One-third of government grains are not reaching the poor, where do 20 million tons of wheat and rice go?

New Delhi: About one-third of the food grains sent by the government are not reaching the poor. A paper released by an economic think tank has revealed that about 28 per cent of grains supplied by the Food Corporation of India and state governments never reach the intended beneficiaries. This is estimated to cause an economic loss of more than Rs 69,000 crore to the government exchequer. Also, immediate reforms have been demanded in this system. Monthly offtake data of Household Consumption Expenditure Survey (HCES) and FCI from August 2022 to July 2023 has been analyzed. The paper estimates that 20 million tonnes of rice and wheat fail to reach their intended beneficiaries. Professor Ashok Gulati, chair of Infosys at ICRIER, said that this is an annual loss. Where is this going? Perhaps it is being sent to the open market or for export.

Burden of Rs 69 thousand crore on government treasury

This report states that the leakage of 20 million tonnes of rice and wheat is a huge financial burden. Considering the economic cost of wheat and rice that year, the burden on the exchequer would be Rs 69,108 crore. Although this figure represents a significant improvement from the 46% leakage recorded in 2011–12, it still indicates that a large portion of the free/subsidized grains are not reaching the intended beneficiaries.

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Northeast tops in PDS leakage

The letter says that it referred to the 2015 report of a government-appointed panel, which was shelved. It also said that the introduction of point of sale (POS) machines in fair price shops (ration shops) in 2016 has helped bridge some of the gap, but leakages are still considerable. It said Arunachal Pradesh and Nagaland are the top three states in the Northeast in terms of PDS leakage, followed by Gujarat.
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Lack of digitization has been considered one of the major reasons for high leakages in the North-Eastern states. The paper says Bihar and West Bengal have achieved significant reduction in PDS leakage over the last decade. In Bihar it declined from 68.7% in 2011-12 to only 19.2% in 2022-23. In West Bengal it decreased from 69.4% to 9%.

How much leakage in which state?

According to the paper, PDS leakage in Uttar Pradesh is estimated at 33%. The state tops the list in terms of total quantity of grains leaked. The paper states that siphoning rates are very high in Himachal Pradesh, Uttarakhand and Maharashtra. In this, the grain is often sent back to the open market. The paper said that linking beneficiaries’ ration cards with Aadhaar for PDS has increased the effectiveness of distribution, but leakages in PDS still remain a matter of concern.

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Leakage despite digital tracking system

“Despite the implementation of digital tracking systems, leakages continue, necessitating not only better monitoring but also structural reforms to address PDS corruption,” according to the paper. It called for major reforms in the PDS system. This includes improving the accuracy of beneficiary targeting and exploring changes to the food stamp or voucher system and direct cash transfers.

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This can increase transparency, reduce inefficiencies and ensure nutritional security. India operates one of the largest PDS in the world. This is to provide free benefits including rice and wheat to about 81.4 crore people.