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Agriculture and The World Trade Organisation

Gurdarshan Singh Bhalla
Jean-Luc Racine
Frédéric Landy

III. Food security and food safety

9. Food Security in India

The Role of Public Distribution System

M.L. Chhipa

Texte intégral

  • 1 Professor Chhipa has prepared for the seminar a very comprehensive paper on the Public Distributio (...)

1The paper is an attempt to review the working of food security system in India.1 According to Chhipa, although policy makers were concerned about food scarcity since the early fifties, a comprehensive policy of food management consisting of procurement, buffer-stocks and public distribution through fair price shops was only formulated in 1965 with the setting up of Food Corporation of India and the Agricultural Prices Commission.

2The setting up of an widespread PDS of specified quantities of rice, wheat, sugar and edible oil at special prices, was supplemented during the Fourth Five Year Plan (1969-1974) by many measures like restriction on foodgrains movement; regulation of private trade; regulation of bank advances against foodgrains and ban on forward trading.

3The Fifth Five Year Plan (1974-1979) emphasized the need for reaching all parts of the country and rural areas. This policy of widespread PDS continued up to the end of the Seventh Plan period, in 1990. At the end of the Sixth Plan (1980-1985) was initiated the “Integrated Tribal Development Project” (ITDP) where wheat and rice were made available at 33 per cent below the PDS prices. Another scheme, the mobile “fair price shops”, was introduced in 1986-1987. PDS was also made a part of a Minimum Needs Programme. The minimum levels of stocks that should be kept at different periods were worked with expert groups. It was only during the Eight Five Year Plan that the need for proper targeting of the weaker sections and exclusion of non-poor and making FCI more efficient was emphasized. Consequently, in 1997, a “targeted public distribution system” (TPDS) was introduced, which distinguished between those below the poverty line and those above it.

4In addition to the Central government, many states like Andhra Pradesh, Gujarat and Himachal Pradesh, Tripura, Madhya Pradesh have introduced their own food security schemes. The most important state scheme is in Andhra Pradesh, under which subsidised rice is sold to all persons who have annual income of up to Rs 6000. The PDS system has become quite large and nearly 10% of total foodgrains production is procured each season.

  • 2 See S.M. Jharwal (1999) Public Distribution System in India Reassessed, Manak Publications, New De (...)

5Chhipa then undertakes a review of various studies on public distribution system in India. In particular, he is in agreement with findings of the recent study of PDS by Jharwal.2 This study brings out firstly that there is no urban bias in PDS and secondly that for purchase of rice, 40 per cent of rural poor and 46 per cent of the urban poor use “fair price shops”– the distribution outlets of the PDS –, the proportion being slightly lower in wheat. In addition, foodgrains are being made available under the anti-poverty programmes. Jharwal brings out that the number of beneficiaries has increased and the rural areas have an overwhelming predominant share in the PDS. It is further estimated that PDS beneficiaries received about 90 per cent calories from the purchased quantities of wheat and rice and 44.31 per cent of that was contributed by the PDS. Finally, PDS has led to an income transfer, for it generates additional purchasing power for the poor as they could make some saving from lower prices through the fair price shops.

6The next issue discussed by Chhipa deals with WTO and food security. Chhipa points out that the liberalisation of the economy has led to increased poverty and had an adverse impact on food security. In India, growth of food production has been ahead of its population growth since independence. However, the liberalisation of the economy since the nineties has led to diversification from food to non-food crops. Poverty ratio has increased in the post-reforms period and the percentage share of expenditure on food for poor families has increased from 64.01 per cent to 65 per cent in 1992 in rural areas (Jharwal, op. cit.).

7Chhipa is therefore not very optimistic about the impact of WTO on Indian agriculture. He agrees with the findings of the Centre for the World Food Studies that trade liberalisation would fail to solve the hunger problem in developing countries. Significant reduction in the poverty would not be possible, and considerable sections of the world population would remain exposed to food insecurity. The impact on food security would depend upon the extent to which the new policies promote economic growth and domestic availability of foodgrains. For the time being, the main rationale of Public Distribution System remains valid, for as many as 30 per cent of the people in India today are poor and more than two thirds of their income is spent on food.

8Coming to policy implications, Chhipa favours targeting of PDS but would like targeted PDS scheme to give much more than 10 kg per month per household. He would like the Food Corporation of India to improve its buffer stocking operations, and improve its functioning especially in the tribal areas. Finally, he would like the locally elected Panchayati Raj System to be associated with the responsibility of planning and implementing poverty alleviation programmes.

9In conclusion, Chhipa feels that the likely impact of the WTO regime on price volatility is expected to be taken care of by the well spread out system of public distribution. As the PDS is serving the poor and vulnerable sections of the society, and with targeting being done by government, the subsidy being provided to meet their minimum needs has no scope for being tempered with.


1 Professor Chhipa has prepared for the seminar a very comprehensive paper on the Public Distribution System, the core of the food security Indian policy, enriched by an extremely large collection of tabulated data The paper was too long for being incorporated to this volume. We are therefore offering here an abstract of the study, which helps to locate the traditional fundamentals of the food policy in India, a key parameter when Indian agriculture is opening to the world (The editors).

2 See S.M. Jharwal (1999) Public Distribution System in India Reassessed, Manak Publications, New Delhi.


© Éditions de la Maison des sciences de l’homme, 2002

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