakage represent a significant improvement from the 46% wastage reported in 2011-12. Still, it underscores a pressing issue: a substantial portion of free or subsidized grains is siphoned off before reaching the needy. Efforts like the introduction of point-of-sale (POS) machines in ration shops in 2016 have helped reduce leakages but have not eradicated the problem.
States such as Arunachal Pradesh, Nagaland, and Gujarat report the highest rates of leakage, with the northeastern states facing challenges due to a lack of digitalization. Conversely, states like Bihar and West Bengal have shown marked improvements. Bihar reduced its leakage from 68.7% in 2011-12 to 19.2% in 2022-23, while West Bengal’s figures dropped from 69.4% to just 9% in the same period.
Uttar Pradesh, however, tops the list in absolute terms, with an estimated leakage rate of 33%, while Himachal Pradesh, Uttarakhand, and Maharashtra also face high rates of siphoning. The report attributes much of this diversion to grains being redirected to the open market.
The integration of Aadhaar with ration cards has improved distribution efficacy, but significant leakages persist. "Despite the implementation of digital tracking systems, leakage persists, highlighting the need for not only improved monitoring but also structural reforms to address PDS corruption," the report states.
India’s PDS, one of the largest in the world, plays a crucial role in providing subsidized grains to over 800 million people. Yet, the system’s inefficiencies continue to drain resources.
The report recommends structural reforms to enhance the PDS, such as better targeting of beneficiaries and transitioning to food stamps, voucher systems, or direct cash transfers. Such measures, it argues, could improve transparency, reduce inefficiencies, and ensure nutritional security for beneficiaries.
As India strives to address these systemic issues, experts stress the need for urgent action to plug the gaps in one of its most vital welfare programs.
(with ToI inputs)
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