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GS Paper: PDS, Buffer Stock & Food Security

  • Wheat Procurement Slowdown  

    Why in the News?

    • Wheat procurement in India during Rabi Marketing Season 2026–27 has declined by ~16%, mainly due to slow procurement in Madhya Pradesh.

    Key Data

    • Total procurement (till April 20, 2026): 114.29 LMT
    • Target: 303 LMT
    • Decline: ~16% lower than last year

    State-wise Performance

    • Major Contributors (Last Year)
      • Punjab
      • Madhya Pradesh
      • Haryana
    • Current Trend
      • Punjab & Haryana: Procurement on track
      • Madhya Pradesh: Significant slowdown
      • Only 7.25 LMT procured vs 47 LMT last year (same period)
    • Other Concern
      • Uttar Pradesh: Low procurement despite being largest producer

    Reasons for Slowdown

    • Administrative issues:
      • Slot booking
      • Farmer registration
      • Verification delays
    • Weather: Unseasonal rainfall (especially in UP)
    • Logistics inefficiencies
    [2020] Consider the following statements: 
    1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India. 
    2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise. 
    Which of the statements given above is/are correct? 
    a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2

  • Rice & Wheat Procurement Shortfall  

    Why in the News

    • A Parliamentary Standing Committee headed by Kanimozhi Karunanidhi raised concerns over consistently low procurement of rice and wheat compared to estimates. 

    Key Findings

    1. Persistent Gap

    • Since 2022-23: Procurement < 30% of total production
    • Wheat procurement (as % of estimates):
      • 2023-24: 76.7%
      • 2024-25: 71.3%
      • 2025-26: 87.3%

    2. State-Level Shortfalls

    • Rice (Kharif 2024-25): Andhra Pradesh, Karnataka, Punjab below targets
    • Wheat (Rabi 2025-26): Bihar, Gujarat, Punjab, Uttar Pradesh below targets

    Reasons for Low Procurement

    • Production fluctuations
    • Market surplus availability
    • Minimum Support Price (MSP) vs market price
    • Demand-supply conditions
    • Participation of private traders

    Committee Concerns

    • Gap between: Estimated procurement vs actual procurement
    • Indicates: Weak planning and coordination

    Recommendations

    1. Strengthen Procurement Planning

    • Improve estimation methods
    • Make targets more realistic

    2. Better Centre-State Coordination

    • Focus on: States with repeated shortfalls

    3. Real-Time Monitoring

    • Track: Production and Market arrivals

    4. Improve Procurement Efficiency

    • Ensure: Timely and effective procurement operations
    [2020] Which of the following factors/policies were affecting the price of rice in India in the recent past? 
    1. Minimum Support Price Government’s trading 
    2. Government’s stockpiling Consumer subsidies 
    Select the correct answer using the code given below: 
    (a) 1, 2 and 4 only (b) 1, 3 and 4 only (c) 2 and 3 only (d) 1, 2, 3 and 4

  • CBDC Based Public Distribution System Launched in Gujarat

    Why in the News?

    The Union Home Minister launched a Central Bank Digital Currency based Public Distribution System in Gandhinagar, Gujarat. This marks the integration of digital currency into the food security delivery mechanism.

    What is CBDC?

    • Central Bank Digital Currency is a digital form of sovereign currency issued and regulated by a central bank.
    • In India, the digital rupee is issued by the Reserve Bank of India.
    • It is different from cryptocurrency because it is legal tender and backed by the government.

    What is the Public Distribution System?

    • The Public Distribution System is a food security system that distributes subsidised food grains to eligible beneficiaries under the National Food Security framework.
    • Around 80 crore beneficiaries receive free food grains under the scheme.

    Key Features of CBDC Based PDS

    1. Digital transfer and settlement using CBDC.
    2. Reduction of leakages and middlemen.
    3. Transparent and traceable transactions.
    4. Faster and automated grain dispensing via Annapurna machine.
    5. Planned nationwide rollout within 3 to 4 years.

    The Annapurna machine reportedly dispenses 25 kg of food grains in about 35 seconds.

    Governance Linkages

    • Linked to Digital India initiative.
    • Inspired by Direct Benefit Transfer model.
    • Reflects the principle of minimum government maximum governance.
    • Strengthens last mile delivery through technology.

    Related Schemes Mentioned

    • Pradhan Mantri Garib Kalyan Anna Yojana providing 5 kg free food grains per person per month.
    • PM SVANidhi providing working capital loans to street vendors.
    [2024] Consider the following statements in respect of the digital rupee: 1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy. 

    2. It appears as a liability on the RBI’s balance sheet. 

    3. It is insured against inflation by its very design. 

    4. It is freely convertible against commercial bank money and cash. 

    Which of the statements given above are correct? 

    (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 4 only (d) 1, 2 and 4

  • [19th November 2025] The Hindu Op-ED: Time to sort out India’s cereal mess

    PYQ Relevance

    [UPSC 2024] Elucidate the importance of buffer stocks for stabilizing agricultural prices in India. What are the challenges associated with the storage of buffer stock? Discuss.

    Linkage: This PYQ is central to GS-III themes of food security, MSP, PDS and price stabilization. It links with the article’s focus on excess stocks and distorted procurement, showing why India’s buffer-stock management is becoming unsustainable.

    Mentor’s Comment

    India faces a cereal management crisis marked by procurement distortions, crop diversification failures, import dependence, and systemic leakages. This article unpacks the urgent concerns raised in “Time to sort out India’s cereal mess” and restructures them into an exam-oriented format that aligns with GS II and GS III themes such as food security, agriculture, subsidies, MSP, PDS, and federal coordination.

    Introduction

    India’s cereal ecosystem, procurement, storage, distribution, and diversification, stands at a difficult juncture. Excessive focus on paddy and rice under MSP, escalating procurement costs, growing import dependence in edible oils and pulses, and logistical inefficiencies have created structural vulnerabilities. The current controversy in Tamil Nadu’s paddy procurement highlights deeper national issues in cereal governance.

    Why in the News

    Tamil Nadu’s short-term kuruvai paddy procurement turned contentious due to time overruns and corruption charges, exposing systemic weaknesses in the procurement architecture. Despite years of surplus stock, India faces a paradox of simultaneous overproduction of rice and wheat and rising import dependence on pulses and edible oils, with 55% of edible oil demand met by imports. The scale of misalignment, such as rice stocks at 536.14 lakh tonnes in October, five times the requirement, reveals an unsustainable cereal management model requiring urgent correction.

    Understanding the Current Procurement Distortions

    1. Excessive Paddy Procurement: Tamil Nadu’s system led by TNCSC and FCI shows delays, over-coverage, and corruption, with farmers preferring paddy due to assured returns.
    2. High Central Pool Stocks: Rice stocks reached 536.14 lakh tonnes (Oct 2024) against norms of about 102.5 lakh tonnes, reflecting procurement far beyond requirement.
    3. Skewed Crop Incentives: Procurement levels for rice and wheat remain consistently higher than norms, reducing incentives for diversification.

    Why India’s Cereal Supply is Misaligned

    1. Surplus in Cereals: India maintains abundant stocks, e.g., rice procurement averaging 322 lakh tonnes over three years, indicating oversupply.
    2. Deficit in Pulses & Oilseeds: Despite large-scale cultivation, imports form a major share: India meets 55% of edible oil demand through imports.
    3. Stagnant Diversification: Farmers hesitate to shift due to uncertain support systems, weak price assurance, and inadequate crop guidance.

    Rising Import Dependence and Its Consequences

    1. High Import Bills: Edible oil imports breached 30,000 crore in 2023-24 despite domestic production dips from 157 lakh tonnes to 138 lakh tonnes over a decade.
    2. Geopolitical Risks: Events like the Russia-Ukraine conflict directly increased global edible oil prices, impacting domestic inflation.
    3. Oilseed Production Stagnation: Even after 2004 reforms, domestic acreage rose but yields and self-sufficiency remained stagnant.

    Structural Issues in India’s Crop Diversification Strategy

    1. Weak Extension Services: Farmers lack assured technical guidance and support for alternative crops.
    2. Higher Risk in Non-Paddy Crops: Limited MSP procurement outside cereals increases production risk.
    3. Fragmented Procurement Framework: Multiple agencies (FCI, State Corporations, NAFED) lead to inconsistent practices across states.

    Why Procurement Reforms are Urgent

    1. Inefficient FPO Integration: FPOs, though expanding, remain nascent and face poor access to credit, logistics, and markets.
    2. Leakages and Diversions: Instances of paddy moving outside the procurement chain due to better prices in open markets distort the system.
    3. Need for Commodity-Specific Strategy: Uniform procurement policies for cereals, pulses, and oilseeds fail to reflect regional agro-ecology and market diversity.

    Conclusion

    India’s cereal management crisis is not of shortage but of imbalance, overproduction of rice and wheat coexisting with deficits in pulses and edible oils. Procurement distortions, poor diversification incentives, and high import reliance underline the need for structural reforms. A shift towards agro-ecology-based diversification, procurement redesign, and FPO strengthening can realign India’s food security architecture.

  • [19th Septmeber 2025] The Hindu Op-ed: Equalising Primary Food Consumption in India

    PYQ Relevance

    [UPSC 2019] What are the reformative steps taken by the Government to make food grain distribution system more effective?

    Linkage: The article’s proposal to restructure the PDS by trimming excess cereal entitlements and expanding pulse distribution directly links with UPSC 2019’s question. It highlights how reformative steps—like targeted subsidies, rationalised stocking by FCI, and focus on nutritional security beyond cereals—can make the food grain distribution system more effective. Thus, it connects poverty reduction with sustainable and equitable food security reforms.

    Mentor’s Comment

    The recent NSS household consumption survey, coupled with World Bank estimates, has painted a contrasting picture of India’s poverty and food deprivation. While global narratives celebrate the near-eradication of extreme poverty, ground-level consumption data tells a more sobering story, half of rural India still struggles to afford two simple thalis a day. This article unpacks the deeper meaning of food security beyond calorie intake, critiques the existing Public Distribution System (PDS), and explores how restructuring subsidies, especially towards pulses, can equalise food consumption in India. For UPSC aspirants, the debate is not only about statistics but also about welfare priorities, distributional justice, and the role of the state in ensuring dignified living standards.

    Introduction

    India has long battled poverty and hunger, but the release of the 2024 NSS Household Consumption Survey and the World Bank’s Poverty and Equity Brief (2025) has reshaped the debate. The World Bank report claims that extreme poverty has fallen from 16.2% in 2011-12 to just 2.3% in 2022-23, a historic achievement if true. Yet, when food consumption is measured through the “thali index” rather than calorie-based poverty lines, stark disparities emerge: 50% of rural India and 20% of urban India could not afford two thalis a day in 2023-24. This contradiction raises a crucial policy question—how can India ensure not just calorie intake but nutritional adequacy and equal access to primary food consumption?

    The contrasting narratives of poverty in India

    1. World Bank Estimate: Extreme poverty has “virtually disappeared,” with only 2.3% living below $2.15/day.
    2. Thali Index Reality: Despite rising incomes, half of rural India could not afford two balanced meals (thalis) daily in 2023-24.
    3. Deprivation Gap: The difference arises because food is residual expenditure after households spend on essentials like rent, health, and transport.

    Why measure poverty through the thali meal?

    1. Beyond Calories: Traditional poverty lines only measure calorific intake, ignoring nutrition and satisfaction.
    2. Balanced Meal: A thali (rice, dal, roti, vegetables, curd, salad) represents a self-contained, nutritious unit of food consumption.
    3. Cost Factor: Crisil estimates a home-cooked thali costs ₹30. Many households fall short of affording even two thalis/day per person.

    How effective is the Public Distribution System?

    1. Food Deprivation with PDS: Even after including PDS food supplies, deprivation persists—40% rural and 10% urban cannot afford two thalis daily.
    2. Subsidy Distribution: In rural India, a person in the 90–95% expenditure class receives 88% of the subsidy given to the poorest 5%, despite much higher consumption capacity.
    3. Urban Progressivity: The PDS is more progressive in urban areas, but still, 80% receive subsidised or free food, including those not in need.

    Why are cereals not enough

    1. Equalised Cereal Consumption: Both the poorest and richest consume similar amounts of rice and wheat, showing PDS success but also its limits.
    2. Expenditure Share: Cereals now account for only 10% of average household expenditure, so increasing cereal subsidy has diminishing returns.
    3. Need for Protein: Pulses consumption is half in the poorest 5% compared to the richest 5%, highlighting protein inequality.

    Policy path: Equalising food consumption through pulses

    1. Expand PDS Coverage: Redirect subsidies towards pulses, the main protein source for many Indians.
    2. Rationalise Cereals Subsidy: Trim excess rice/wheat entitlements, especially for better-off groups, reducing stocking costs for FCI.
    3. Compact and Targeted PDS: By focusing on pulses and eliminating subsidies beyond the “two thali/day” norm, the system becomes both cost-effective and equitable.
    4. Global Significance: Achieving equalised food consumption across social classes would be a unique welfare success story worldwide.

    Conclusion

    The thali index reveals a hidden crisis of food deprivation that headline poverty numbers obscure. While cereal consumption has been equalised through decades of PDS efforts, the next frontier lies in ensuring protein security via pulses distribution. Rationalising subsidies and targeting them effectively can not only optimise public spending but also equalise primary food consumption across India, a feat that would stand as a benchmark in global welfare policy.

  • Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)

    Why in the News?

    Since its launch, PM-AASHA has significantly benefitted farmers, contributing to the procurement of 195.39 lakh metric tonnes (LMT) of agricultural commodities, valued at ₹1,07,433.73 crore, from over 99 lakh farmers.

    Procurement Details:

    • In the Rabi 2023-24 season, 6.41 LMT of pulses, valued at ₹4,820 crore, were procured from 2.75 lakh farmers. This included:
      • 2.49 LMT of Masoor
      • 43,000 metric tonnes of Chana
      • LMT of Moong
    • In addition, 12.19 LMT of oilseeds, valued at ₹6,900 crore, were procured from 5.29 lakh farmers.
    • In the ongoing Kharif season, the government has procured 5.62 LMT of Soyabean, valued at ₹2,700 crore, benefiting 2.42 lakh farmers.

    About the PM-AASHA Scheme

    Details Launched in 2018, PM-AASHA is an umbrella scheme encompassing various components to ensure farmers receive fair prices for their produce.
    Aims and Objectives
    • Ensuring fair prices for farmers by providing price support when market prices fall below the Minimum Support Price (MSP).
    • Stabilize the prices of essential commodities, benefiting both farmers and consumers.
    • Addressing price fluctuations and ensuring sustainable agricultural practices for crops like pulses, oilseeds, and copra.
    Structural Mandate and Implementation
    • Type: Central Sector Scheme (Fully funded by the Centre).
    • Nodal Ministry: Ministry of Agriculture & Farmers Welfare.
    • Fund Allocation: Rs. 35,000 crore during the 15th Finance Commission Cycle (up to 2025-26).
    • Central Nodal Agencies (CNA):
      • Guarantees to lender banks for extending cash credit facilities to agencies like NAFED (National Agricultural Co-operative Marketing Federation of India Limited) and NCCF (National Co-operative Consumer’s Federation of India Limited) for MSP procurement.
      • Department of Consumer Affairs (DoCA) will procure pulses at market price from pre-registered farmers on eSamridhi Portal of NAFED and eSamyukti Portal of NCCF when prices exceed MSP.

    Key Components:

    • Price Support Scheme (PSS):
    • The PSS is the core component of PM-AASHA, operating through state governments to procure notified commodities at the Minimum Support Price (MSP) levels.
    • It provides financial relief to farmers when market prices fall below MSP, offering remunerative prices and promoting investment in agriculture.
    • The government fixes the MSP for 24 crops at 1.5 times the Cost of Production (CoP) to ensure a fair income for farmers.
    • Price Deficiency Payment Scheme (PDPS):
    • Under PDPS, farmers are provided direct payments if the market prices of oilseeds fall below the MSP.
    • It helps bridge the gap between MSP and market prices, ensuring that farmers still get a fair return.
    • Market Intervention Scheme (MIS):
    • The MIS provides financial assistance to states for price stabilization of perishable agricultural commodities like Tomato, Onion, and Potato, which are not covered under MSP.
    • This scheme helps manage price volatility and benefits both farmers and consumers by stabilizing prices.

     

    PYQ:

    [2020] In India, the term “Public Key Infrastructure” is used in the context of:

    (a) Digital security infrastructure

    (b) Food security infrastructure

    (c) Health care and education infrastructure

    (d) Telecommunication and transportation infrastructure

  • [10th December 2024] The Hindu Op-ed: In energy-dependent world, the issue of food security

    PYQ Relevance:
    Q) What are the salient features of the National Food Security Act, 2013? How has the Food Security Bill helped in eliminating hunger and malnutrition in India? (UPSC CSE 2021)

    Mentor’s Comment: UPSC Mains have always focused on ‘Food Security’ (in 2021), ‘conventional energy generation’ (in 2020) and ‘India’s Energy Security’ (in 2017).

    “Food insecurity and energy poverty are critical to ensuring global stability, but addressing them in isolation is inadequate,” cautions the World Bank in its latest climate and development report. The intertwined crises of food and energy security are shaping the course of the 21st century, posing significant threats to global stability. Food production is under pressure from climate change, population growth, and inequality, while energy systems grapple with geopolitical conflicts, aging infrastructure, and a slow shift away from fossil fuels. 

    Today’s editorial explores their deep interconnection and intensifies the challenge: agriculture, vital for humanity, is both a major energy consumer and a driver of climate change.

    _

    Let’s learn!

    Why in the News?

    In a virtual address at the 5th Energy Finance Conference, it was emphasized that energy-reliant agricultural systems struggle to adapt to climate-induced changes in food production, underscoring their interlinked challenges.

    Impact of Energy Price Fluctuations on Food Production and Security

    • Dependency on Fossil Fuels: Agriculture relies heavily on fossil fuels for mechanization, irrigation, fertilizer production, and transportation. This dependence creates a cycle where rising energy prices lead to increased costs for food production, directly impacting food security.
    • Volatility in Natural Gas Prices: Natural gas is crucial for fertilizer production so fluctuations in its prices can significantly affect fertilizer costs and, consequently, global food prices. For instance, geopolitical actions such as export bans can disrupt supply chains, exacerbating food insecurity in countries reliant on imports.
    • Climate Change Effects: Erratic weather patterns due to climate change further strain agricultural output, putting the livelihoods of billions at risk.
      • Nearly 11.8% of the global population faced severe food insecurity between 2020 and 2023, a figure expected to rise significantly.

    Role of Sustainable Energy in Enhancing Food Security

    • Renewable Energy Investments: The transition to renewable energy presents opportunities for enhancing food security. Investments in renewable technologies can help reduce reliance on fossil fuels and lower operational costs for agricultural practices.
    • Innovative Solutions: Solar-powered irrigation and biomass energy solutions could transform agricultural productivity. However, high costs and inadequate infrastructure limit their adoption in low-income countries where they are needed most.
    • Reducing Vulnerability: Clean energy solutions can help mitigate the vulnerability of food systems to energy price shocks. By integrating renewable energy into agricultural practices, countries can improve resilience against climate-induced disruptions.

    Strategies to Address the Nexus of Water, Energy, and Food Security (Way Forward)

    • Integrated Policy Approaches: A holistic approach that integrates water management with energy and food policies is essential. This includes promoting water-efficient agricultural practices and investing in infrastructure that supports sustainable resource management.
    • Investment in Renewable Technologies: Increasing investments in renewable energy infrastructure can support agricultural productivity while reducing carbon emissions. This includes expanding access to clean energy solutions for rural areas to enhance agricultural efficiency.
    • Financial Support for Vulnerable Communities: Providing financial resources and technical support to low-income nations is crucial for enabling them to transition towards sustainable practices without exacerbating poverty. Targeted investments can help build resilience against climate impacts while ensuring food security.

    https://www.thehindu.com/opinion/op-ed/in-energy-dependent-world-the-issue-of-food-security/article68966351.ece

  • States can directly buy Rice from FCI

    Why in the News?

    The Union Food and Consumer Affairs Minister announced that States can now directly purchase rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (Domestic) without participating in e-auctions.

    Key Announcements:

    Direct Rice Purchase of Rice by the States:

    • States can procure rice directly from FCI at ₹2,800 per quintal (excluding transportation cost), down from the earlier rate of ₹2,900 per quintal.
    • This new rate applies to rice procured over the stipulated 5 kg of free grain per individual under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

    Launch of Price Monitoring System (PMS) 4.0:

    • Minister Joshi launched the 4.0 version of the Price Monitoring System (PMS) mobile app.
    • The app, which previously monitored prices of 22 commodities daily, will now include 38 commodities.
    • The additional 16 food items are bajra (whole), jowar (whole), ragi (whole), suji (wheat), maida (wheat), besan, ghee, butter (pasteurised), brinjal, egg, black pepper, coriander, cumin seed, red chillies, turmeric powder, and banana.

     

    About Open Market Sale Scheme

    Details
    Purpose Enhance the supply of food grains, especially wheat, during the lean season to moderate open market prices, especially in deficit regions.
    Administered by Food Corporation of India (FCI)
    Method of Sale Surplus stocks of wheat and rice sold at pre-determined prices through e-auction on the National Commodity and Derivatives Exchange (NCDEX) platform.
    Participants Bulk consumers, private traders, State Governments, and Union Territory Administrations
    Auction Frequency Weekly
    Reserve Price Fixed by the government; bidders cannot quote less than the reserve price.
    Schemes under OMSS
    1. Sale of wheat to bulk consumers/private traders through e-auction.
    2. Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
    3. Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.

     

    PYQ:

    [2017] Which of the following is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme?

    1. It is a pan-India electronic trading portal for agricultural commodities.

    2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • The PDS impact on household expenditure   

    Why in the news? 

    The Household Consumption Expenditure Survey Data provides an opportunity to analyze the effects of social transfers.

    About Public Distribution System (PDS):

    • The Public Distribution System (PDS) aims to ensure food security by providing subsidized foodgrains to economically vulnerable sections of society. Under the National Food Security Act (NFSA), 2013, up to 75% of the rural population and 50% of the urban population are eligible for subsidized foodgrains.
    • Foodgrains procured by the Food Corporation of India (FCI) are distributed through a network of Fair Price Shops (FPS).

    Its structural mandate: 

    • Procurement and Distribution: The PDS operates through the procurement of foodgrains by the Food Corporation of India (FCI) from farmers at Minimum Support Prices (MSP). These foodgrains are then allocated to states and union territories based on their requirements and distributed to Fair Price Shops (FPS), which deliver subsidized foodgrains to eligible beneficiaries.
    • Identification and Subsidy: Beneficiaries are identified based on the Socio-Economic and Caste Census (SECC) data, classifying households into Priority Households and Antyodaya Anna Yojana (AAY) households. Under the National Food Security Act (NFSA), 2013, eligible households receive rice at ₹3 per kg, wheat at ₹2 per kg, and coarse grains at ₹1 per kg. The system aims to ensure that food security is maintained for the economically vulnerable sections of society.

    Observations made by the HCES:2022-23 report  

    • The Household Consumption Expenditure Survey (HCES) 2022-23 provides insights into the coverage of social welfare programs, including the Public Distribution System (PDS).
    • The survey highlights discrepancies between administrative data and survey estimates due to inclusion and exclusion errors, offering detailed characteristics of households benefiting from these programs.

    Imputation of values for food and non-food items    

    Note: Imputation of values for food and non-food items refers to the process of assigning a monetary value to items received by households for free or at a subsidised rate through social welfare programs like the Public Distribution System (PDS) in India.

    • Purpose: Imputation is done to estimate the total consumption expenditure of households more accurately. It accounts for the fact that households receive goods (such as foodgrains from PDS) without directly paying for them, thus impacting their overall consumption.
    • Methodology: The National Sample Survey Office (NSSO) and other agencies use statistical methods to assign a value to these items. This involves determining the modal (most common) or percentile prices of the items received, which may vary by state and rural/urban classification.
    • Types of Items Imputed: Imputation covers both food and non-food items. In the context of the PDS, it primarily includes foodgrains but can extend to other essential commodities provided through government schemes.
    • Data Sources: Data for imputation can come from surveys like the HCES, where households report receiving these items. NSSO surveys typically provide detailed guidelines on how imputation values are derived and applied in their reports.
    • Impact on Analysis: Imputing values allows analysts to compute metrics like the Monthly Per Capita Consumption Expenditure (MPCE) accurately, reflecting the true economic status and welfare impact of households.

     Implications for Poverty

    • Economic Relief for Poorer Households: By providing foodgrains at highly subsidized rates, the PDS reduces the financial burden on poorer households, allowing them to allocate their limited resources to other essential needs.
    • Enhanced Measurement of Poverty: Imputing the value of free or subsidised items received through programs like the PDS allows for a more comprehensive assessment of household consumption. Including these imputed values in poverty measurements provides a more accurate reflection of the economic well-being of households.
    • Policy Insights and Targeting: Understanding how imputed values impact poverty metrics helps policymakers in targeting social welfare programs more effectively.
    • Diversification of Diet: Access to subsidized foodgrains from the PDS allows households to free up resources, potentially enabling them to purchase a more diverse range of nutrient and protein-rich foods such as vegetables, milk, pulses, eggs, fish, and meat

    Way forward: 

    • Enhancing Efficiency and Targeting: Improve the identification and targeting of beneficiaries through updated and accurate data collection methods. Continuous validation and updating of Socio-Economic and Caste Census (SECC) data can help in reducing inclusion and exclusion errors.
    • Promoting Nutritional Security and Health Outcomes: Expand the scope of subsidized items beyond basic grains to include more nutritious food options like pulses, edible oils, and fruits.

    Mains PYQ: 

    Q What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent? (2022)

    Q Food Security Bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (2013)

  • Why govt must create a buffer stock of all main food items? 

    Why in the news? 

    Sales of wheat and chana in the open market have effectively curbed soaring inflation in cereals and pulses.

    What is an Open Market?

    • An open market is an economic system with little to no barriers to free-market activity. An open market is characterized by the absence of tariffs, taxes, licensing requirements, subsidies, unionization, and any other regulations or practices that interfere with free-market activity. Open markets may have competitive barriers to entry, but never any regulatory barriers to entry.

    Present State of Inflation:

    • Overall CPI Inflation: Stood at 4.75% year-on-year in May, the lowest in 12 months, but food inflation remained elevated at 8.69%.
    • Cereals and Pulses: Inflation rates were 8.69% for cereals and 17.14% for pulses in May 2024.
    • Impact of Buffer Stocks: Buffer stocks of wheat and chana moderated inflation by ensuring sufficient supply during periods of price volatility.

    How Buffer in Gram(Chana) Helped:

    • NAFED Procurements: Procured large quantities of chana during surplus years at MSP, preventing prices from soaring during crop failures.
    • Distribution: Sold chana through various channels including open market e-auctions and ‘Bharat Dal’ at subsidized rates, stabilizing prices for consumers.
    • Current Stock Levels: Despite recent sales, NAFED still maintains a buffer stock of 4.01 lakh tonnes of chana as of now.

    Significant Role Played by FCI:

    • Wheat Offloading: FCI offloaded a record 100.88 lakh tonnes of wheat in fiscal 2023-24 through open market sales, stabilizing prices and reducing inflation.
    • Retail Price Management: Sales under schemes like ‘Bharat Atta’ ensured wheat and cereal inflation was reduced from peak levels earlier in 2023.
    • Buffer Management: Despite reduced stocks from previous years, FCI’s interventions have been crucial in managing price volatility in essential commodities.

    Need to Adopt Buffer Policy and Better Procurement:

    • Buffer Stock Strategy: Proposal to expand buffer stocks beyond rice, wheat, and select pulses to include oilseeds, vegetables, and even milk powder to mitigate price spikes.
    • Enhanced Procurement: Advocates for increased procurement during surplus years to build adequate buffer stocks for future market stabilization.
    • Policy Impact: Buffer stocking can moderate price volatility influenced by climate change-induced agricultural uncertainties, benefiting both consumers and producers.

    Way forward: 

    • Enhanced Diversification of Buffer Stocks: There is a need to diversify buffer stocks beyond traditional items like rice and wheat to include a broader range of essential commodities such as oilseeds, vegetables, and milk powder. This expansion would help in better managing price spikes and supply shocks across various sectors.
    • Strengthened Procurement Mechanisms: Improving procurement strategies during surplus production years is crucial. This involves proactive measures to purchase larger quantities of commodities at minimum support prices (MSPs), ensuring adequate buffer stocks for future market stabilization and price moderation during scarcity periods.

    Mains PYQ: 

    Q Food Security Bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (UPSC IAS/2013)