1.3. Limitations of PDS In India

1. Limited benefits to poor from PDS: Rural poor have not benefited much from PDS and their dependence on the open market has been much higher than on PDS. Urban poor face the similar scenario. Since, there is residential requirements for ration cards, a large number of homeless people, migrants etc. are automatically left out of the food security.

2. Urban Bias: For quite a longer period of time, PDS remained limited mostly to urban areas. Although things have changed now and there has been expansion of PDS in rural areas but its effectiveness in terms of timely and adequate availability remains meager. Also, their meaningfulness in remote, inaccessible, backward areas remains under question.

3. The burden of food subsidy: After inclusion of NFSA-2013, the burden of food subsidy has become huge. Also, APL have no incentive to buy from PDS, so there has been increasing stock with FCI. Other than that the procurement prices have been rising continuously due to rich farmers’ lobby and issue prices are getting lower due to populist policies. All of this together are making the PDS unsustainable.

4. Inefficiencies in the operations of FCI: The economic cost of FCI food grains operation has been rising on account of increase in procurement prices and other costs (distribution cost, carrying cost, etc.) and also due to inefficiencies caused by highly centralised and bureaucratic mode of operations.

5. PDS results in Price increases: Due to large procurement of food grains every year by Government, the net quantities available in open market reduces. This leads to increase in Price. This dual market system i.e. PDS and Open market operates to the disadvantages of poor, especially those who are excluded from the food security system.

6. Leakages from PDS: The major part of leakage is due to diversion of food grains to the open markets because of widespread prevalence of corruption. Transport and diversion losses also takes place. There is problem of ghost beneficiaries as well.