Context: Ahead of Budget 2025-26, the Confederation of Indian Industry (CII) has recommended rationalisation of food subsidies urging the government to adopt direct benefit transfer (DBT) model to provide direct income support to beneficiaries of the Public Distribution System (PDS).
Relevance of the topic:
Prelims: National Food Security Act, 2013- Features
Mains: PDS- Problems, DBT for PDS.
National Food Security Act, 2013
- National Food Security Act, 2013 provides food and nutritional security by ensuring access to adequate quantities of quality food at affordable prices to households.
- Coverage: Up to 75% of rural population and 50% of urban population (encompassing 67% of total population of India).
- Entitlement:
- Priority households: 5 kg/person/month
- Antyodaya households: 35 kg/household/month
- Subsidised prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains.
- Nutritional Support: Meals for Pregnant women and lactating mothers and children (6 months- 14 years)
- Maternity benefit: Rs 6000 for pregnant women and lactating mothers.
- Women empowerment: Eldest woman (18 years and above) considered as head of household for issuing ration cards.
- Grievance redressal: At district and state levels.
- Accountability through social audits and Vigilance committees.
- Food Security Allowance: Provided in case of non-supply of food.
Need for Rationalisation of Food Subsidies
- Higher Subsidy Burden: Food subsidy burden has increased to more than Rs. 2 lakh crores on an annual basis. This indicates the unsustainability of food subsidies.
- Leakage in PDS system: Recent ICRIER study highlights 28% leakage in the PDS system. Inefficiencies and corruption lead to diversion of food grains.
- Rise in fiscal deficit: High subsidy bills strain the fiscal deficit, diverting funds from other critical areas like education, health, infrastructure, etc.
Benefits of Direct Benefit Transfer for PDS Beneficiaries
- Empowerment of beneficiaries: Direct income support would empower beneficiaries to purchase food items of their choice, based on individual needs.
- Better targeting: DBT can precisely reach the intended beneficiaries with the help of digitisation as the system is linked to Aadhar.
- Eliminate middlemen: Cash transfers directly to the beneficiaries remove intermediaries, reducing chances for diversion, corruption and leakages.
- Administrative Efficiency: DBT would reduce the logistical burden of transporting and distributing food grains under the PDS system.
Bottlenecks for DBT in PDS
- Existing legal provision: There exists an optional provision under the National Food Security Act, 2013, (NFSA) for the states to transfer the subsidy directly to the beneficiary’s bank account. However, no State had requested for DBT since NFSA was rolled out in 2013.
- Linkage with MSP procurement: The issue of DBT is linked with the Minimum Support Price procurement as PDS is one of the outlets where the government disposes of the grains purchased from farmers.
- Poor Banking infrastructure and Digital Divide: Limited access to digital resources and inadequate banking infrastructure would hinder DBT implementation.
Rationalisation of Food Subsidies should be considered by the government, considering the unsustainable subsidy bill and rising cases of leakages reported in the PDS system. An overhaul of the system along the lines of Direct Benefit Transfer, end-to-end computerisation of PDS, seeding of Aadhar with Ration Card, etc. is the need of the hour.