Poster #86 - Reducing Leakages in Food-Based Safety Nets: Evidence from India’s Public Distribution System (PDS)

• In Event: Friday Poster Reception

Abstract

Leakage or diversion of food grain from in-kind food-based safety nets, either through corruption or operational inefficiencies, are a major hurdle in the effective implementation of these programs. While cash transfers have become a popular mode for delivering subsidized food, many large countries such as India, Indonesia, and Egypt continue to provide in-kind food transfers.

Estimating leakages and identifying ways to improve the delivery of in-kind food transfers can play a pivotal role in increasing food security for low-income households. We focus on the Public Distribution System (PDS), India’s national food-based safety net program, that provides five kilograms of free food grain to over 800 million individuals every month. This food grain is procured from farmers at fixed prices and distributed through a nationwide network of Public Distribution System (PDS) shops.

Past research has highlighted high rates of leakage of food grains during the procurement, transportation, storage, and distribution of PDS food grains. In 2011-12, it was estimated that 41 percent of the total food grain distributed through the PDS did not reach beneficiaries. This high rate of leakage raises questions about the efficacy of in-kind food-based safety nets in ensuring food security for low-income households. Since 2011-12, there have been no estimates of food grain leakage from the PDS due to delays in data collection by the government’s national statistics organization. However, there have been major reforms to the PDS at the national and state levels over the past decade. The lack of consumption data has left a significant gap in our understanding of the implementation and effectiveness of one of the world's largest food-based safety nets.

Our study aims to fill this gap by using recently released data from India’s Household Consumption and Expenditure Survey (HCES). We find that leakage of PDS food grain has declined from over 54 percent in 2004-05 to less than 10 percent in 2023-24. This decline in leakage can be attributed to two factors: first, the implementation of India’s National Food Security Act (NFSA), which expanded the coverage of the PDS, leading to reductions in exclusion and rent-seeking; and second, the introduction of new technologies, such as biometric authentication, at the last mile of delivery. We corroborate these quantitative findings with insights from qualitative interviews with PDS beneficiaries and administrators on their experiences with PDS reforms over the past decade. 

Author

• Raghav Puri, Cornell University
  Presenting Author