The Chhattisgarh model offers some key lessons on how to make the public distribution system deliver
Probably the only thing extraordinary about Manglu is that he is the perfect example of an ordinary tribal. The 60-year-old belongs to the Pahadi Korba tribe and lives in Govindpur village of Sarguja district of Chhattisgarh. He best represents what modern India calls a below poverty line (BPL) beneficiary of various government schemes. Manglu earns just about Rs. 200 a month and has a family of four to support. He is uneducated, unskilled and most of all, unaware that he is eligible for some relief from the government.
In the past, he would routinely rush to the village moneylender by the middle of the month to get a loan just to ward off hunger. The repayment of this loan would then account for the bulk of his next month’s income.
But lately things have changed. For the first time in his life, in August 2007, he was given a “red” card which meant that the Chhattisgarh government recognised him as one of the poorest of the poor in the state and promised to provide 35 kg of rice a month at Rs. 1 per kg under the Public Distribution System (PDS). Moreover, the PDS shop is now being run by his village’s Panchayat and is just walking distance from his hut.
Winds of Change
Manglu is not the only one who is hugely relieved at the manner in which the Raman Singh-led Bharatiya Janta Party (BJP) government in the state has taken up PDS reform since early 2007. Apart from increasing the coverage of PDS from the central government mandated figure of 42 percent (which translates to 19 lakh BPL households) to 74 percent (over 36 lakh households), what stands out in Chhattisgarh is the wide range of structural and legal reforms over the last six years to fix PDS.
At a time when many experts feel that PDS should be replaced with food coupons or direct cash transfers, the Chhattisgarh model offers some key lessons on making this system work. PDS was first started in urban India in the late 1960s in response to the critical food shortages. During the 1970s and 1980s, PDS was expanded to rural areas. Until 1992, PDS remained a general entitlement scheme for all citizens. However, with the growing poor population, it was progressively converted into a targeted programme restricted to the BPL population by 1997. But PDS has, over time, come to be severely criticised for widespread corruption and leakages.
The situation was not very different in Chhattisgarh when Raman Singh took over as Chief Minister in 2003.
“Any village I went to, the main complaint was about the non-availability of food grains in PDS shops. I found that more than 50 percent of the rice meant for the poor would actually never reach the beneficiaries,” says Singh.
“It was clear to me that PDS had to be reformed if the people are to get their due.”
Round One of Reforms
Raman Singh began reforming the public delivery of food grains in 2004 when he took away the ownership of all the PDS shops from private businessmen and gave it to local community-owned bodies like forest co-operatives employing tribals, gram panchayats (village councils) and women self-help groups.
In the past, as is the case even today in many other states, a businessman running the PDS shop in the village did not live in that village and had little incentive to keep the shop open on all days of the month. There was no way the local community could exercise any control over him since he was not accountable to the villagers.
“I asked the villagers whom did they trust for the delivery of food grains and these were the institutions they mentioned. And it made sense because these ensured collective responsibility,” says Singh.
However, the move did not go down well with the existing shop owners and it was only in September 2005 that the High Court gave its approval to the move by dismissing more than 400 petitions lodged against the government.
The second big reform came when Singh raised the commission to PDS shop owners from Rs. 8 per quintal to Rs. 35 per quintal. Singh and his advisors knew too well that a typical PDS shop runs into losses, and that’s what motivates people to cheat and re-send food grains to the rice millers who would then sell it back to the state government at the market rate.
The state government also decided to provide interest-free loans up to Rs. 75,000 to each PDS shop as seed capital to develop the shop and tide over immediate cash flow problems.
While the move had a salutary effect on the morale of the shopkeepers, Singh’s government had to shell out an extra Rs. 80 crore per year to subsidise the move.
The Trigger for Round Two
“Bulk of the pilferage used to happen before the grains reached the PDS shops. To plug the leakages, the first step was to take away the transportation of grains out of the private players’ [hands]. This was now done through the civil supplies corporation so as to ensure better accountability of the food grains,” says Singh. The government ensured that the grains reached every PDS shop by the 6th of each month. A Web-based application tracked the trucks dispatched as well as the amount of food grains that were being procured, transported, and received at different points of the journey. All this was placed on the Web and circulated through an SMS to whoever wished to be kept in the loop.
(This story appears in the 17 December, 2010 issue of Forbes India. To visit our Archives, click here.)