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Is PDS worth Scrapping?

An interesting debate has been raised by the Jago Party about the feasibility and desirability of abolishing the current Public Distribution System. The key to implementation of the suggestion lies in appropriate e-Governance solutions being developed whether to retain the existing system or to introduce a new system. Since use of technology for public benefit is close to my heart, I am raising some of the issues associated with this suggestion... Naavi

It is reported that CVC Justice D P Wadhwa appointed by the Supreme Court has reported that PDS system is one of the most corrupt sectors in our economy. The report states that RS 28000/- crores spent  annually for PDS management is largely  misused.

It is also stated that according to the Economic Survey, the total amount the total amount of annual subsidy being given by Central  and  State governments is about Rs 4 lakh crore per annum while the Central Government alone spends Rs 1.8 lakh crores on this account

An interesting off shoot of this is that since it is estimated  that about 27% of India’s roughly 1.13 billion population are below the poverty line (BPL) i.e., about 310 million people or 70 million households. the subsidy of  Rs 400,000 crore spent on various schemes and subsidies is divided by 70 million households,  amounts to an expenditure of Rs 4750 per month per household.

An argument is therefore being presented that the poor would be better off if the subsidy is directly distributed in cash rather than through subsidized supply of grains which get diverted and replaced with substandard or adulterated stuff.

There appears to be some strength in the argument though giving a dole is ethically uncomfortable and has to be linked to some parameter of progress to be achieved by the recipient.

The key to the problem is in using an appropriate IT mechanism linked to the proposed UID, a micro finance disbursement system linked to a gradual phasing off of the dole. Such a "Dole" can be called more respectfully an "Unemployment Allowance" and withdrawn in time to encourage people finding their own sources of income over a period.



April 2, 2010

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