PDS(Public distribution system) is India’s flagship food security programme which sells subsidised food grains, including wheat, rice and sugar, and kerosene through fair price shops in states and union territories. DBT (Direct Benefit Transfer) is a scheme launched by Government of India to transfer the benefits and subsidies of various social welfare schemes directly in the bank account of the beneficiary. Both PDS system and DBT has benefits and suffers from some deficiencies. Now lets us see the merits and demerits of both the systems.
Merits of PDS:
- PDS provides food grains in a subsidized rate so this acts as a safeguard for beneficiaries against inflation and price fluctuation. In normal course the people will be forced to consume less of food and other items during inflationary situation affecting the productivity and efficiency of the household sector. The PDS system acts as a safeguard against such price fluctuations providing a cushion against decline in consumption.
- The farmers have the advantage of an assured demand for their produce since the government is procuring these produce for public distribution. Thus there is an assured market for the farmers produce.
- Under this mechanism there is an assured employment for workers, provides for the procurement of services by way of transporting the produce from procurement area to the point of distribution, and creating the necessary infrastructure in the form of the storage facilities, marketing centers and other associated services. This system is envisaged as a well fare system unlike a commercial attempt which is based on profit.
Demerits of PDS:
- The materials supplied under PDS are generally substandard and sometimes even not fit for human consumption.
- Materials supplied are under weighted and thus the consumers are cheated by providing reduced quantity of rice, sugar, wheat etc.
- The system involves large scale wastage of materials because of improper storage facilities. Lack of sheltered storage facilities leads to wastage of grains due to rain and other climatic conditions, rodents play a predominant role in the loss of grains, grains are infected by insects like cockroaches.
- Corruption in the procurement centers where factors like weight, the moisture content etc are conveniently ignored. This system happens to be unwieldy requiring a vast administrative work involving heavy expenditure to the Government and thus inherently an inefficient mechanism.
- Consumers have no choice in the purchase of food grains and other materials from PDS. They have to buy what is provided by the government.
Merits of DBT:
- Food grains provided in PDS are of low quality and only few food products are available in PDS shops. By direct cash transfer method beneficiaries can buy the food products of their choice in open market.
- PDS spends most of its revenues in holding and maintain the food grains; by adopting DBT system government can reduce the administrative cost.
- DBT will encourage more people to open bank accounts there by making proper monetary transaction without pilferage.
- Government can also make target specific approach under DBT.
Demerits of DBT:
- There is a chance that beneficiaries spend their money in unproductive way by way of gambling, drinking and other harmful ways, depriving the family members of their necessities and comforts. The general tendency of poor and uneducated is spending their income in irresponsible way affecting the general welfare of the family which is the co-principle of this system.
- India has a very weak banking infrastructure in rural areas. Not every rural household will have bank branches within 5km radius, so beneficiaries will face difficulty in accessing their cash benefits.
- Regular and assured marketing of their produce to the government agencies will become absent.
Government can introduce bar-coded ration cards for beneficiaries like done in Gujarat this will reduce duplicate ration cards.
Periodic checking in procurement points and selling points should be done to reduce corruption and leakages.
Government may establish more banking infrastructure facilities for rural people to inculcate banking habits to the rural household.