ANALYSING THE REASONS FOR THE CONTINUED SUCCESS OF THE PUBLIC DISTRIBUTION SYSTEM IN TAMIL NADU, INDIA Adam

Bin Mohd Rafey, Leong Ji Keet, Ragupathi Tharun and Yong Wei Sheng Isaac Raffles Institution Mentor: A/P Rahul Mukherji, South Asian Studies Programme, NUS Teacher-Supervisor: Mr Yuen Kah Mun, Raffles Institution

ABSTRACT The Public Distribution System (PDS) in Tamil Nadu, India, has been lauded as one of the most successful PDSs in India. This study aimed to determine the reasons for Tamil Nadus continued success in implementing PDS . We sought to ascertain the reasons for the success through field surveys and by interviewing the general public, the consumers and the related authorities from rural villages in Tamil Nadu. It was discovered that strong political commitment, administrative efficiency and proper monitoring has led to the success of the PDS in Tamil Nadu.

INTRODUCTION Food security has been a perpetual problem in a large country like India and it is evident from several studies (Mooij, 1994; Nakkiran, 2004) that genuine food security within the Indian population depends upon a wide range of factors changes to cropping patterns, increasing population, purchasing power of the public, s welling prices, and a corrupt distribution system. While reduced availability of food grains and price increases impact all Indians in general, the poor are affected the most. Of all the intervention programmes launched over the years in India to protect t he vulnerable populations, the Public Distribution System (PDS) is notable and the most extensive, both in terms of size of population covered as well as government spending on subsidies. The PDS is a network through which food grains, sugar, kerosene and other essential commodities are provided at subsidised rates to the ration card 1 holders (Paul et al., 2006, pp. 50-52). The PDS outlets, also called Fair Price Shops (FPS) act as the distribution centres and are conveniently located in most cities and villages. Thus, PDS is a distribution system owned and controlled by authorities for the general public . A targeted PDS was implemented for several decades with the PDS serving selected sections of the community, but such targeting mechanisms are also prone to errors like the unjustified exclusion of the genuinely poor ( determined by various parameters such as land holding, literacy status and means of livelihood; people who meet these criteria are classified as Below Poverty Line ) and the unwarranted inclusion of the non -poor. To avoid such errors and to make the programme successful, food distribution has moved towards universal or near -universal access. This provides economies of scale, reduces transaction costs and eliminates administrative hassles involved in ascertaining the target group and making sure that the food reaches this group. It allows for better public provision because even the better -off groups with more political voice have a stake in ensuring it works well and generates greater stability in government plans for ensuring food production and procurement (Mooij, 1999, pp. 25-26). The state of Tamil Nadu has defined Below Poverty Line (BPL) in such an inclusive way that the vast majority of the population is included , making the scheme close to universal (Swaminathan, 2009) .
1

A ration card is a document issued by the state government, as per the PDS, for the purchase of essential commodities from PDS outlets (Fair Price Shops). (Indian Central Government, 2005)

Several studies suggest frequently that Tamil Nadu has been managing a fairly efficient PDS system (Mooij, 1999, pp. 25-26; Nakkiran, 2004; Venkatsubramanian, 2006 , pp. 266-293; World Bank, 2006, pp. xiii-xvi; Swaminathan, 2009 ). Hence this study aims to determine the reasons for Tamil Nadus continued success in maintaining the PDS , which could then be used to assist other state governments in replicating Tamil Nadus su ccess. It will assess the perceptions of the rural people and report both the merits and demerits of this system in Tamil Nadu. We will seek to ascertain the reasons for success by interviewing the general public, the consumers and the related authorities from rural villages in Tamil Nadu. The literature review section highlights the history of the PDS in India and Tamil Nadu , the influence of politics and its current situation . The results and discussion section explains the results of our field survey specifically undertaken for this study in India that particularly focused on the rural villages in Tamil Nadu.

LITERATURE REVIEW Public Distribution System in Tamil Nadu The Indian PDS has a long history, dating before Indian independence. Originally conceived as an instrument to achieve food price stabilis ation in a few urban centres, it gradually widened its reach, and evolved into a poverty alleviation program me where the poor could afford food and provisions, with the specific proclaime d task of providing food security to vulnerable households in both urban and rural area s (Mooij, 1999, pp. 25-26). The serious problems of food grain shortages in the whole of India during World Wars I and II, and in the 1960s, influenced the evolution of the PDS in India (Radhakrishna & Venkata Reddy, 2002 , pp. 201-220) as a major instrument for state governments to create safety nets for the poor and underprivileged who were unprotected against a rise in prices of essential co mmodities, especially rice, wheat, kerosene and sugar (Nakkiran, 2004). When the shortage of food supplies became more acute in Tamil Nadu in the beginning of the 1960s, the state government took steps to introduce rationing by issuing family ration cards for certain consumers and later extended it to statutory rationing which was introduced in Madras, Coimbatore and their corresponding belt areas. The government decided to adopt a universal PDS scheme where all families were made eligible for family cards irrespective of their income in 1967. The PDS is built on the following key parameters: adequate availability of food grains at affordable rates and easy access to PDS outlets (Paul et al., 2006) . The Government of Tamil Nadu claims that it attaches utmost importance and priority to the easy availability of the above -mentioned commodities , in addition to alleviating the distress caused to the weaker sections of society in obtaining such items at affordable prices (Government of Tamil Nadu, 2010, pp . 7-25). Nakkiran (2004) stated that Tamil Nadu had set a model in implementing the PDS as a universal system . With several studies targeted at PDS in India, Tamil Nadu is generally regarded as having one of the most successful PDSs in India (Paul et al., 2006, p.52) . Politics and PDS in Tamil Nadu After the Dravida Munnetra Kazhagam (DMK) took over the state of Tamil Nadu from the Congress Party in 1967, a group of party members broke off from the DMK to form the All India Anna Dravida Munnetra Kazhagam (AIADMK) Party in 1972. Since 1972, either one of these two Dravidian parties has held power in Tamil Nadu and has sought to establish a welfarist ideology as a major ingredient of social policy in Tamil Nadu u nder their rule (World

Bank, 2006, pp. xiii -xvi). The fact that no government except one had failed to complete its full term allowed for the effective implementation of reforms of the PDS much easier (Venkatsubramanian, 2006, pp. 266 -293). The defeat of the Congress in 1967 over food grain scarcity issues provoked the Dravidian parties into creating a social safety net for the citizens of the Tamil Nadu by adopting universal systems of public distribution for less privileged groups of people (Swaminathan, 2009) . Current state of the PDS in Tamil Nadu There are over 30,000 Fair Price Shops (FPS) in Tamil Nadu today, as c ompared to the approximately 20,000 in 1985. In urban areas, an FPS would have 800 -1000 cards and 500800 cards in rural areas , thus ensuring "economic and operational viability". There are over 19 million family cards in circulation today compared to 12 million in 1985. There is currently about 2.3 metric tons of warehouse space to store PDS foodstuffs. A system as large as the PDS requires a lot of monitorin g to reduce the theft of grain for sale on the black market. There are 600 officials who inspect 16 ,925 PDS shops every month. Electronic weighing machines and machine stitching of rice bags help ensure accuracy of the amount of food grains distributed (Government of Tamil Nadu, 2010, pp. 7 -25). The amount of manpower and money that is put into the constant upgrading and development of the PDS is a huge contributing factor to the effectiveness of the Tam il Nadu PDS. However, the PDS does face many problems, diversion of supplies being a major problem with wheat, rice, sugar and kerosene being diverted to the open market. In 1998 alone, 1/4 of wheat and sugar, and 1/3 of rice were diverted to the open mar ket. Fake ration cards pose another serious problem. Up to 13% of the ration cards that were being used between July 2001 and March 2003 were fake. Though the government has introduced measures to arrest the diversion of PDS foodstuffs, the amount seized i s insignificant, barely 0.025% of the total amount of rice distributed (Swaminathan, 2009) . Though the PDS in Tamil Nadu is effective, several problems are present and the measures taken against these problems may not be adequate.

METHODOLOGY Research Design A literature research was undertaken so that we have a better understanding of PDS in India, particularly in Tamil Nadu. We reviewed recent publications books, articles, policy statements, and government reports related to PDS that gave an insight into the history, the influence of politics, its current state, and the problems faced. The field survey consisting of interviews was specifically undertaken for this study in the state of Tamil Nadu, India , with a particular focus on rural areas in the district of Coimbatore, as it was one of the pioneer districts to h ave PDS introduced in the 1960s . Six randomly selected villages: Sulakkal, Senniyur, Sendrampalyam, Devarayapuram , Nallikavundanpalayam, Singanallur were selected for the study. Interviews were c onducted on 62 randomly selected households. The interviews were targeted at consumers at the FPS and the questionnaire for the interview was categorised into two main aspects satisfaction with the FPS services and FPS supplies. The questions included those such as the availability of commodities, the adequacy of commodities received, the quality of commodities received and the affordability of commodities received. Interviewees were also asked three open-ended questions about the benefits received, the problems observed within system and suggestions for improvement. To reflect the view of all the stakeho lders, people who are connected with the

PDS (village clerical officers, Panchayat Presidents 2 and FPS salesmen), either directly or indirectly, were also interviewed. Unstructured interviews were conducted with two Panchayat Presidents and four FPS salesmen representing the six villages. The village clerical officer gave us a good overview of the system and clarified some of our initial uncertainties about the system. Of the 62 consumers interviewed, 38 (61 %) were males and 24 (39 %) were females. The interviewees ranged from ages 15 to 89. The majority of the interviewees (53%) were of ages 31 to 50. However, it was interesting to note that there were customers who were below twenty years of age, as well as one man who was 89 years of age. Gender and age did not affect our analysis. A large part of the interviewees, about 28 (45%), did not receive any schooling and over 75% of our interviewees were limited to primary (Standard 6) or no education. However, it must also be noted that four interviewees (7%) had basic graduate degrees. Most of the interviewees, 28 (45%) were from families with four members with the exception of one family consisting of eight people, as it was a joint family. RESULTS AND DISCUSSION Almost all interviewees except one had a ration card and it was evident from our conversations with interviewees that many use the ration card as a form of identity as well as serving its original purpose of enabling citizens to receive provisions at subsidised prices . Hence it is not surprising to find such a high rate of ration card ownership among the general public with only one out of the 62 interviewees not having a ration card (it must be noted that this interviewee lost his ration card in a fire) . 97% of the interviewees used the PDS shops. A similar study conducted by Swaminathan (2009) across several districts showed that the PDS is indeed being used and still remains an important way of getting necessary supplies for the residents of Tamil Nadu in the villages. Our study in Coimbatore (not surveyed by Swaminathan) showed similar results as well. It is interesting to note that the two interviewees who did not use the FPSs were individuals who assigned proxies (usually their employees) and had let these proxies keep the rat ions. This points to a small portion of residents who might get more rations than they are entitled to, and thus some inequality in the PDS systems . This highlights a problem in the PDS systems the inefficiency of its administration. The government has h owever countered this problem by introducing different cards for individuals with different amounts of income/wealtha None card which entitles the user to no rations at all, but still is a form of an identity record, is given to the rich, and a Green card which entitles the user to all rations available at the shops is given to the poor (Government of Tamil Nadu, 2010, pp. 7 -25). From this it becomes evident that the ration cards are well -distributed and well -used among the rural public in Tamil Nadu. The majority of interviewees (82%) visit the FPS 1-3 times per month, indicating the high usage of PDS in a regular manner by most rural families due to the heavily subsidised prices. This was also observed in other studies (Paul et al., 2006; Swaminathan, 20 09). Though most interviewees visit the FPS 1-3 times a month, it must be noted that the number of interviewees who visit the FPS 4-5 times a month increases as the number of members in the family increases, indicating higher usage of t he PDS by larger families. The government has over-subsided the amount of rations given to those with larger families, thus those with smaller families could be marginalised (Swaminathan, 2009) . This overcompensation could be due to the government trying to solve the problem of how the same amount rations were given to every family, regardless of size.

Panchayats are groups of about five to six villages, and Panchayat Presidents are people appointed to look after social matters within a Panchayat.

Satisfaction with FPS Services and Supplies The Government of Tamil Nadu strives to ensure that no family in the state goes hungry, due to poverty or lack of access to food grains in the state. Therefore, a universal PDS has been implemented in the state and aims for universal food security. This is evident in our study as indicated in Figure 1a and 1b. With regard to satisfaction with the FPS services, about 70% of interviewees said that the weight of the provisions supplied is accurate. About the same percentage of interviewees said that supplies were readily available. Although interviewees were satisf ied with the availability of supplies at the FPS, they were not satisfied with the regularity of the shops openings. The majority of interviewees (90%) stated that prices of commodities were always displayed. The small group of interviewees who said that prices were not always displayed usually consisted of those who were unable to read. The system ensures easy access (distance from homes), adequate availability of food grains at affordable rates to all needy families. As to satisfaction with the FPS sup plies, there are varying opinions pertaining to the quality of provisions. This could be due to the fact that our interviewees came from different villages where the source of provisions varied; hence the quality of provisions would vary greatly from village to village. The satisfaction with the quantity of provisions, on the other hand, varied not with location, but with the number of members in a fam ily, despite the fact that the government has set rules as to how much each family receives, depending on t he number of members in each family (Mooij, 1999, pp. 25-26). Most interviewees (90%) were willing to pay more for provisions of better quality, which shows us that instead of focusing on lowering the prices of provisions, the government should focus on im proving the quality of provisions. The effect of income on affordability and availability The income level of each interviewee greatly affected his/her opinion as to whether provisions at the FPS were affordable (Figure 2a). This was an expected trend, a s there would definitely be more interviewees of high-income backgrounds who felt the provisions were affordable than those of low -income backgrounds. Still, a commendable 65% of interviewees from low-income backgrounds felt that the provisions were afford able which clearly indicates that prices are kept affordable for those of low -income backgrounds. Those of high-income groups felt that provisions were often available, while those of low -income groups thought otherwise (Figure 2b). This is possibly due to the fact that those of highincome groups assign proxies, and hence they themselves may not know if provisions were available or not. The effect of income on quality and quantity All interviewees of high-income groups (13% of total) were fully satisfied with the quality and quantity of provisions (Figure 3a and 3b), which is probably due to the fact that many do not consume the grain themselves, but rather, assign proxies or use it to feed animals. Those of low- and middle-income groups, however, consume the grain and hence know what the quality of the grain and the sufficiency of the amount given are like. This ties in neatly with the fact that 54 (87%) people would pay more for provisions of better quality, thus implying that the prices of the provisions are less important than the quality of the food.

Views of other stakeholders According to the FPS salesmen we interviewed, the scales used to weigh the grains and other foodstuffs used to be an old -fashioned balance scale, but n ow the equipment has been upgraded to an electronic scale. This does not only mean that weighing will be more accurate but also means that the salesman would not be able to cheat their customers of that foodstuff. The salesmen feel that their jobs could be carried out more efficiently if more salesmen were employed to work in FPS, particularly those operating part-time shops. The interviewed Panchayat Presidents felt that the presence of the PDS was a boon to most villagers of low-income backgrounds. Their continued support and monitoring of the system allows for constant upgrading and changes that benefit the rural p eople. This could be seen from the fact that sheltered waiting areas were constructe d outside the FPS for customers , as well as seating areas, in the event of the duration of a very long wait. Of all the suggestions for improvement to the PDS from interviewees, one that was of particular interest to us and could be considered by the government was that food grains could be procured at a local level; benefitting both the farmers as well as the government, who would be able to buy grains at a much more economical rate as opposed to the current practice of the government growing grain themselves or importing it from other countries. Though we were told many success stories of the PDS, we were eventually told about various malpractices within the system as well. The FPS salesmen admitted that the expected amount of provisions did not always reach them, possibly due to the diversion of provisions to the black market in the transport stage. Also, some FPS salesmen said that the grain transported to their respective FPSs varied over a long period of time, which may suggest that the government is not using sustainable sources of grain for the PDS.

CONCLUSION Our findings from the field survey confirm that the PDS in Tamil Nadu has been running fairly well. In the areas of satisfaction levels with FPS maintenance, a presence of democracy and a wellinformed public ensure that most stakeholders are contented. Firstly, we see that Universal PDS proves to work well for Tamil Nadu as opposed to a Targeted PDS. Secondly, we infer from interviews with Panchayat Presidents and FPS salesmen that the presence of good infrastructure and a good system of storage facilities for PDS in Tamil Nadu makes it a success. Adequate arrangements for transport and monitoring of goods supplied make it more efficient. Other poorer states lag behind in these aspects and are thus unable to replicate such success (Nakkiran, 2004). Our interviewees confirmed that s ufficient measures have been taken to ensure that they are satisfied with the services provided to them at the FPS and that the FPS salesmen carry out their jobs (such as maintaining hygiene in the shop and controlling the flow of customers) efficiently, as well as providing the correct amount of provisions to each customer. A presence of a democracy allows for widespread freedom of speech in Tamil Nadu, enabling citizens to voice out their concerns about the PDS and thereby allowing appropriate changes to be made to the system such that a large majority of consumers are satisfied with the PDS. This was fairly evident from the comments we received indicating that the salesmen and the government officers attend to their feedback. Thus it is clear that members of the public living in rural areas are aware of the current situation of the PDS in Tamil Nadu, and are hence able to offer their insights into the issue, as well as give constructive comments to the government. Political commitment has underpinned administrative efforts to implement PDS effectively but at the cost a staggering Rs 15.4 billion (S$446 million) in 2000-2001. The extremely low price of rice may prove to be an unbearable burden in the future as the Tamil Nadu Government

will not be able to keep prices so low for all cardholders in the future, and the government needs to form an "exit strategy" to reduce the fiscal cost of the PDS in the years to c ome. Currently, all political parties view the PDS only from the point of view of electoral politics. The government is unwilling to undertake necessary reform due to political pressure from opposition groups. Such reform would be detrimental to the ruling party's electoral fortunes. However, they also understand that any attempted reform in the PDS will be received negatively by the electorate and the opposition will seek to capitalise on it. Thus, there is no political will to undertake any sort of reform that will make the PDS fiscally sustainable. Thus it can be concluded that a strong political commitment coupled with administrative efficiency in translating political commitment into eventual success through proper monitoring (Venkatsubramanian, 2006, pp. 266-293) of the system has led to a success of the PDS in Tamil Nadu. ACKNOWLEDGEMENTS We would like to express our heartfelt gratitude to our mentor, A/P Rahul Mukherji for his invaluable time, expertise and constructive feedback, and our teacher-supervisor, Mr Yuen Kah Mun, for his commitment, constant guidance and support. We would also like to thank our interviewees, without whom this project would not have been possible, as well as the students and teachers of Shaanthi Matriculation School, Pollachi, who aided us in effectively communicating with interviewees. Our greatest thanks go to our parents and relatives, for their unwavering faith in us, and for supporting our tri p to India. REFERENCES Government of Tamil Nadu. (2010). Food and Consumer Protection: Policy Note (2010 2011). Chennai: Government of Tamil Nadu, pp. 7 -25. Indian Central Government, Initials. (2005). Apply for Ration Card - How do I. Retrieved from http://india.gov.in/howdo/howdoi.php?service=7 Ministry of Finance, Government of India. (2010). Economic Survey 2009-2010. Government of India. Mooij, J. (1994). Public Distribution as Safety Net: Who is Saved? Economic and Political Weekly , 29 (3), pp. 119-126. Mooij, J. (1999). Food Policy and the Indian State: The Public Distribution System in South India. Delhi: Oxford University Press, pp. 25-26. Mukherji, R. (April, 2010). A Tiger Despite the Chains: The State of Reform in India. Current History , 109 (726), pp. 144-50. Nakkiran, S. (2004). A Study on the Effectiveness of Public Distribution System. New Delhi: The Planning Commission, Government of India. Paul, S., Balakrishnan, S., Thampi, G. K., Sekhar, S., & Vivekananda, M. (2006). Who Benefits fom India's Public Services? Bangalore: Academic Foundation, pp. 50 -52. Radhakrishna, R., & Subbarao, K. (1997). India's Public Distribution System: A National and International Perspective. Washington, D.C.: The World Bank, pp. 1 -2.

Radhakrishna, R., & Venkata Reddy, K. (2002). Food Security and Nutrition: Vision 2020. In G. o. Planning Commission, Report of the Committee on India Vision 2020 . New Delhi: Academic Foundation, pp. 201 -220. Swaminathan, A. M. (2009). Food Security: Policy Options for Tamil Nadu. New Delhi: Academic Foundation. Tamil Nadu State Government. Public Distribution System (Item No.28). Tamil Nadu State Government. Venkatsubramanian, A. K. (2006). The Political Economy of the Public Distribution System in Tamil Nadu. In R. P. Studies, Chand, Vikram K . New Delhi: Sage Publications, pp. 266 -293. World Bank. (2006). Reforming public services in India: drawing lessons f rom success / a World Bank report. New Delhi; Thousand Oa ks, [Calif.]: Sage Publications, pp. xiii -xvi. APPENDIX

Figure 1a: Satisfaction with FPS Services

Figure 1b: Satisfaction with FPS Supplies

Figure 2a: Effect of income level on opinion of whether provisions are affordable

Figure 2b: Effect of income level on opinion of whether provisions are regularly available

Figure 3a: Effect of income level on the satisfaction with quality of FPS supplies

Figure 3b: Effect of income level on the satisfaction with quantity of FPS supplies