Editorial Analysis 13 July

GOVERNANCE

The PDS impact on household expenditure

Source: The Hindu

Context

• The Public Distribution System (PDS) in India implements the National Food Security Act (NFSA), 2013 for ensuring food security to the population where about 75% of the rural and 50% of the urban population is covered under NFSA

Details

Overview of Public Distribution System (PDS):

• Objective:
  • Food security is maintained through selling affordable food grains.
• Coverage:
  • According to NFSA, 2013 75% population of rural area and 50% population of urban area is eligible for food security.
• Importance:
  • Reduces the consumption of foods high in energy density in the household

Historical Evolution

Structure and Operation

• Central Government:
  • Personally, supervises purchasing, warehousing, and distribution in large quantities using FCI.
• State Governments:
  • Perform the task of allocation of ration cards within the state, distribution and monitoring of Fair Price Shops (FPSs).
• Commodities:
  • Supplies wheat, rice, sugar, Kerosene and in some of the states, pulses, edible oils and spices.

Impact on Household Expenditure

• Social Security: Of immense importance in the provision of food security.
• Resource Allocation: Being able to spend on other nutrient rich items, households are able to have subsidized food grains.
• Consumption Diversification: Banalized through the analysis of the results obtained from the questionnaire developed by HCES in 2022-23 academic year.
• The survey is also known as the household consumption expenditure survey 2022-23.
• Scope: It covers details on cash value of food and other goods obtained through food aid from social assistance programmes.
• Objective: Provides educated guesses of household benefits, but possibly less comprehensive than those from administrative sources.
• Errors: The type of error that was investigated includes inclusion (ineligible households benefiting) and exclusion (eligible households not benefiting).
• Characteristics: Enables one to look at the households which receive benefits from the social programs.

Poverty Implications

• Discussion: It raises the question where to put the poverty line when it comes to free items’ consumption.
• In-Kind Transfers: Huge effect on the quality of life of the less-favoured families.
• Estimation: Should take into account expenditure as well as the total value of consumption.

Challenges

• Errors: Over- and under-identification in the lists of beneficiaries.
• Infrastructure: Lack of proper and proper storage and transport infrastructure.
• Leakages: Hunger and food aid being diverted since due to corruption and inefficiencies of the current government.
• Quality: This area of the project implementation is the worst aspect as most of the beneficiaries complained of substandard food quality delivered to them.
• Awareness: These include: lack of awareness and access especially in the rural areas.
• Administration: These inefficiencies are in the form of bureaucratic barriers to productivity.
• Technology: The lack of integration in the distribution process.
• Economics: Lack of funds that can hamper the enhancement of the quality of care.

Way Forward

• Targeting: Reduction of errors with the help of technical methods such as Aadhaar.
• Infrastructure: It also involves investment in storage and transport of the products hence a large capital investment.
• Leakages: They should ensure the put in place strict monitoring mechanisms.
• Quality: Set very high-quality control standards.
• Awareness: Carry out campaigns, and rationalize processes.
• Coordination: Improve inter-agency coordination.
• Technology: Biometric authentication, Real time tracking and Online payments should be incorporated.
• Funding: Devise strategies and plans such as increasing the budgetary provisions for the development of renewable energy and establish PDPs with the private sector.

Conclusion

• Solving PDS’ problems entails improvement of its technology, infrastructure, and governance and raising awareness to feed every vulnerable group in India.

Sources:

The Hindu

POLITY

Just a Bargaining Chip

Source: Indian Express

Context

• Special Category Status (SCS) in India was introduced in 1969 which provides higher plan assistance and tax concessions to states with socio-economic and locational disadvantages and is aiming for balanced regional development. It has evolved significantly over time.
  

Introduction

• In 1969, The concept was introduced by the Planning Commission during the Fourth Five-Year Plan.
• Purpose: Positive intervention for higher plan assistance to states with locational and socio-economic disadvantages.
• Objective: Balanced regional development.

Details

Initial and Current States with SCS:

• Initially status was given to Jammu & Kashmir, Assam, Nagaland.
• Later it was extended to all northeastern states, Uttarakhand, Himachal Pradesh.

Allocation and Financial Assistance

• Gadgil Formula: Higher weightage was given to population and economic deprivation.
• Plan Assistance: 30% of funds reserved for SCS.
• Finance Commission Role: Higher per capita transfers to SCS since the Fifth FC in 1969.
• Centrally Sponsored Schemes: 90% grants and 10% loans for SCS whereas 60-75% grants for other states.

Tax Concessions and Benefits

• Concessions like excise, customs duties, income tax and corporate tax benefits will be given to the SCS states.
• Planning Commission Role: Higher central plan assistance (now under NITI Aayog).

Political and Structural Changes

• Regional Parties Influence: these parties are pushing harder for SCS status as a political bargaining tool.
• 2014 Andhra Pradesh Announcement: Central assistance was promised but not the full SCS status.

Finance Commission Recommendations

• 14th FC did not talk about SCS but allocated higher funds to NE states, Uttarakhand and Himachal Pradesh.
• 15th FC has ignored SCS but assigned 10.5% share of devolved taxes to northeastern and hilly states.
• Weightage Factors: Ecology, area, 2011 Census population data.

Challenges and Controversies

• Updating Framework: Difficult to update SCS identification criteria in contemporary context.
• Political Use: Leaders often claim SCS status for political gains without proper assessment of net benefits.

Alternative Approaches

• Proper Utilization of Funds: Net benefits of SCS can be achieved through full utilization of existing funds and opportunities.
• Strategic Interventions: Special budgetary allocations and transparent packages from the Centre.

Conclusion

• The focus should shift from broad Special Category Status designations to strategic, well-targeted interventions that ensure inclusive development. Effective utilization of existing funds and transparent, specific packages from the Centre can achieve the desired socio-economic

Sources:

Indian Express