Corruption, Bureaucracy and the Black Market: India’s failing public distribution system
Simon Harding
Image: Giselle Aris
16th November 2009
My flat is a fairly standard South Delhi bachelor pad: what it lacks in size it makes up for in mod-cons. It may struggle to house me and the dozen or so lizards which scuttle under my back door each evening in search of a wall to stick themselves to, but it has reliable water and electricity, broadband Internet and a huge TV with hundreds of cable channels, which my landlord proudly demonstrated when I first looked round. It would be relatively simple to divide my time between my flat, the office and the numerous upmarket shops, bars and restaurants in the city's poshest neighbourhoods: Defence Colony, Hauz Khas, Greater Kailash and South Extension. I could all too easily cocoon myself in the gossip pages of the Hindustan Times and kid myself that I was living in a burgeoning economic powerhouse of new cars, imported drinks, glamorous parties and world beating big business. But living like a colonial viceroy would give me a slightly skewed picture of contemporary India. Indeed the right-wing BJP‘s ‘India Shining‘ election campaign painted a similarly modern dynamic picture of the nation in 2004. But the conservatives were routed at the ballot box because Indians did not recognise the picture of their country being portrayed and were angry that burning everyday issues of poverty, hunger and malnutrition were being overlooked by one of the two national parties. Millions of people languish below the poverty line (42% of the country according to the World Bank in 2005) and child malnutrition remains a major problem. The World Bank estimates that 49% of the world’s underweight children live in India. Forget the call centres, the heart of the Indian labour force is poor and struggling.
Millions cannot afford to pay market prices for staples like rice, wheat, sugar, milk and kerosene (the standard fuel here). These are the people who do the arduous, back breaking work: building roads, pulling rickshaws generally cleaning up after urban India. In the countryside they toil long hours in the fields of wealthier farmers, earning a pittance for ten to twelve hour days. These people are the poor, under-nourished and often invisible backbone of India's vast labour force. Catering to their needs - or rather to ensure their day-to-day survival - the Indian government runs a network of ration shops (part of a wider Public Distribution System or PDS), which sell subsidised staples at below market prices. Sometimes the difference between paying Rs.15 per/kg (GBP 0.20) for rice on at the market and Rs.4 per/kg (GBP 0.08) at the ration shop is the difference between a mother or father eating that day or going to bed hungry.
But India’s PDS with its 478,000 ration shops is failing. Corruption, greed, a lack of accountability and the disengagement from the PBS of an entire section of the population have combined to decimate a public service, which for some could play a vital role in improving their Spartan livelihoods.
The path from the paddy fields of Bengal and the wheat farms of the Punjab to the ration shop is long, tortuous and riddled with opportunities for officials to make a quick buck on the side at the taxpayer’s expense. To put it concisely, the government sets a price at which it wants to procure food for the PDS. This price is usually low, so only the lowest quality grain and rice are bought. The food is sent to the network of ration shops, but some goes ‘missing’ along the way and inevitably ends up being sold on the open market, putting a tidy profit into the pockets of certain PDS officials and their private sector collaborators. In 2005 a joint study between Transparency International and the Delhi-based Centre for Media Studies found that almost 100% of subsidised grain was illegally diverted on the open market in the eastern state of Nagaland, this figure is still as high as 70% in the wealthier, apparently better governed Punjab.
Once the food reaches the local ration shop things get complicated. Often the shop owner, in the same manner as officials higher up in the supply chain, sells large amounts of the subsidised food on the open market. This often goes ‘unnoticed’ as most shop owners need some degree of political patronage to get an operating licence, so those in charge happily turn a blind eye at best, or take a backhander at worst. If he’s paid a big bribe to get his licence, the shop owner will be sorely tempted to divert his stock to the open market to recoup his investment.
52% of ration shop customers live in India’s vast rural heartland where such activity may go unnoticed or, in a place where everyone knows everyone else, be largely ignored. In 2007, residents of West Bengal became so fed up of ration shops selling subsidised grain on the open market and running out of subsidised stock that riots erupted. Shop owners were forced to publicly ‘pay back’ money earned from alleged black market dealings, although recovering in its entirety the $467m worth of rice stolen in the state in 2006 proved too tall an order.
Ration shops operate under a thick layer of bureaucracy. To purchase cheap ration shop goods (if there are any left after the open market has had its illegal share) each customer must have a ration card. Indian citizens can apply for ration cards at birth. This is a relatively simple process. However, it is virtually impossible for an adult to obtain a ration card or to transfer his/her card, which is valid in one particular ration shop only, to another shop.
If a farm worker from Uttar Pradesh migrates to Haryana and wants to transfer his card from one state to another, his task is akin to that of Sisyphus forever rolling the boulder up the hill only to have it roll back down again. At one point in the process the local Municipal Councillor has to attest that he knows the applicant personally, which is difficult considering the average MC has a constituency of 100,000 people or more. Even if our farm hand does beat the odds and gets a card, he faces erratic opening hours, dodgy scales, low quality food, rude staff and the one-visit-per-week rule. This means he has to buy a week’s worth of rice, wheat, sugar and kerosene in a single shop: next to impossible when you only earn a few rupees a day. Whilst many genuine cases are refused, countless bogus ration cards are used to divert food away from the shops and onto the free market.
When asked if they have Delhi ration cards, the majority of poor Bihari migrants plying the auto-rickshaw trade in the capital shake their heads wearily. No, of course they don't. Silly question. Do they want them? A dismissive wave of the hand: Wanting them isn’t the issue, it’s just impossible to get them.
The Indian PDS began as a way to stabilise prices and ensure supplies for urban consumers during the food shortages of the 1960s. The middle and lower-middle classes used ration shops on a regular basis, not only to buy wheat, rice and sugar, but also the buy the wide range of subsidised clothes and school equipment on offer. Literate, vocal and with some political clout, if they weren't satisfied with the products, services or availability at their local ration shops, then the government was going to know about it, whether it liked it or not. Consumer power went some way to keeping the PDS in check.
However, in the mid 1980s, it was becoming clear that the PDS had done little in its 20 year existence to counter both urban and rural poverty. In an attempt to tackle poverty head-on the system became more targeted. Gone was the general public distribution network providing food, clothes, fuel and school supplies to a broad section of the population and in came a narrow anti-poverty drive focused on getting food and kerosene to the very poorest people. However, with little political voice the poorest sections of society lacked the ability to complain, which had previously forced errant elements in the PDS to toe the line. Standards dropped, corruption increased and accountability and transparency declined. However, a few recent policies have provided rays of light against this gloomy backdrop.
In 2004 Delhi-resident Triveni Devi, who falls into the poorest category of ration card holders, began to ask why she was being denied her monthly ration of 5kg wheat and 10kg rice, which should have been sold to her by her local ration shop at heavily discounted prices. Despite having a valid ration card the shopkeeper repeatedly refused to serve her. Being an enterprising lady, Triveni was not going to be beaten. Using the Right To Information Act (RTI) she obtained the records for her local ration shop. Triveni was surprised to learn that, according to the data supplied under the Act, she was getting a whopping 25kg of rice and wheat a month. Confronted with the official records, the shopkeeper offered Triveni 6 months rations and Rs.20,000 (GBP250) to keep quiet. She refused and took her case to Parivartan, a local NGO which specialises in using the RTI. Parivartan applied for the records to 3,000 ration shops in the city. The application failed (some ration shops are owned by politicians). Undeterred women across the city began filing their own applications despite constant intimidation from goons and thugs sent by the shop owners.
Mobile phone technology is helping people in the southern state of Tamil Nadu tackle corruption at their local ration shops. The state government has set up an SMS scheme under which customers can find out exactly what has been delivered to their local shop by texting the central distribution centre. Faced with clued up customers, owners of the 28,000 shops in the scheme will find it hard to grunt, shake their heads and turn away customers empty-handed when the entire queue knows that there’s 2 tonnes of rice out the back waiting to be distributed.
Far from the coffee shops and fat Audis on the streets of South Delhi, the fight for basic nutrition occupies the lives of a huge section of India's labour force. But the PDS, which had such potential to improve the lives of millions of people, is on its knees, brought down by endemic corruption. Some intrepid individuals and groundbreaking government policies are challenging the vested interests which divert vast sums of public money into private pockets. However, their efforts, though laudable, amount to a tick on an elephant. They may go some way to highlighting failings, but cannot bring about wholesale change, which requires a full purge of corruption from every capillary of the PDS. A move which, although virtually impossible, would greatly improve the lives of millions of poor labourers and their families.
A summary of the study can be found here: http://www.livemint.com/2007/04/01225600/1E485215-9AA8-4D86-8E5F-A0A4E599FDEDArtVPF.pdf