Cash Transfers: Raman Singh is Right, Centre Wrong.

Cash Transfers to beneficiaries is turning out as the battle cry of Congress/ UPA government for the upcoming general elections scheduled for early 2014 though its merits for intended beneficiaries are dubious. It is touted as the cure for dysfunctional and corrupt public distribution system, which delivered food and fuel free or subsidized according to economic eligibility criteria. Putting the money in the hands of heads of the family, invariably a man, would fetch brawny points to get votes come election; but those critical funds may find uses other than nutrition and health in the hands of a man. So, the very objective of support to weaker sections of society would be defeated by putting women and children at the mercy of men.
Instead of joining this cynical bandwagon, the Chhattisgarh Government led by Raman Singh it seems has chosen to stick to the existing public distribution system, which has reportedly steadily improved during his time at the helms. He has appealed to Centre to allow the state government to stay away from Cash Transfers and stick to PDS. This is certainly a commendable development and an example for other states to follow. Raman Singh has argued his decision cogently based on known facts, which academics and activists have tried again and again to drill into Central Government’s head. Raman Singh is doubly correct because in his state with larger proportion of tribals and other poor, the cash transfers would prove a greater menace.  I reproduce the Times of India report in full below.
RAIPUR: Armed with strength of Chhattisgarh’s effective PDS system, chief minister Raman Singh on Thursday said his government was not in favour of cash subsidy to the beneficiaries in Targeted Public Distribution System saying that the state be exempted from the proposed cash transfer scheme.
“The present system was the only and viable and convenient option for access to food grains in the rural areas”, he said in a letter to Prime Minister Manmohan Singh. 

Referring to the pilot project for transfer of cash subsidy through ration cards to the beneficiaries of various government schemes in 51 districts in the country and there were lot of problems in implementation of cash subsidy transfer under PDS. “In my view, Fair Price Shops under PDS are the only viable and convenient option for access to food grains in rural areas in the State. Financial inclusion and availability of IT infrastructure are preconditions to any scheme of cash transfers. There are substantial problems in the State on both accounts“, the chief minister said it would be difficult to fix the monthly cash subsidies in view of fluctuation in market prices.
Singh said the system is also vulnerable to misuse of cash subsidy amount by the male heads of the households or purchase of non PDS commodities which would defeat the very purpose for which the subsidies are proposed to be transferred.
Pointing out that Chhattisgarh has been pioneer in terms of reforming the PDS and the state Model has not only been recommended for replication in other states by the centre, he said it has been the experience of the state that substantial improvement in service delivery at the Fair Price Shops could be achieved by bringing about qualitative changes in the existing system through reforms and by close monitoring of the whole PDS supply chain, substantially reducing instances of diversion and leakages in the PDS.
Stating that any changes in present PDS should only be implemented if the same result in better convenience to the beneficiaries, Singh said since implementation of PDS at state level is the responsibility of State Government, any changes in the system should be done only with the consent of State Government.
He said the state government was committed to reforms in PDS and is of firm belief that substantial improvement in PDS service delivery can be achieved through reforms and monitoring. Hence the State does not agree with transfer of cash subsidy to the beneficiaries in Targeted Public Distribution System (TPDS) and Chhattisgarh be exempted from the proposed cash transfer scheme, he added. 

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