The Public Distribution System (PDS) evolved as a system of management of scarcity and for distribution of food grains at affordable prices. But this system could not achieve its desired objectives because of widespread corruption. So to remove the loopholes of this system, government re-launched the Targeted Public Distribution System (TPDS) in June, 1997 with focus on the poor. Under the TPDS, States were required to formulate and implement foolproof arrangements for the identification of the poor for delivery of food grains. This programme is run by the ministry of consumer affairs, Govt. of India.
With a view to reduce the burden of food subsidy and targeting it better to the really needy people, the Government of India adopted the Targeted Public Distribution System (TPDS) from June 1, 1997. TPDS aims at providing food grains to people below the poverty line at highly subsidised prices from the PDS and food grains to people above the poverty line at much higher prices than the poverty line Thus, the TPDS adopted by the Government of India maintains the universal character of the PDS but adds a special focus on the people below the poverty line (known as BPL).
The key features of TPDS as adopted by the Government of India are as follows:
1. Targeting. The most distinctive feature of the TPDS in relation to the previous policy is the introduction of targeting by dividing the entire population into Below Poverty Line (BPL) and Above Poverty Line (APL) categories, based on the poverty line defined by the Planning Commission. The maximum income level for the population to be covered under BPL was kept at Rs. 15,000 per annum. The TDPS provides wheat at Rs. 2/kg., rice Rs. 3/kg and millets at the Rs. 1/kg to the BPL families.
2.Dual (multiple) prices. The second distinguishing feature is that the PDS now has dual central issue prices: (i) Prices for BPL consumers and (ii) Prices for APL consumers. A third price, introduced in 2001, is for beneficiaries of the Antyodaya Anna Yojana (AAY).
3. Centre-State Control. A third important feature of the TPDS is that it has changed Centre-State responsibilities with respect to entitlements and allocations to the PDS. PDS was and is designed and managed by State governments, and State governments differ with respect to entitlements, the commodities offered, the retail price (State issue price) and so on. In the past, the State governments demanded a certain allocation from the Central pool and based on certain factors, most importantly, past utilisation and the requirements of statutory rationing, the Central government allocated grain and other commodities to States for their public distribution systems.
Total number of families covered under BPL and AAY is presently 6.52 crore.
Review of TPDS
TPDS has been criticised on the following grounds:
1. Targeting. The major criticism of TPDS is that it has led to the large-scale exclusion of genuinely needy persons from the PDS. In this context, Madhura Swarninathan discusses two types of issues - (i) conceptual issues, and (ii) operational issues. The first concern 'the definition of the poor' and the second concern 'identification of poor in practice.' Both these issues are very important and crucial to the working of the TPDS as its very success hinges on the inclusion of genuinely needy persons under the programme.
(i) Conceptual issues: (Definition of poor). The main issue here is how appropriate is the definition of poor applied in the TPDS. The current definition of eligibility for BPL status is based on the official poverty line as estimated by the Planning Commission in 1993-94 (adjusted for population levels in 2000). If we use the income poverty line, then the target group comprised 37 per cent of the rural population and 32 per cent of the urban population in 1993-94. However, the official poverty line represents a very low level of absolute expenditure.
(ii) Operational issues: (Identification in practice.) The fact of the matter is that the whole process of identification of BPL families in many States has been carried out in a very arbitrary manner. As a result, there have been large errors of misclassification with genuinely deserving households excluded and some affluent households included in the BPL category.
2. Leakages and diversion.
3. Late and irregular arrival of grains in fair price shops.
4. No variation in purchase across expenditure groups.
5. Decline in off take and the question of viability of fair price shops.
6. TPDS has failed in transferring cereals from surplus to deficit regions.
7. Burden of subsidy has increased.
But despite having a lot of loopholes, the TPDS is supporting a lot of BPL families in this costly environment.