CHAPTER FOUR: PUBLIC DISTRIBUTION SYSTEM IN KERALA: COMPARISON OF PRE AND POST-TPDS PHASES (An Inter-District Analysis)

Transcription

1 CHAPTER FOUR: PUBLIC DISTRIBUTION SYSTEM IN KERALA: CHAPTER 4 COMPARISON OF PRE AND POST-TPDS PHASES (An Inter-District Analysis) 4.1 Introduction Kerala has historically been a food-deficit State and the PDS had played an instrumental role in ensuring the physical access of food grains in the State. The issue of availability of food grains is extremely important for the State considering that the chronic food deficit status of the State. Kerala PDS was widely lauded for its universal coverage, rural biased-ness, adequate physical access made possible by the wide network of fair price shops, high and progressive utilization of the System and high entitlements adequate enough to fulfill the consumption requirements of the people. The previous chapter analysed the performance of the PDS in Kerala, in terms of these very parameters. It was reasonably established through the analysis that the need for targeting PDS was not relevant in the State ot-kerala, where the poor were already reaping the benefits of System much more than their economically well off counterparts. Further, the utilization of the rural households was more than their urban counterparts from the PDS during the universal regime. The present chapter studies the utilization of PDS across districts. An interdistrict analysis would help us in better undersjanding the region-wise differences in the utilization of the PDS over the years. The objective of the study being the contribution of PDSt TPDS in the food security, it becomes important to analyse the contribution of TPDS in meeting the food grain requirements of the population in each district. Further, given that TPDS was introduced to improve the utilization of the subsidized grains by the targeted population, it needs to be analyzed if there is equitous incidence of the PDS across districts. It also needs to be seen whether the food insecure districts in terms of the economic access criterion (larger number of poorer households) and physical access criterion (per capita production and per district food grain deficit) are faring better than the others, after the introduction of TPDS. The chapt~r also addresses the issues of utilization of PDS across districts (in terms of allotment and offtake), the role of POS in meeting rice requirements 132

2 of the population across districts, impact of targeting (in terms of per capita offtake and share in the total offtake, Pre-TPDS and Post-TPDS, income gain due to TPDS) and factors determining ration consumption in Kerala. 4.1 Food grain offtake from PDS in Kerala ( to ) Offtake of rice from the PDS. Table 4.1 A and 8 shows the total offtake of rice from the ration shops. The district-wise offtake figures are available from the 1990s onwards. Given that the drastic decline in the off-take from the PDS has started only from the beginning of the current decade, an analysis of the inter-district variation in the offtake for periods post the early 90s would reveal a comparative picture of the Pre-TPDS and the Post-TPDS regime. Table 4.1 A Total rice offtake from PDS in Kerala ( to '96-97) 000' MT Dist OFF % OFF % ALL OFF % OFF TVM KLM PTA ALP KTM K EKM TSR PKO MLP KKD WYO KNR KZO TOTAL cv OFF - Offtake, % ALL- Offtake as a % of allotment. % OFF % OFF Source; Civil Supplies Department, Government of Kerala The total offtake of rice from the PDS was around lakh MT in which fell to about 11 lakhs MT in the mid 1990s. This further increased to 16 lakh MT in , followed by a consistent decline in the offtake in the subsequent periods. In , the total offtake from the PDS stood at just 4.89 lakh MT, merely a quarter of it was in the earlier periods. 133

3 Table 4.1 B Total offtake of rice from PDS in Kerala ('00-01 to '05-06)000' MT T OFF %ALL OFF % OFF % OFF % OFF % TVM KLLM PTM APZA KTYM IDKI ERNK TRSR PLKD MLPM KZKD WYND KNNR KSRD TOTAL cv Source: Same as above. Allotment figures are not available for & The offtake as a percentage of allotment decreased from around 97 percent in to percent in The proportion was the lowest in at percent. The allocation and offtake of food grains by the BPL households, AA Y households and the APL households are given in Appendix Tables 4.1, 4.3 and 4.4. The allotment and offtake of rice by the BPL households in the State is shown in Fig 4.1. ALLOTMENT AND OFFTAKE OF RICE IN KERALA:BPLHOUSEHOLDS r r- o BPL ALLOTMENT 000' MT 300 c-- f-- I-- I--- f BPL OFFTAKE '-- f-- f-- I f-- f-- f-- f '-- - ' YEAR Fig 4.1 Allotment and Offtake of rice by BPL Households in Kerala 134

4 The BPL offtake declined from 9.45 lakh MT in to 4.41 lakh MT in and further to 3.22 lakh MT in the year Though it slightly increased to 3.99 lakh MT in , the increase was not sustained in the subsequent years when it declined to 3.74 lakh MT and 2.65 lakh MT respectively. The decline in the BPL offtake has been consistent during the last three years. The quantum of allotment has shown vide variation. The allotment of BPL rice increased from 4.21 lakh MT in to 5.52 lakh MT in the next two years. The allotment declined in the next two years to 3.71 lakh MT in and 3.34 lakh MT in One of the factors governing the allotment of food grains to the State is the amount of offtake in the given State. The consistently declining offtake of BPL rice may be one reason for reduction in the amount of BPL rice allotted to the State. Given the variation in the allotment figures, the offtake as a proportion of allotment shows vide variation in these years. Infact, as shown by-appendix Table 4.1, though the offtake as a proportion of allotment exceeded 100 percent during the year, the reason lie not in the higher utilization from the System but the reduced allotment with the offtake figures actually showing a decrease from the previous year. The State Government, taking into account the hastening decline of the PDS decided to provide additional subsidy to all the BPL cardholders in the State from February 2006 onwards by reducing the retail issue price of ration rice from Rs. 6.20/ Kg to Rs. 3/ Kg (the same as that of the issue price of AA Y) The reduced price did have an impact on the offtake from the PDS, as shown in Appendix Table 4.2 The offtake from the ration shops are generally higher during August-September, the month of Onam Festival. However with the provision of additional subsidy, the offtake during February-March greatly exceeded the offtakes in the earlier months. The picture is different when we observe the utilization of PDS by the AA Y households, shown in the Figure 4.2 below (Appendix Table 4.3). With the exception of , when the offtake as a proportion of allotment was only 75 percent, in all the subsequent years, the offtake exceeded 95 percent of the total allotment. 135

5 ALLOTMENT & OFFTAKE OF RICE IN KERALA: AA Y HOUSEHOLDS OOO' MT [] AA Y ALLOTMENT AAY OFFTAKE 50 o 2001'()2 2002'() YEAR Fig 4.2 Allotment and Offtake by AA Y households in Kerala The significantly-reduced offtake from the PDS following the introduction of the TPDS is owing to the reduced utilization of the System by the BPL households and the almost complete withdrawal of the APL households, as shown in Figure 4.3 (also see Appendix Table 4.4 ). Surprisingly, despite the extremely low offtake from the System, there is no much change in the amount of APL rice allotted to the State. Infact, it has increased from lakh MT in to lakh MT in , after which the quantum of allotment has remained stable. This is in sharp contrast to the reduced allotment to the BPL households. During to , the offtake by the APL households was almost negligible, though an improvement can be seen in the offtake figures in the last two years. ALLOTMENT AND OFFTAKE OF RICE IN KERALA: APL HOUSEHOLDS [] APL ALLOTMENT APL OFFTAKE Fig 4.3 Allotment and Offtake by APL households in Kerala l36

6 The quantum of the offtake in a given district would depend on the population of the district and a comparatively higher offtake may not necessarily mean high offtake per person. Therefore the analysis of total offtake does not reveal the complete picture. The district-wise per capita rice offtake given in Appendix Table 4.5 and depicted in Fig 4.4 shows the magnitude of decline in the utilization of PDS (rice) in Kerala. In the early 90s, not much variation is seen amongst the districts in Kerala as regards the per capita rice offtake, with average per capita offtake being around 60 Kgs. However in the next two years, the per capita offtake of rice declined for the state as a whole. This could have been following the rise in issue prices of grains distributed from the PDS. The districts which saw a continuous decline in the per capita rice offtake even prior to targeting include Thiruvananthapuram, Ernakulam, Kollam and Pathanamthitta districts. On the other hand in Malappuram, Kannur and Wayanad districts, the offtake per capita increased after till Thus the decline in the offtake that happened in the mid 90s (after which it increased in the latter years) was not consistent for all the districts. The values of coefficient of variation can be seen to be very high in the mid 90s implying high inter-district variation in the per capita offtake. Per capita rice offtake in Kerala /1 ~40 I Year Fig 4.4 Per capita rice offtake in Kerala 137

7 l Chapter IV However, Post-TPDS and the price hiking starting from , the per capita rice offtake declined drastically in all the districts of the State. In , the per capita offtake of rice in the state fell to around 9 Kgs. In the two subsequent years, the per capita registered slight improvements and by stood at 18 Kgs. The values of the CV can be seen decreasing from the to , following which it marginally increased. The decline in CV in per capita offtake post the TPDS is owing to the consistent decline in the offtake of all districts. However in the last two years considered above, the per capita offtake can be seen improving in Wayanad, followed by Alapuzha and Idukki districts. The following emerges from the above analysis of allotment and offtake of rice from the PDS in the Post-TPDS phase: First, the introduction of TPDS did not immediately decline the offtake from the PDS as the offtake levels in the initial years of TPDS are comparable to the earlier years. Infact the same increased from the mid 90s. Second, though the APL prices were raised during , BPL prices remained unchanged and much below the average market retail price which was around Rs Kg during the period. The decline in offtake that began in is consequent to the increase in the prices of both the APL 1 and the BPL issue prices 2 and with the issue of same quality rice (Common) of both the APL and the BPL households. Third, the State Government continued to provide additional subsidy for the APL households and to cover the additional BPL households identified by the State till July 2001, after which the same was discontinued. The decline in the offtake that began in therefore happened prior to the discontinuation of the State subsidy. The fact is that the rise in issue prices was significant and a one rupee subsidy for the APL households was 1 The retail issue price of APL rice increased from 8.60 in to (April 2000 to June 2000) (June 2000 to July 2000). 10 (July 2000 to July 2001) 2 The retail issue price of BPL rice increased to 6.4 Kg in from 3.90/ 4kg-in the previous year. 138

8 PDS in Kerala-Comparison of Pre and Post'-TPDS Phases unable to rest the decline in offtake. As for the additional subsidy for the BPL households, additional subsidy did not mean lower issue prices but only the extension of benefits to larger number of people. Lastly, there has been an improvement in the levels of offtake of all households during to , after which it declined, during Offtake of Wheat from the ration shops As with rice, there was a drastic fall in the distribution of wheat also, post However by , the per capita offtake of wheat increased to around 9 Kgs, ~s shown in Appendix Table 4.6 (See Fig 4.5). Per capita wheat offtake in Kerala 18,...,..-...",..-_~ 16+'-~~~~ 14~~"'+i-~,c..~~ 12 +-~--'-'----~~~c'" Offtake 10 +-'----,..'--"-",c---'---"~~ (Kgs) 8 +,.,.-c~~ ~~,* ~~~~-c---c'"'~ ,.--.'-_~ 2 -t--,---~ :_:_''' :_c~~::;;=& o~--~~--~~~~~~~~~~~~~~--~~ & Year Fig 4.5 Per Capita wheat Offtake in Kerala (Kg) The district-wise offtake of wheat as a percentage of allotment is given in Appendix Table 4.7. Wheat used to be consumed predominantly by the richer community in the State earlier. In the early 90s, the per capita wheat offtake was the highest in Kottayam and Kozhikode districts, the comparatively well off districts. In , Idukki, a district with the least percentage of people under the poverty line emerged as the district with highest per capita wheat offtake. For the poorer districts of Wayanad, Kasargode and Palakkad, there was no much change in the per capita offtake. In fact in Kasargode and Wayanad districts, the per capita offtake of wheat actually reduced post targeting. 139

9 As a percent of allotment, the distribution of wheat can be seen increasing in the 1990s till the introduction of the TPDS in the State, following which it declined drastically. However in the last year considered i.e , the offtake exceeded the allotment Seasonality in offtake from PDS The above section was an analysis of the offtake of rice and wheat from the PDS. With respect to the seasonality pattern of offtake from the PDS, two questions need to be answered. First, whether there is any discernible seasonal variation in the offtake of food grains from the PDS and secondly whether the trend has changed recently. To analyse the seasonal variation in the offtake from the PDS, rice offtakes have been decomposed using the ratio to moving average method to arrive at the seasonal indices. The seasonal Indices of rice offtake are calculated for two phases. The two phases considered are: 1. Phase I: to Phase II: to The Seasonal indices during the Pre-TPDS & Post-TPDS phases and the amplitude of seasonal variation in the monthly rice offtakes are given in Tables 4.2 and 4.3. Table 4.2 Seasonal indices: pre-tpds and post-tpds Months to to January February March April May June July August September October November December

10 Table 4.3 Amplitude of seasonal variation in the monthly rice offtakes Peak Trough Period J5.1.} Peak Month Trou_9h 15.1~ month to August April to August May Agricultural activity in the State is brisk in April-May and May-June with the field preparation and transplanting underway. In June-July, activities in the rice fields begin tapering off as tapioca harvesting and related employment picks up. July-August is generally a slack period when practically no field work is done. The next two months i.e. August-September is the rice harvesting period. The broad pattern emerging from the seasonality factors is that the offtake touches a peak during the month of August during both the phases. On an average, the offtake during the month of August is 19 percent and 10 percent higher than the average offtake during the two phases. The figures for the month are pushed by the large "Onam" purchases by some households. "Onam" is a festival characterized by feasts that falls immediately after the harvest in Kerala and usually between late August and September. The offtake remained higher than the average during December and January months, during both the phases. In the second phase, the offtake also remained higher than the average during October and November months. On the other hand, the offtake from the PDS remained the lowest during April and May months respectively in the two phases. The offtake in April during the first phase was 12 percent lower than the average offtake during the first phase. Similarly the offtake during May was 10.5 percent lower than the average offtake during phase II. We observe that the amplitude of fluctuations in the offtakes have declined in the second phase and the explanation should lie in the reduced share of the PDS rice in the consumption basket of the people of the state Post-TPDS. While offtake still remained highest during August, the magnitude of variation was almost half of what it was in the first phase. 141

11 Chapter /V PDS in Kera/a-Comparison of Pre and Post-TPDS Phases Analysis of the causes of decline in APL & BPL offtakes from PDS The drastic decline from the PDS, particularly of the APL consumers began in The policy change that would have prompted the mass exodus of the APL consumers from the ration shops should be the rise in the issue prices for food grains in the initial years of the current decade. The inverse relationship between the issue prices and offtake is consistent with the conclusions drawn in the other studies on PDS. In other words increase in the issue prices and the resultant change in the relative prices, which is considered to be the criteria of choosing the source of supply by most consumers, would result in more people shifting to the market 3. This lowers the offtake from the PDS. Despite the increase in issue prices, the shift over to the market is not easy for the people of Kerala, given the high open market retail prices of rice, which still remains much higher than the issue prices. Table 4.4 shows the district-wise APL offtake of rice from the PDS along with the differences in the issue prices and open market retail price. It is clear from the Table that there is a considerable gap between the market price and the issue prices even for the APL house holds in all the years considered. If we see the relative prices for these households from earlier periods, it is clear that there have been negligible differences in the relative prices of food grains during the period i.e. prior to and post-targeting, except during the years , when the issue prices were hiked and which was first of all responsible for the massive withdrawal of the households from the PDS. However subsequent to this period though the APL issue prices were lowered down and has been steady at the same levels since 2002, the offtake has not seen a corresponding increase. 3 Balakrishnan (1997) showed how the impact of the issue prices on the open market prices are dependent on the perceived ql.!ality differentials between the ration grains and the market grains by the consumer 142

12 ; 4 >i,...,. _.; 4~ Table 4.4 APL offtake and relative market prices in Kerala 018T OFF TVM 2664 KLM 1196 PTA 426 ALP 1448 KTM K 293 EKM 1036 TSR 2152 PKO 1324 MLP 2178 KKO 2168 WYO 741 TOTAL Offtke & Price gap.17 Offtke & pey -.44 Source: Same as above *Significant at 5percent level. MP-IP OFF OFFTAKE OFFTAKE OFFTAKE 03 MP-IP MP-IP MP-IP * -.55* PCY 143

13 PDS in Kera/a-Comparison of Pre and Post-TPDS Phases Hence to solely attribute the decline in offtake to the rise in issue prices would not be a complete explanation and there would clearly be other factors at work resulting in the negative relationship between the offtake and the issue prices. It is here that the implicit costs associated with the purchases from the PDS comes to work. The implicit costs associated with the purchases from the PDS, which although cannot be put down to quantifiable terms certainly guide the consumers in their purchase decisions. The implicit costs generally associated with the purchases from PDS include the transaction costs arising because of the distant location of the fair price shops, the time spent in standing in a queue, the need for adequate liquidity to make weekly purchases at one go, the usage of faulty weights and measures by the dealer the quality differences between the PDS grains and the grains available in the market etc. Some of these costs particularly the long distance from the ration shops, time spent in standing in the queue may not be particularly relevant for Kerala and what seems to have had a significant bearing on the decision to purchase from the PDS seems to be the quality factor. Suppose there are no quality differences between the grains distributed through the PDS and that available in the open market, then so long as the issue price is less than the open market price of rice, the consumers would demand grains from the open market only after exhausting their ration entitlements (Balakrishnan, 1997). A lower difference between the open market price and the ration price as a result of increase in the issue prices would result in reducing the real income gain received by the consumer and therefore lowers the demand for food grain from the open market. Inclusion of the implicit costs (particularly associated with the quality differences) in the price of food grains from the ration shops would result in the pushing the cost of PDS grains above the open market price for some consumers and these consumers would now shift to the market. If quality of the grains were identical, they would have chosen to buy from the PDS so long as the issue prices remained below the market price. There would also be a segment that would opt to remain with the PDS, considering the reduction in the real income gain from the following the smaller gap between 144

14 the open market price and PDS price. For these people, the demand from the open market and the aggregate consumption itself may reduce in the process. Thus, following the increase in the issue prices, the sales from the PDS may decline! increase depending on the strengths of the following effects. 1. Switchover effect: implying transfer of purchases to the open market, considering the higher implicit costs of the PDS grains as compared to the open market grains. 2. Reduction in PDS purchases by some consumers who are not able to maintain their existing level of consumption at the higher price, given the erosion in their purchasing power. 3. Higher purchases from the PDS by those who perceive no difference in quality and hence shift whatever purchases they made from the market to the PDS, given the reduction in their real income. The explanation carried out above is particularly relevant for the APL consumers in Kerala. The reduction in the offtake from the PDS has been a result of the strength of the former two effects, with the'third being negligible given the wide perceived differences between the qualities of grains available from the two sources. However given that the data on open market sales is not available, the exact amount of switchover cannot be calculated. The decline from the PDS is generally explained in terms of the switchover effect. However the above reasoning remains incomplete, since as explained above, this would also comprise that section that reduce their consumption from their pre price hike consumption levels as they cannot maintain their consumption at the new higher price. Since targeting errors cannot be discounted for in any targeting programme, the poor people who are wrongly classified under the APL category (explained in the next section) may be the ones who are severely affected in the process. Thus explaining a reduction in the offtake of the APL category from the PDS should include both the explanation of both the switchover effect of the consumers and at the same time the reduced consumption effect of the poor consumers. 145

15 Thus the explanation for the lack of improvement in the off take despite the fall in issue prices post should be on the following grounds: First, the rising issue prices that led to the initial withdrawal of the households from the PDS served only as an initiating factor and the perceived quality differences and implicit costs of PDS grains were high. Second, for the majority of the households, the implicit costs of making purchases from the PDS along with the intrinsic differences in the quality between the open market foodgrains and the grains distributed through the PDS, when put to quantifiable terms, is still considered higher than the open market price. These costs would have risen following the issue of identical quality, 'common rice' to both the categories of the consumers. In case of Kerala, the perceived quality differences have not only prompted the consumers to switchover to the market, but have also prevented their return back to the system, despite the fall in the issue prices. Third, for the poor households wrongly targeted under the APL category, accessi'ng the PDS may still be a costly option. Despite the quality differences, the rising food insecurity could bring back the economically vulnerable sections back to the System. As can be seen in Table 4.4, the offtake that had fallen to marginal levels has seen an increase in the last two periods considered. When these figures are correlated with the district-wise per capita income, the results were negative and significant for the last two periods. In other words, despite the quality differentials, the increase in the offtake levels in the economically poor regions could be partly attributed to the rising food insecurity in these regions. However for the System to attain the levels of offtake that e.xisted earlier, ensuring improvements in the quality of grains distributed is vital. Also it has to be ensured that the physical accessibility does not deteriorate further. The problem in Kerala is not just the decline in APL offtake, rather the withdrawal of the people at large from the System. The decline in offtake has been consistent across the districts for BPL households as well. The BPL offtake also remained below their entitlement for most of the years. The 146

16 perceived quality differences as explained above are applicable to the BPL households as well and hence do not require further explanation. Given the procedure for identifying the BPL households, a large number of economically well off sections may have been included under the BPL category and many of these households, given their economic status may consider it more prudent to shift to the market. Thus the underutilization of the PDS in Kerala by the BPL category would also partly explained by the inclusion of economically well off sections under the BPL category who are not constrained by their economic condition to access the market. A detailed explanation of the withdrawal of the consumers at large from the PDS is explained in Chapter 6 after understanding the ground realities. On the whole, the general solution for the dilemma faced by the Government with regard to the underutilization of the PDS is to keep the issue prices sufficiently below the market price alc:mg with suitable improvements in the quality of the grains distributed from the system. A significant improvement can also t;>e expected' with the correct identification of beneficiaries. 4.3 Issues related to targeting of beneficiaries under TPDS A comparison of the allotment and offtake of food grains under the PDS and the TPDS has been made in the above section. The following sections examine two important dimensions of the PDS and the TPDS. First, the issue of targeting; examined in terms of the share of offtake, it is seen whether the share of poor districts (with higher number of identified poor households) has improved post targeting. Though it is clear from the analysis in the above sections that the per capita offtake of food grains from the PDS has drastically declined from the beginning of the current decade, the comparative analysis of the rich and poor districts in terms of per capita offtake in the pre and Post- TPDS period would help us better understand if the decline has been uniform or biased in favor of the food secure districts. Further, given that PDS has an important role in ensuring food availability and prices in the State, it needs to be analyzed whether the offtake of food grains through the PDS has been higher in the food insecure regions i.e. regions 147

17 with larger proportion of poor households and low per capita production. The role of PDSt TPDS towards food security is analyzed in terms of its contribution in meeting the food grains requirements of different districts. Post-TPDS, it is to be seen whether the poorer districts are meeting larger proportion of consumption requirements from the PDS than the richer districts. Towards the above, answers are sought to the following questions in the remaining part of this chapter. 1. What can be said about the nature of decline in the offtake from the PDS across districts? Has the share of districts with higher proportion of poor population increased in the Post-TPDS phase as compared to the earlier years 2. Is the distribution of PDS offtake higher in districts with higher food insecurity measured in terms of physical access criterion (per capita production of rice) and economic access criterion (Per Capita Income). Is there a significant difference between the Pre-TPDS and the Post- TPDS periods in this regard. 3. Is the distribution of PDS benefits (income gain) progressive i.e. higher in districts with higher percentage of population below poverty line? 4. What role does PDS play in meeting the food grains requirement of population in various districts? Considering that the TPDS was introduced with a view to improve targeting, the contribution of PDS in meeting food requirements should be higher in the districts with larger proportion of poor population. 5. What are the proximate factors influencing the ration offtake (rice and wheat) of the APL and the BPL households in the various districts Poverty in Kerala Poverty can be defined in an inclusive sense as consisting of a number of elements: lack of access to,- or availability of income earning opportunities, basic health and education, food security, lack of adequate shelter, water or 148

18 PDS in Kerala-Camparisan af Pre and Past-TPDS Phases sanitation, lack of land or employment opportunities, and gender discrimination. The list is sometimes further enlarged to include lack of participation in civil society, social exclusion, alienation, political instability and conflict. The inclusive definition however robs the concept of its specificity. To accord specificity to the definition of poverty in India, the fulfillment of the nutritional requirement of 2400 calories per person per day in the rural areas and 2100 calories in the urban areas is taken as the defined criteria. The poverty line is defined as that level of expenditure at which a person accesses this minimal level of calorie intake. The practice has been to take the level of expenditure corresponding to the poverty line in the base year and to update it for subsequent years for each State using the Consumer Price Index Number for agricultural laborers for rural areas and the Consumer Price Index Number for industrial workers for urban areas. The NSS Consumer Expenditure data have been used to identify the extent of poverty in the State and the Central Government funds for the various antipoverty programmes are released to the State based on the estimates. As per the NSSO 55 th Round ( ), Kerala had poverty figures of 9.38 percent in the rural areas and percent in the urban areas. These figures appear to be gross underestimates, considering that at the official poverty line for in rural Kerala, only 1440 calories could be accessed which is 960 calories short of the 2400 calories that define poverty4. While the central funds for poverty alleviation flow based on NSS data interpretation, at the State level, the activities are formulated and the funds spent as per the periodic surveys of BPL families. The first full survey of the BPL families was done in 1985 and the next comprehensive survey was done in However this was not the survey of all the BPL families as those who had been assisted under IRDP earlier were not included. In 1997, the GOI took a landmark decision based on the suggestion by an Expert Group 4 Economic Review (2006), Govt. of Kerala points out that at the minimum calorific norm of 2400 calories in the rural areas, the proport!on of people who could not meet this norm was a staggering 82.5 percent. At a lower norm of 21 O~ calories, the proportion that could not access it comes to 60 percent. 149

19 appointed by the Ministry of Rural development. Accordingly there was to be a census of every household with certain exclusion criteria determining the elimination of APL households and were to be based on the expenditure in the last 30 days on the pattern of the NSS assessment Targeting of beneficiaries under TPDS The proper identification of the households is of utmost importance under a targeted system given that the distributions of the benefits are to be solely made available to the targeted households. Errors of targeting arise when attempts are made to distribute the benefits of a welfare Scheme to a specified target group. These errors can arise in any targeted welfare programme due to factors such as imperfect information and measurement and costs of participation. The existing literature on the targeting errors 5. discusses two types of errors in targeting - inclusion errors and exclusion errors. Exclusion errors refer to the exclusion of the genuinely poor or deserving households from the targeted programme. These are also called Type I errors and reflects the failure to reach the target population. On the other hand Inclusion errors, also called Type" errors refer to the inclusion of the non-poor in the targeted programme resulting in the excess coverage of households in the programme. Both these errors substantially contribute to reducing the effectiveness of the program with the non-poor receiving benefits and the actually poor not receiving the intended benefits High utilization of the PDS in the past, a history of active state involvement in matters of food distribution and support for the system in the form of additional subsidy, proverbial involvement and awareness of the local people, and above all a larger number of people identified as poor by the State Government (than the GOI estimates), seems to have relegated the issue of targeting in Kerala to the back and denied the importance it should have received. However the distribution of ration cards to a considerably larger proportion of population than that identified by Government of India does not mean genuineness of the targeted households. In fact given the background 5 Summary discussions of tile costs of targeting can be found in, Cornia & Stewart (1993), Sen (1992,1995) and Swaminathan (2000) 150

20 Chapter /V PDS in Kera/a-Comparison of Pre and Post-TPDS Phases of the BPL identification procedure (explained in the earlier chapter), the errors of targeting both inclusion and exclusion errors cannot certainly be discounted for. The analysis of targeting in the present chapter is carried out in the following manner: 1. District-wise distribution of BPL rations card holders and the BPL households (as per the latest BPL Census). 2. Distribution of ration cards to the Asraya families. 3. District-wise share of offtake from the early 1990s. 4. District-wise per capita offtake, Pre-TPDS and Post-TPDS periods. 5. District wise distribution of income gain from the TPDS to the BPL households; Pre-TPDS and Post-TPDS. 6. Correlation between indicators of offtake and indicators of poverty and income. 1. District-wise distribution of BPL rations cards and the BPL households (as per the latest BPL Census). Table 4.5 shows the district-wise number and share of BPL families along with the number of BPL ration card holders. Ideally the distribution of ration cards should be broadly corresponding to the proportion of BPL households in each district. Though the 1992 BPL Census was taken as the base, the local authorities were asked to update the lists based on the existing conditions in 1997, before the final lists of the targeted beneficiaries were finalized. Hence broadly the number of ration cardholders should correspond to the BPL Census conducted in The districts with significant difference between their share in total BPL households and the total BPL ration cards are Kottayam, Idukki and Palakkad. The share of Kottayam and Idukki in the total BPL households in the State is 3.4 percent, and 2 percent, whereas their share in the total BPL ration cardholders is almost double at 6.6 percent and 4.4 percent respectively. On the other hand, Palakkad had the highest share of BPL population at

21 PDS in Kera/a-Comparison of Pre and Post-TPDS Phases percent, its share in the total BPL ration cards is just 6.98 percent. 6 In Alapuzha, Wayan ad, Malappuram and Kannur too, the share of BPL ration cards are comparatively lesser than the proportion of BPL households officially declared under poverty line by the BPL Census. Table 4.5 District-wise share of BPL households and BPL ration cards Dist No. of % total No of BPL % of total No of % of total BPL BPL Ration BPL Ration BPL BPL RCs families- families Cards Cards Ration 1997 Cards TVM KLM PTA ALP KTM IDK EKM TSR PKD MLP KKD WYD KNR KZD TOTAL Source; CIvil Supplies Department, Government of Kerala The difference between the proportion of BPL ration cards and the BPL share of families can be broadly taken as an indicator of the targeting errors 7. Thus Kottayam and Idukki having a higher proportion of BPL ration cards than their share in the BPL population is indicative of inclusion errors and the lower share of BPL ration cards as compared to their share in BPL households in Alapuzha, Wayanad, Malappuram and Kannur districts may be indicative of exclusion errors. 6 Palakkad is the largest rice producing district in the State, which would have a bearing on the rice availabiiity in the district 7 This is considering the fact that the BPL census was more scientifically conducted. However, identification errors cannot be totally discounted for in the Census also owing to which it cannot be taken as a concrete base for comparison. 152

22 2. Distribution of ration cards to the Asraya families An insig~t into the evaluation report of the 'Asraya families' undertaken by Kudumbashree throws a great deal of light into the issue of targeting in Kerala: One of the recent initiatives in the democratic decentralization in Kerala is the 'Kudumbashree' programme, implemented by the local governments with proactive facilitation by the State Poverty Eradication Mission. Under the programme, every BPL family is organised, with each family being represented by a woman, into a Neighbourhood Group (NHG) at the local level with 15 to 40 families which is federated into an Area Development Society (ADS) at the level of the Village Panchayat! Municipal Ward, which are further networked into a registered society called the Community Development Society at the level of the local government. Thus an inclusive community based organization works in partnership with the panchayats to plan and implement a participatory poverty reduction programme 8 in Kerala. The Asraya project was conceptualized by the Kudumbashree, following the finding that there were some outliers who had not benefited from the antipoverty projects of the local government namely the poorest of the poor (destitutes). Asraya following the principle of empowerment of the poorest of the poor is a community based initiative to accord social security to the poorest of the poor. Accordingly, a two stage criteria is used to identify the targeted destitute families under the Asraya project, as given below: First stage of identification: Indicators considered: 1. No land/ Less than 10 cents of land 2. No House/ Living in a dilapidated house 3. No drinking water facilities within 300 meters 4. No sanitary toilet 8 There are NHGs (covering lakh families), ADSs and 1058 CDSs in the State (2007) 153

23 5. No employment to any person in the family (employment for less than 10 days a month). 6. Women headed family! widow! abandoned women! presence of unwed mother in the family 7. Presence of physically! mentally challenged! chronically ill member in the family. 8. Family belonging to SCI ST. 9. Presence of an adult illiterate member. The families attracting seven or more indicators are subjected to another list of five special indicators for rural areas and urban areas respectively as given below: Special indicators for rural areas 1. Having no landed property to set up a dwelling place (living in a puromboke land, forest land, side bunds of canals, and paddy fields) 2. Spending the night time in public places, streets or in the verandas of shops for sleeping 3. Having no healthy member to win bread for the family 4. Resorting to beggary as a vocation. 5. Having women subjected to atrocities 6. Having the children below the age of 14 who work to earn money for the family Special indicators for urban areas 1. Spending the night time in public places, streets or in verandas of the shops for sleeping. 2. Resorting to beggary as vocation 3. Having no healthy member to win bread for the family, below the age of Having women subjected to atrocities. 5. Having street children! children in juvenile homes! poor homes. 6. Having children below the age of 14 who work to earn money for the family 7. Having commercial sex workers. 154

24 8. Having women members who live in Abala Mandiram. 9. Living in slums. If a given family attracts at least one of these special indicators in addition to the seven or more from the first set of general indicators for the rural and the urban areas, the given family is classified as a destitute family. After utilizing the network of the poor families, the preliminary identification of the probable destitute families is done by special groups of trained volunteers from each NHG. The Evaluation Report of the families assisted under Asraya project has brought forth startling results with regard to targeting of beneficiaries under the TPDS. The total number of sample households surveyed was 10,160 households assisted through the 'Asraya Project'. Table 4.6 Distribution of ration cards amongst the Asraya families Dist Total No. of No. of No. of Asraya BPL AAY APL households Card- Card- Cardho %AAY cards in total %APL Cards in total surveyed holders holders Iders TVM KLM PTA ALP KTM IDK EKM TSR PKD MLP KKD WYD KNR KZD TOTAL Source: Kudumbashree, Kerala Table 4.6 shows the ration cards possessed by the surveyed Asraya households Given that Asraya families are the poorest of the poor, a term used to define the AA Y households under the TPDS, ideally all these households should have been provided BPL cards with AA Y endorsement 155

25 which would have entitled them to the highly subsidized food grains from the PDS. Surprisingly only 40 percent of the total sample of Asraya households surveyed were issued AAY cards (Table 4.6). The magnitude of errors in targeting can be gauged from the fact that the number of APL cardholders amongst the Asraya families (who are actually entitled to AA Y cards) is extremely high in many districts and certainly not negligible in the others. Shockingly, more than one-fifth of the Asraya families surveyed in Kollam, Ernakulam and Malappuram (poorest district in terms of per capita income) districts were in possession of APL cards. The high exclusion errors would undoubtedly be a major reason behind the underutilization of the PDS after the introduction of TPDS. For those wrongly classified as APL there are twin disadvantages involved. First and foremost is the wide difference between the APL issue price and the prices at which the AAY households are issued food grains from the TPDS 9. Secondly, for the extremely poor households, liquidity constraint is an associated problem. While the local shop may give food grains for credit, such a facility is not provided by the ration shop. Thus though the APL issue prices are still lower than the open market retail price, availability of sufficient cash in hand is essential for purchasing the cereals from the ration from the PDS. The cost of exclusion errors can be extremely high especially because the alternative available i.e. accessing the market comes at a very heavy price, particularly for the poorest of the poor families. For the destitutes, whose income is below the subsistence level, this would contribute to curbing the consumption of food grains. The adverse repercussions on the health front of these households need not be reiterated. District-wise share of rice offtake: Pre-TPDS and Post- TPDS Given the share of BPL ration cards in each district, it is to be seen whether the actual offtakes in a district corresponds to their share in the BPL 9 The price of APL rice is Rs. 8.90/ Kg and that of AAY households are Rs. 3/ Kg. 156

26 population. Table 4.7 shows the share of each district in the total offtake of food grains in the State during the period. Thiruvananthapuram is the district with the largest number of BPL households. The share of the district in the total offtake showed wide interyear fluctuations. For the period as a whole, the share of the district increased from 9.8 percent in to 11.2 percent in In Kollam district too, the share in the offtake increased from 7.9 percent to 8.9 percent during the period. On the other hand, the share of Ernakulam district declined from 9.8 percent to 7.3 percent in the same period. There is however no change in the combined share of the top five districts in terms of offtake i.e. the share of Malappuram, TVM, Thrissur and Kozhikode continued to be around 40 percent in the first and the last year considered. Table 4.7 Share of districts in total offtake (%) DIST TVM KLM PTA ALP KTM IDK EKM TSR PKD MLP KKD WYD KNR KZD TOTAL Source: CIvil Supplies Department, Government of Kerala The district-wise share of BPL population (in the total BPL population of the State) the percentage of BPL population (to the total population in each district) and the share of the districts in the total offtake in the Pre-TPDS and the Post-TPDS periods is given in Table 4.8. There are slight improvements in 157

27 the shares of some districts like Pathanamthitta and Alappuzha, whose share in the total offtake increased from 2.6 percent and 6.5 percent in the Pre- TPDS period to 4.6 percent & 7.7 percent in the Post-TPDS period. On the other hand, Ernakulam, Malappuram, Kannur and Kasargode, the districts with slightly higher share in offtake than their share of BPL households saw some decline in the share of offtake in the Post-TPDS period. Table 4.8 Distribution of BPL households as per BPL census and BPL ration cardholders and share in offtake: Pre-TPDS and Post- TPDS Dist Total %BPL No. of BPL % total Share in Share in total BPL card households BPL total offtake: Ration holders '97 BPL house offtake- Post-TPDS card Census holds Pre-TPDS ('00-01 to '05-06 holders (OOO's) (92-93 to (OOO's) 96-97) TVM KLM PTA ALP KTM IDK EKM TSR PKD MLP KKD WYD KNR KZD TOTAL Source: CIvil Supplies Department, Govt. of Kerala, Economic Review, Govt. of Kerala District-w ise share in Offtake - Pre and Post - TPDS o I-- - I- I-- ki- ff HI= FrF l- I- l- l- I- l- I- l- I- I-- I-- I-- RI TVM KLM PTA ALP KTM IDK E KM TSR PKD MLP KKD WYD KN R KZD C S h a re in off take- PreTP DS Share in off take- Post TPDS Districts Fig. 4.6 District-wise share in Offtake: Pre-TPDS and Post-TPDS phases 158

28 The overall scenario did not see many changes after the introduction of TPDS. The top four states in terms of number of BPL households are, Thiruvananthapuram Kollam, Thrissur, and Malappuram, with their combined share in the total BPL population being 41.5 percent. The share of these districts in the total offtake in the Pre-TPDS period was around 37 percent. This implies that even prior to targeting, the utilization of the System as reflected in the respective shares of each district in total offtake were mostly in consonance with the share of poor population. In the Post-TPDS period, the combined share of these districts in the total offtake stood at 37.7 percent. On the other hand the bottom three districts viz. Kasargode, Wayanad and Pathanamthitta, with a combined share of 10.5 percent of the total BPL households saw a slight increase in their in total offtake i.e. from 9.7 percent in the Pre-TPDS years to 12.7 percent in the Post-TPDS period. Yet the slight variations that has happened Post-TPDS has been towards making the district-wise share in offtakes more in consonance with the proportion of people BPL and the BPL ration cards. Drastic improvements in the shares of offtake were anyway not warranted given that the offtakes were already higher in districts with higher proportion of BPL households and BPL ration cards. 4. District-wise per capita offtake, Pre-TPDS and Post-TPDS periods. The share of the districts in the total offtake is broadly reflecting their share in the total BPL cards distributed and there are no major changes in this regard after the introduction of TPDS, as seen above. However, it remains to be seen if the per capita offtake in the various districts, in the Pre-TPDS and the Post- TPDS phases are broadly in consonance with the degree of food insecurity or if there are other factors at work. Broadly, the food insecurity can be determined in terms of the physical access criterion and the economic access criterion. The food insecure districts according to the economic access criterion would comprise those districts with the lowest per capita income while food insecure districts according to the physical access criterion would include those households with lowest per capita production. The average per 159

29 capita offtake in the districts prior to the introduction of TPDS and the percentage reduction in per capita offtake Post-TPDS is given in Table 4.9 (Fig 4.6): The most food insecure regions in terms of physical access criterion measured by the proportion of internal production meeting the consumption requirements of the population, (as shown in Col 3 of the Table 4.9) is Kozhikode, Idukki, Thiruvananthapuram and Kannur in both the Pre-TPDS period and the Post-TPDS period. In terms of the economic access criterion as measured by the per capita Income, the most food insecure regions are Malappuram, Palakkad, Kasargode, Kannur and Wayanad. During the Pre-TPDS period, highest per capita offtake was seen in the districts of Wayanad, Kannur, Idukki, Malappuram and Kozhikode. Kannur is a food insecure district in terms of both the economic and physical access criterion, Wayanad & Malappuram by the economic access criterion, and Idukki & Kozhikode by the physical access criterion. Thus on the above parameters, the utilization of the system was higher amongst the regions with higher food insecurity prior to the introduction of the TPDS. Wayan ad continued to have the highest per capita offtake followed by Kasargode, Thrissur and Idukki during the Post-TPDS period. While Wayanad and Kasargode are food insecure by the economic access and Idukki by the physical access criterion, the same cannot be said about Thrissur which seems to be favorably placed in terms of both the criteria. In the Post-TPDS phase, not only have the per capita offtake declined drastically but also the magnitude of reduction is spread almost uniformly across all districts, and even the food insecure districts of Malappuram, Kannur and Kozhikode saw a decline of more than 70 percent as compared to the Pre-TPDS period. Overall, the percent reduction in the per capita distribution of rice in two time periods is around 70 percent for the State as a whole. There are slight inter regional variations this regard. The highest reduction is in Ernakulam district (district with the highest per capita) income at 77.7 percent, followed by Malappuram, Kannur and Kozhikode. 160

30 POS in Kera/a-Comparison of Pre and Post-TPOS Phases Wayanad continued to have the highest per capita offtake followed by Kasargode, Thrissur and Idukki during the Post-TPDS period. While Wayanad and Kasargode are food insecure by the economic access and Idukki by the physical access criterion, the same cannot be said about Thrissur which seems to be favorably placed in terms of both the criteria. In the Post-TPDS phase, not only have the per capita offtake declined drastically but also the magnitude of reduction is spread almost uniformly across all districts, and even the food-insecure districts of Malappuram, Kannur and Kozhikode saw a decline of more than 70 percent as compared to the Pre-TPDS period. Overall, the percent reduction in the per capita distribution of rice in two time periods is around 70 percent for the State as a whole. There are slight inter regional variations this regard. The highest red uction is in Ernakulam district (district with the highest per capita) income at 77.7 percent, followed by Malappuram, Kannur and Kozhikode. Per capita Offtake - Pre and Post - TPDS ~ 50 ~ ~ III 40 s::. II'J Q) 30 :It: III IE f r--- I-- I-- r I-- I-- I-- c- I t I- t r t t - I- f- f- f- r- f- TVM KLM PTA ALP KTM 10K EKM TSR P KO MLP KKO WYO KNR KZO Districts ep er capita offtake - P re TPOS. P er capita offtake - Post TPOS Fig 4.7: District-wise per capita offtake: Pre-TPDS and Post-TPDS phases 161