Eleventh Five Year Plan

Nutrition and Social Safety Net 139when one compares poor BPL cardholders with nonpoorBPL cardholders, or when comparing poor AAYcardholders with non-poor AAY cardholders.4.1.57 The TPDS in its current form as a anti-povertyprogramme clearly is not doing very well. Given thesefacts, a restructuring of the TPDS has been suggested.4.1.58 In this context, a recommendation of the HLCon Long Term Grain Policy (2000) was that instead ofthe current distinction between APL, BPL, andAntyodaya in terms of issue pricing for rice and wheat,there should be a single issue price for grain issued bythe FCI from its warehouses. This recommendation,sometimes identified with the return to universal PDSfrom TPDS adopted in 1997, has been criticized on anumber of grounds. First, that if the same price forBPL and APL households was charged, this would notbe financially viable for the BPL. If existing AAYand BPL cardholders were charged a higher price,there would be a diversion of benefits from therelatively poor to the relatively rich. Second, theremight be pressure to keep the uniform CIP low as highcommon price for BPL and APL would have adverseconsequences for the poor. On the other hand, a lowCIP would increase even further the fiscal subsidy.Third, any widening in the effective reach of PDS dueto its universalization would put unbearable pressuresfor the supply of grain into the PDS.4.1.59 It needs, however, to be noted that the HLChad not altogether ruled out the continuation TPDSin States where this might be the best option. Itsrecommendation was that there should be a single CIPas far as FCI is concerned for each grain fixed at FCI’sacquisition cost and that the existing subsidy beyondthis should be passed on to the States on the conditionthat this be used for food based schemes.4.1.60 The key issue here is whether or not the existingsubsidies that the HLC recommended shouldbe given to the States as cash or best targeted to theintended beneficiaries by means of the existing differentialpricing system with lowest prices for Antyodaya,slightly higher price for BPL, and higher still for APLcardholders. The view of the HLC was that althoughthis differential pricing system may work well for someStates, it was not necessarily the case in most othersand that removing the price differentials in PDS wouldenable FCI to concentrate on its proper role of pricestabilization rather than get involved, as it has, withthe complexities of an anti-poverty programme. Also,the HLC had pointed out that differential pricing ofthe same grain is an invitation to corruption and, therefore,to leakages and other deadweight losses—asalready shown by the PEO study cited above as well asmore recent evidence emerging from the NSSO. TheHLC had suggested that large savings were possible ifthe subsidy on FCI account could be used to expandother food-based schemes like ICDS, Mid Day Meals,and food entitlement in employment programmes.However, as already mentioned, the HLC left thischoice to the States allowing them to continue withthe existing TPDS if they so wish to do, by having theirown differential prices rather than differential price atthe FCI stage.4.1.61 As we have noted in the tables above, data availablefrom the 61st Round of NSS supports some ofthe concerns expressed by the HLC. NSS 61st Roundalso enables an assessment of how effectively PDS andother food based schemes such as MDM, ICDS,and Food for Work are able to reach the poor. Thisshows that: (i) only about 36% of the poor have eitherBPL or Antyodaya cards, and also that about 40% ofsuch cards are with the non-poor (Annexure 4.1.4);(ii) possession of appropriate cards (e.g. BPL orAntyodaya) rather than actual poverty status is thedeterminant of the benefits derived from targetedTPDS (Annexure 4.1.5); (iii) in more self-selectingschemes such as MDM, ICDS, and Food for Work, thetotal number of beneficiaries is similar to the numbercurrently benefiting from a BPL or AAY status andindeed these self-targeted schemes are somewhatbetter reaching the poor than the assignment of BPLcards (Annexure 4.1.6). Although not conclusive, thisobservation taken together suggests that the leakagesof physical grain could be reduced without greater fiscalcost and with somewhat better targeting towards the poorby redirecting subsidies currently in the PDS to betterfunding of the other schemes (i.e. the MDM, the ICDS).However, it was noted by the HLC that the incidentof leakages and the effectiveness of PDS targetingvaries considerably from State to State, suggesting that