In my previous blog about the National Food Security Act, I had discussed whether cash transfers are an effective replacement for providing food through PDS. Here are a few related facts from recent research which provides fascinating data on the impact of PDS over the last 15 years.
I have culled out the points which quantify the impact of PDS in an attempt to answer the question: Is it worth keeping (and expanding) the admittedly leaky PDS system we have in place? I have combined ideas from various research, but almost all the data cited is the from the sources listed at the bottom of the post.
PDS impact – on calorie intake
- Calorie intake of the country was about 6% higher in 2009-10 than would have been without PDS. Cereal consumption is about 7% more than without PDS and non-cereal calories are also higher though not significantly.
- For the same income (inclusive of value of PDS food), those without any PDS access had about 10% lower calorie intake than those who did have PDS access (2009-10).
- The proportion of people NOT getting FAO-determined absolute minimum of 1800 calories was 40% in 2009-10, and would increase to over 50% in absence of PDS. The proportion below the recommended 2200 calories would go up from 70% to over 80%
- Just having PDS available locally, even if the household does not actually purchase PDS food, also increases calorie intake, possibly because of the assurance that PDS provides.
- Over the last 15 years (1994 to 2010) there has been a puzzling 15% decline in per capita calorie consumption despite economic growth. This reduction was only 8% for those who bought PDS cereals but over 20% for those with no PDS purchase at all. This is another way in which PDS is contributing to food security.
PDS impact – on poverty reduction
- 30% of the total reduction in poverty headcount ratio from 2005 to 2010 can be attributed purely to PDS, and the rest to increases in out of pocket MPCE (due to economic growth or other anti-poverty programs).
- The study also finds that for the period from 1993 to 2010, the PDS and MDM (Mid Day Meals) lifted more people out of poverty than income growth, particularly so in rural India. This is because population growth continued to erode the poverty reducing impact of GDP growth. (I have to admit that I couldn’t quite figure out the analysis behind this claim, but that’s for further reading…)
PDS versus cash-transfer
- The percentage increase in calorie intake due to PDS is in almost all cases is much larger than the cash value of PDS transfers as a percentage of MPCE (Monthly Per Capita Income) So if PDS were to be replaced with cash transfers, it would need to be replaced by 3.5 times the current value of PDS grain.
- Another way to think about this is that if you give people cash instead, they may not spend it on food. So we have to be clear whether the purpose of PDS is food/nutrition security or income enhancement. If the former, there is plenty of evidence besides this research (including the ones cited in my previous blog), that cash transfers cannot compensate for supply food items.
The recently passed National Food Security Act slightly expands the current PDS program. Although it is not perfect by any means, and doesn’t fix the already exiting 40% leakage, given the high impact of PDS on national food security, it seems a worthwhile way to spend ~1% of the country’s GDP.
- “In-Kind Food Transfers – I: Impact on Poverty”, Himanshu and Abhijit Sen, EPW, Nov 2013
- “In-Kind Food Transfers – II: Impact on Nutrition and Implications for Food Security and its Costs”, Himanshu and Abhijit Sen, EPW, Nov 2013