1.4.2. Issues related with TPDS

1. Targeting: It has both conceptual and operational issues. Conceptual issues include the problems related with definition of eligibility for BPL status based on income poverty line does not cover a large number of vulnerable population. Under operational issues, Identification has been considered as the biggest challenge. Exclusion errors are so high that 63% of the poor household were not covered by the system (NSS-2007). A high Inclusion Error is also reported as APL were having unacceptably large amount of subsidised grains. NCAER reports about ‘ghost’ card holders. The Gram Panchayats and the Gram Sabhas are given responsibility of identification, but in states where these bodies are not functional, PDS dealers are seen performing the task and benefitting from it.

2. Leakages and diversion: Planning commission estimated that in 2004-05, more than half (54%) of the grain taken off for TPDS disappeared before they reached buyers in the fair price shop. NSSO 68th round reports that diversion of grains from PDS amounts to 46.7% in 2011-12.

3. Late and irregular arrival of grains in fair price shop: because of lack of awareness among poor households about the exact arrival of grains creates the problem of physical and economic access.

4. No variation in purchase across expenditure groups: A successful targeting is said when there is continuous decrease in quantity purchased from PDS with increase in expenditure class. Other than Kerala, Andhra Pradesh and Karnataka, no state has shown this trend.

5. TPDS has failed in transferring cereals from surplus to deficit regions: The policy of targeting and allocation of grain on the basis of income poverty line has worked against the earlier objective of price stabilisation through grain movements across the country. In pre- TPDS time, the areas where PDS offtake was high, were not only deficient in terms of cereal production but also tended to be the area of low cereal consumption.

6. Burden of subsidy has increased: Because of introduction of AAY and low prices for BPL, and exclusion of APL as they are not getting any incentive to buy from fair price shops (hence increasing the stock with FCI), the burden of subsidy has pushed the burden of subsidy further.