FOOD SECURITY Coupon fiasco

http://www.frontline.in/stories/20120113282710100.htm


*FOOD SECURITY*

*Coupon fiasco*

SAKINA DHORAJIWALA AND AASHISH GUPTA

*In Bihar, the coupon system to distribute PDS grain fails to prevent
corruption.*

MANISH KUMAR

*Surendra Kumar Paswan,PDS dealer for Singhaul village, in possession of
180 coupons for the months of April and May, which he managed to collect
from BPL households in February 2011.*

AT the Jamaluddin gram panchayat in Patna district on January 26, 2007,
Chief Minister Nitish Kumar launched an ambitious reform of the public
distribution system (PDS) in Bihar: a coupon system. He claimed that it
would "empower the poor and stop black-marketeering" and that it was "not a
simple coupon but a powerful weapon in the hands of the poor".

Under the coupon system, families below poverty line (BPL) receive 12 food
coupons every year, one for each month. They are distributed to cardholders
in May and June in public by panchayati raj and government functionaries.
Every month, the household exchanges one coupon for foodgrain (wheat and
rice) with any licensed PDS dealer in their district. The dealer deposits
the coupons with the administration and gets back the quantity of grain
distributed by him, and the cycle continues.

Nitish Kumar claimed that the coupon system would stop black-marketeering
because a dealer who sold grain in the open market would not get any
coupons, and therefore, no grain for the next month. Further, if BPL
households found that a dealer was not supplying grain or cheating them
(say, by charging more, giving less, or mixing stones with the grain), they
could go to another dealer. In other words, coupons would help "track" the
flow of grain and create competition among dealers.

However, a survey of the PDS conducted in 12 villages of Katihar and
Nalanda districts in May-June 2011 found that the perceived power of
coupons to combat corruption had been undermined severely. Sometimes
government officers were responsible for this, at other times the dealers
were, and quite often, they were hand in glove with each other. In village
after village, respondents hurled abuses at the dealers and complained that
the PDS was not working.

In Mansahi block of Katihar district, the survey showed, dealers delivered
between 21 and 23 kg of grain against coupons that entitled BPL households
to 25 kg of grain. Antyodaya households got only 31 kg out of their
entitled 35 kg. Dealers also overcharged them for the grain even though the
coupons mentioned the price and quantity clearly. Many of the respondents
said they were helpless and had to pay what the dealers demanded and take
whatever they gave. " Sab chor hain, paisa jyada lete hain aur anaaj kam
dete hain (They are all thieves, all of them overcharge and give less
grain)," said a respondent. The competition process obviously had its
limits.

In Barsoi block, also in Katihar, grain was distributed for just a few
months in a year. Residents still had coupons for the months gone by, with
the number ranging from a low of four to a high of 10. Some people had
received their PDS rations only twice in the preceding year. Others showed
us, often with anger and disgust, coupons dating back to 2007.

This does not appear to be the dealers' fault, though. Dealers in Barsoi
complained that they had not been given grain in exchange for the coupons
they had submitted. They were sure that grain had been siphoned off by
marketing officers and district managers who controlled the godowns. In
short, the "powerful weapon in the hands of the poor" had failed to
"empower" them.

In Nalanda district, the survey team found, dealers had found a simple way
of undermining the coupon system: they collected the coupons but did not
deliver grain. In several villages, dealers would take coupons for two
months and give grain for one.

One dealer had taken coupons for four months (February to May) in February
itself. When confronted with proof of this, he said he had done this under
pressure from the Block Marketing Officer. It turned out that they had sold
in the open market the grain meant for March. The option of going to a
dealer other than the designated one was not available in Nalanda: dealers
refused grain if someone who was not "allotted" to them turned up. Here
again, coupons had failed to create competition.

The survey found that dealers were involved actively in spreading
misinformation. In one village, the dealer had told BPL cardholders that
they were no longer entitled to grain and that it was for Antyodaya
households only. In another case, there was a rumour that Bihar was sending
kerosene to Japan for earthquake relief, making it scarce in ration shops:
"A nuclear plant has been destroyed there, so they need kerosene
desperately."

These tricks work partly because of Bihar's failure in other critical
domains, such as basic education: 84 per cent of the respondents were
illiterate. While people were often aware of the quantity they were
entitled to (perhaps because they were printed on the coupons in big size),
they were not clear about the prices they were supposed to pay (also
printed on the coupon, but in small size). Being illiterate and powerless,
they could not use their coupons to demand their full entitlements from the
dealers. Nor could they get the dealers' licences revoked easily.


Consequently, the overall survey findings from Bihar are depressing
(especially when contrasted with other survey States). The monthly PDS
purchase of BPL households in Bihar was on average just 11.2 kg compared
with the entitlement of 25 kg. Even this appears to be an improvement:
according to Reetika Khera's analysis of the National Sample Survey data,
90 per cent of the PDS grain was "diverted" in Bihar in 2004-05; it was
down to 75 per cent in 2009-10.

In at least one of the five blocks we visited (Mansahi in Katihar),
respondents felt that the system had improved. Their testimonies suggest
that Mansahi used to be much like the other sample blocks where nothing got
delivered for months. Now they get at least something every month, even if
it is not the full entitlement.

However, the general situation in Bihar is still abysmal, though not
irredeemably so. Indeed, Bihar would do well to learn from the experiences
of Chhattisgarh and Orissa, where the PDS has achieved a remarkable
turnaround in recent years, as well as from Tamil Nadu, Himachal Pradesh
and Andhra Pradesh where the PDS has been in good shape for a long time.
The survey, which was carried out in these States as well, showed a
well-functioning PDS there, with most BPL households getting their full
entitlements regularly.

Bihar's coupon system fails to prevent corruption for at least three
reasons. First, government officials can still divert grain from godowns
instead of delivering it to dealers. Secondly, dealers can sell grain in
the open market after forcibly collecting the coupons. Finally, it is easy
for dealers to give cardholders only a part of their entitlements while
charging more. Thus, the coupon system is not the "solution" it was
envisaged to be – at best, it is a safeguard, but it does not obviate the
need to do the homework that many States have done to streamline their PDS.

JITEN PASWAN

*ABDUL KUDDUS OF Barsoi, Katihar, shows the coupons for the months for
which grain was not delivered in the village. Each coupon corresponds to
one month of undelivered grain.*

The lessons for a State like Bihar from other performing States include
initiating de-privatisation of PDS shops, computerisation of records and
regular monitoring, establishing effective grievance redress mechanisms,
and reducing the prices of commodities provided through the PDS. Bihar
currently focusses on "targeting effectively", but despite considerable
efforts by the State, the BPL list is unreliable, with large exclusion
errors. These can be avoided only with a much expanded BPL list.

*There are also important lessons for policymakers and politicians gung-ho
about the ability of coupons, food stamps, smart cards or the unique
identification number (UID) to root out corruption.* In a context like
Bihar's, it is easy for a PDS dealer to take coupons while delivering
partial entitlements, or for that matter to get a thumb impression on a
biometric device without delivering any grain.

Bihar's current PDS based on coupons seems to show signs of life for a few
months in a year and in a few places – for the rest, it is as good as dead.
As mentioned earlier, it is easy to find respondents who have preserved
coupons from 2007, perhaps hoping that they will be able to get grain
against them or perhaps hoping that this will serve as evidence of a
non-functioning system. After all, Nalanda is the electoral constituency of
Nitish Kumar, who brought "good governance" to Bihar. However, the Chief
Minister seems to have given up on the PDS, going by the claims he is
making about cash transfers, which are similar to those he made about
coupons four years ago