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==Benefits of Food Stamps==
==Benefits of Food Stamps==
Food stamps is an ideal solution to counter few issues like
Food stamps is an ideal solution to counter few issues like
===Black marketing===
As a faire price shopkeeper earns barely anything from the sale. He gets only 35 paisa per kg of grain and 7 paisa per litre of kerosene. as the gains are so low that they tend to sell it in the open market and not to the actual beneficiaries.

====Reducing monopoly====
The ration shops are usually located in the urban areas and they are not always open and the ration card which an individual receives is only valid to a specific and not valid at other fair price shop due to which a monopolistic condition is created and individual’s cannot access any other faire price shops.


===Avoid wastage of food===
===Avoid wastage of food===
The Food Corporation of India (FCI) collects food grains from the farmers from all over the country and than distributes it to state government which than further distributes it to the fair price shops. It’s a very lengthy process and to add to the miseries the FCI does not have enough warehouses to store all the grains and hence there is immense wastage of food grains as it is kept in open eaten by rats, if procurement and sale happens in the open market than wastage would be drastically reduced.<ref>{{cite web|title=Public Distribution System in India|url=http://iimahd.academia.edu/ArnabSaha/Papers/349179/Public_Distribution_System_in_India|publisher=INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD|accessdate=5 October 2011}}</ref>
The Food Corporation of India (FCI) collects food grains from the farmers from all over the country and than distributes it to state government which than further distributes it to the fair price shops. It’s a very lengthy process and to add to the miseries the FCI does not have enough warehouses to store all the grains and hence there is immense wastage of food grains as it is kept in open eaten by rats, if procurement and sale happens in the open market than wastage would be drastically reduced.<ref>{{cite web|title=Public Distribution System in India|url=http://iimahd.academia.edu/ArnabSaha/Papers/349179/Public_Distribution_System_in_India|publisher=INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD|accessdate=5 October 2011}}</ref>

===Food security===
There is a huge population of India that still continues to be poor and it is the responsibility of the state to ensure that the poor gets atleast food to eat and food stamps seems to be is one of the easiest ways to achieve the goal of food security. There has been huge expenditure borne by the government every year to tackle the issue of food security however issues like corruption, rotting of food, transmission and distribution cost etc leads to its failure, food stamps if administered properly will definitely lead us to thee achievement of food security.

Food stamps would change the whole system and give purchasing power directly in the hands of the poor consumer. No separate system will have to be created like the fair price shops, FCI for procurement and distribution etc. Only the government will have to make payments to the grocery shops and ensure fair distribution of the food stamps to the needy.


===Drawbacks===
===Drawbacks===

==Abuse or misuse==

Individuals may encash the food stamps for money from the grocers and may end up buying liquor or anything which he is they are entitled for.
Reducing the value of subsidy
In a dynamic economy like India where inflation is of great concern to the public and the government and being developing in nature there are always chances of inflation increasing and its nature would not remain constant in the short run. Hence as quantities are not defined the targeted consumer may not get the indented benefit they are supposed to get.

==Forgery or fraud==

The government will have to take immense steps to ensure that duplicate food stamps are not in circulation in the market. As this would create a scene of chaos in the market because than the shopkeepers may not accept food stamps in fear of it not getting redeemed by the government.


==Distribution of food stamps==
==Distribution of food stamps==


The government may have to set up a complete system for the same or would have to put this responsibility on Post office, banks or such other institutions. In this process there could be leakages which are a matter of concern. Also there would be a burden which would come on the poor class who has to benefit from the same of going and collectinf the food stamps.<ref>{{cite web|title=Food Stamps: A Model for India|url=http://ccsindia.org/ccsindia/images/policy%20review-FoodStamps.pdf|publisher=CENTRE FOR CIVIL SOCIETY|accessdate=27 September 2011}}</ref>
The government may have to set up a complete system for the same or would have to put this responsibility on Post office, banks or such other institutions. In this process there could be leakages which are a matter of concern. Also there would be a burden which would come on the poor class who has to benefit from the same of going and collectinf the food stamps.<ref>{{cite web|title=Food Stamps: A Model for India|url=http://ccsindia.org/ccsindia/images/policy%20review-FoodStamps.pdf|publisher=CENTRE FOR CIVIL SOCIETY|accessdate=27 September 2011}}</ref>

===Microeconomic analysis of food stamps===

[[File:Pds diagram 1.png|frame|Panel 1 shows the effect of subsidy on consumption in the panel let goods under subsidy be represented by ‘E’ on the X-axis (all that is provided in the PDS) and all other goods outside the PDS by a good ‘K’ on the Y-axis. Let KL be the initial budget line. Let U0 and U1 be the two indifference curves, utility on U1 is higher than that on U0.
Panel 1 shows the effect of subsidy. The tangency point is Q on indifference curve U0. Subsidy acts like price reduction, changing the budget line from KL to KL’. The new point of consumption is R on indifference curve U1. The consumption pattern changes for both those covered under subsidy and for those which are not covered.
]]

[[File:Pds diagram 2.png|frame|Panel 1 shows the effect of food stamps on consumption the initial position Q on the indifference curve U0 is the same as it was in panel 1. The food stamp is like additional cash which the consumer receives to spend on a specific set of goods. The distance KK’ represents the amount of the gift, so that the consumer’s budget line shifts outward from KL to K’L’. But this increase in income can only be used on E. Thus the consumer cannot reach the dashed part of the budget line between K’ and K’’. Therefore the new budget line for the consumer is the kinked line KK’’L’. The new optimum is at S on U1. Food stamps will increase purchase of commodity E, whenever E has a positive income effect. So it simply appears that due to the stamps the consumers have special power with them.]]


==See also==
==See also==

Revision as of 21:55, 19 November 2011

Public Distribution System (PDS) is an Indian food security system. Established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments in India, it distributes subsidised food and non-food items to India's poor. Major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through a network of Public distribution shops (FPS) established in several states across the country. Food Corporation of India, a Government-owned corporation, distributes food grains to FPS throughout the country, which are managed by state governments.[1] As of date there are about 4.99 lakh Fair Price Shops (FPS) across India.[2]

In terms of both coverage and public expenditure, it is considered to be the most important food security network. However the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality. The average level of consumption of PDS grains in India is only 1 kg per person / month. The PDS has been criticised for its urban bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to much corruption in the process of extricating the poor from those who are less needy.

Overview

Both the central and state governments shared the responsibility of regulating the PDS. While the central government is responsible for procurement, storage, transportation, and bulk allocation of food grains, state governments hold the responsibility for distributing the same to the consumers through the established network of Fair Price Shops (FPSs). State governments are also responsible for operational responsibilities including allocation and identification of families below poverty line, issue of ration cards, supervision and monitoring the functioning of FPSs[clarification needed].[2]

Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month, while a household above the poverty line is entitled to 15 kg of foodgrain on a monthly basis.[3]

Fallouts of P.D.S System


1. Generally, the consumers get inferior food grains in ration shops.
2. Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of India) with inferior stock.
3. Many retail shopkeepers have large number of bogus cards to sell food grains in the open market.
4. Many FPS dealers resort to malpractice since they acquire little profit.
5. Despite the PDS, India accounts for over 400 million poor and hungry people. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poor.

Several schemes have augmented the number of people aided by PDS, but the number is still extremely low. Poor supervision of FPS and lack of accountability have spurred a number of middlemen who consume a good proportion of the stock meant for the poor. There is also no clarity as to which families should be included in the BPL list and which excluded. This results in the genuinely poor being excluded whilst the ineligible get several cards.

The stock assigned to a single family cannot be bought in instalments. This is one of the biggest barriers to the efficient functioning of PDS in India. Many BPL families are not able to acquire ration cards either because they are seasonal migrant workers or because they live in unauthorised colonies. A lot of families also mortgage their ration cards for money.


To improve the current system of the PDS, the following suggestions are furnished for:
1. Vigilance squad should be strengthened to detect corruption, which is an added expenditure for taxpayers.
2. Personnel-in-charge of the department should be chosen locally.
3. Margin of profit should be increased for honest business, in which case the market system is more apt anyway.
4. F.C.I. and other prominent agencies should provide quality food grains for distribution, which is a tall order for an agency that has no real incentive to do so.
5. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards, which is again an added expenditure and not fool proof.
6. The Civil supplies Corporation should open more Fair Price shops in rural areas.
7. The Fair Price dealers seldom display rate chart and quantity available in the block-boards in front of the shop. This should be enforced.

In aggregate, only about 42% of subsidised grains issued by the central pool reach the target group, according to a Planning Commission study released in March 2008.

Food stamps

Food stamps is an indirect financial support given to the needy and to the underprivileged by issue of coupons, vouchers, electronic card transfer etc. they can purchase commodities at any shop or outlet and would not have to purchase food from a particular shop as in the case of the PDS system in India. The state government would than pay back the grocers shop for the stamps they possess.This was the plan proposed by the Finance minister in his budget[4] but the United Progressive Alliance (UPA) government which came to power in 2004, it decided on a Common minimum programme (CPM) and one of the agenda was food and nutrition security. Under that the government had plans for strengthening the Public distribution System (PDS).[5] However the Finance minister P. Chidambaram in his budget speech went contrary to the idea proposed in the CPM and proposed the idea of the food stamp scheme.[6] and has proposed to try the scheme in few districts of India to know its viability.[7] ) In the CPM the government had propsed that if it is vaiable it would universalise the PDS but if the Food stamps would be introduced it would be a Targeted public distribution system and a group of about 40 economist have cautioned the NAC headed by Sonia Gandhi against the food security bill as it would put an additional burden on the ex-chequer and instead have advised to go ahead and experiment with food stamps and other alternative methods and did point out the flaws in PDS . These set of 40 economist hail from different institutes like Delhi School of Economics, Indian Statistical Institute, Jawaharlal Nehru University, Indira Gandhi Institute of Development Research, Centre for Development Studies, Harvard, MIT, Columbia, Princeton, London School of Economics, University of British Columbia, University of California and University of Warwick.[8]

Benefits of Food Stamps

Food stamps is an ideal solution to counter few issues like

Avoid wastage of food

The Food Corporation of India (FCI) collects food grains from the farmers from all over the country and than distributes it to state government which than further distributes it to the fair price shops. It’s a very lengthy process and to add to the miseries the FCI does not have enough warehouses to store all the grains and hence there is immense wastage of food grains as it is kept in open eaten by rats, if procurement and sale happens in the open market than wastage would be drastically reduced.[9]

Drawbacks

Distribution of food stamps

The government may have to set up a complete system for the same or would have to put this responsibility on Post office, banks or such other institutions. In this process there could be leakages which are a matter of concern. Also there would be a burden which would come on the poor class who has to benefit from the same of going and collectinf the food stamps.[10]

See also

References

  1. ^ "5.17 The Public Distribution System" (PDF). Budget of India (2000-2001). 2000.
  2. ^ a b "Public Distribution System". Ministry of Consumer Affairs, Food and Public Distribution (India).
  3. ^ "UP foodgrain scam trail leads to Nepal, Bangladesh". The Times of India. 11 December 2010.
  4. ^ "Public Distribution System in India". INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD. Retrieved 5 October 2011.
  5. ^ [pmindia.nic.in/cmp.pdf "NATIONAL COMMON MINIMUM PROGRAMME OF THE GOVERNMENT OF INDIA"] (PDF). Retrieved 27 September 2011. {{cite web}}: Check |url= value (help)
  6. ^ [(http://www.hindu.com/2004/08/03/stories/2004080300331000.htm) "Targeted food stamps"]. The Hindu. Retrieved 27 September 2011. {{cite web}}: Check |url= value (help)
  7. ^ "Food Stamps: A Model for India" (PDF). CENTRE FOR CIVIL SOCIETY. Retrieved 27 September 2011.
  8. ^ "Allow alternatives to PDS, say experts". The Indian Express. Retrieved 27 September 2011.
  9. ^ "Public Distribution System in India". INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD. Retrieved 5 October 2011.
  10. ^ "Food Stamps: A Model for India" (PDF). CENTRE FOR CIVIL SOCIETY. Retrieved 27 September 2011.

External links

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