Agriculture Reference
In-Depth Information
State Responses to Nutritional
Deprivation
With spiraling food-price inflation and sluggish employment growth in both rural and
urban areas, the specter of hunger and nutritional deprivation looms large for millions
of households.
The government of India redesigned the Public Distribution System (PDS) in 1997 in
the form of a new Targeted Public Distribution System (TPDS), aimed to reduce subsi-
dies to the nonpoor and enhance those to the poor. Its salient features are summarized
in the following list, based on Bhalotra (2004), Kochar (2005), Svedberg (2010), Jha and
Ramaswami (2010), and Planning Commission (2008).
1. It distinguishes between households that fall below the poverty line (BPL house-
holds) and those above the official state-specific poverty lines (APL).
2. Food grains are purchased by the central government, through the Food
Corporation of India (FCI), at predetermined minimum support prices (MSP).
The government also determines a uniform central issue price at which food
grains are sold by FCI to state governments for distribution through the PDS.
3. The TPDS initially fixed the BPL household entitlements at 10 kg of food grains
per month and gradually raised them to 35 kg. Since 2000-2001, BPL households
are entitled to purchase rice from fair-price shops (FPS) for Rs 5.65 per kg and
wheat for Rs 4.15.
4. APL allocations varied across states and were calculated as the difference between
the state's allocation of food grains and BPL allotments.
5. As market prices rose more than subsidized prices, there were substantial
increases in BPL subsidies.
6. As of 2002, a new TPDS window was opened, the Antyodaya Anna Yojana (AAY),
under which the poorest of the poor are given the option to buy food at even more
subsidized prices. The prices for AAY households are Rs 3 per kg of rice and Rs 2
per kg of wheat, respectively (Svedberg, 2010).
(a) Real Income Transfers
The intent and normative underpinnings of public food distribution to the poor are
clear; but what are the effects on the ground? By far the most comprehensive analysis is
Svedberg (2010). His findings are summarized next.
Although the BPL and AAY cardholders are allowed to buy 35 kg of subsidized grains
per month, the actual purchase is just 14.7 kg in rural areas and 17.4 kg in urban areas.
According to the NSSO 2004-2005 survey, only 37.6% of the rural households below
the poverty line have BPL cards; the corresponding figure is 25.7% for urban areas.
 
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