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TRANSCRIPT
CHAPTER V
COOPERATIVE SOCIETIES AND THE PUBLIC DISTRIBUTION SYSTEM IN KERALA
5.1 Introduction
Public Distribution System (PDS) is one of the instruments to ensure
adequate supply of foodgrains and other essential commodities at reasonable
rates to the people throughout the country. The PDS, which has its origin
during the World War 11 period, has been an important source for enhancing the
food security of the poor (George 1983.)' The consumer cooperatives have to
play a significant role in the distribution of essential articles at fair prices to the
needy, particularly to the low and middle income groups. This necessitates an
immediate and effective role by the consumer cooperatives in the public
distribution system (PDS). Hence in h s chapter an attempt is made to examine
the role of consumer cooperatives in the Centre-sponsored PDS in Kerala. The
chapter is divided into Sour sections. In the f i s t section, a review of the Indian
PDS is made, followed by a review of PDS in Kerala. The third section
examines the role of primary consumer cooperatives in the PDS in Kerala. The
last section attempts to inter-link public participation, consumer cooperatives
and PDS since they are complimentary to a great extent.
1 George, P .S . (1983). Guvernmmr tnrerventions in Foodgrains Market in India, Indian Institute of Management, Ahmedabad. p.3
5.2 Public Distributi'on System (PDS) in India
The public distribution system in India was evolved in the wake of food
shortages (1960s) to ensure adequate supply of essential and other commodities
such as rise. wheat, sugar, kerosene etc. to the consumers in right places, at
right time and at fair prices. Starting of Food Corporation of India and
Agricultural Pnces Cormiission in 1965 consolidated the position of PDS with
the following specific objectives:
1. providing foodgrains ,and other essential articles to vulnerable sections of
the society at reasonable (subsidized) prices.
2. to have a moderate influence on the open market prices of cereals, the
distribution of which constitutes a fairly big share of the total marketable
surplus, and
3 . to attempt socia1isat:ion in the matter of distribution of essential
commodities.
In order to meet these objectives, we have a long chain of institutions in
the country ranging from ration shops (public distribution centres), cooperative
institutions, State Civil Supplies Corporations and the Food Corporation of
India.
Immediately after the launching of PDS, various scholars attempted to
evaluate the working, structure, effectiveness and problems of PDS. A few
notable works include George (1979)'. Vaidyanathan (:198513, Government of
India (1990)'. Dev and Suryanarayana (199115, Jain, and Minhas (1991)~,
Howes and Shikha Jha (199217 Geetha, and Surynarayana (199318,
Suryanarayana. (1994'. 1'999'~), Parikh (1994)11, Dreze, Jean and Amartya Sen
(1995)12, Radhaknshna eta1 (1997)13, Nair (2000)14, Saxena (2000)'~ and Mani
(2002)'".
2 George. P.S (1979). t'u6lic Distrihur~on oj'Foodgrains in Kerala - Income Distribution Implications nnd Effl.ctiven~?ss, International Food Policy Research Institute Report No. 7, Washington. D.C
3 Vaidyanathan, A. (1985), "Food Consumption and Size of Peopk: Some Indian Evidence", Economic nnd Polrtical Weekly, Revizw of Political Economy, Vol. XX, No. 30, pp 79-84.
4 Government of India (1990), "Results on Utilisation of Public Distribution System", Sarvekshana, Journal of the :National Sample Survey Organisation, Vol. XIII, No.4.
I Dev, S.M and M.H. Suryanarayana (1991), "Is PDS Urban Biased and Prorich? An Evaluation". Lconom~c a ~ ~ d ~~ol i t ica l Weekly. Vol.XXV1, No.41, pp. 2357-2366.
Jain, L.R. and BSMinhas (1991), '.Rural and Urban Consumer Price Indices by Commodity Groups (States and All-Inldia: 1970-71 to 1983)", Sarvekshana, Vol. XV, No. 1, Issue No. 48, pp.1-21
7 Howes, S and Shrkha Jh (1992). "Urban Bias in Indian Public Distribution System", Economic and Political Wee,&, Vol. XXVII, No. 19, pp. 1020-1030.
8 Geetha, S. and M.H. Suryanarayana (1993), "Revamping PDS: Some Issues and Implications". Economic ~,ma'Polirical Weekly, Vol. XXVIII, No. 41, pp. 2207-2213. Suryanarayana. M.H. (1904) "Urban Bias in PDS", Economic and Political Weekly, Vol. XXIX: NO. 9; pp. 510-512:.
lo ----- (1999). -Food Security and PDS In Kerala : Form and Scope for Reform", Rethinking Development: Kerala '.s D8evelopment Experience (Ed.), Vol. 11, Institute of Social Sciences, New Delhi, pp. 325-369 Parikh Kirit S. (1994). 'Who Gets How Much From PDS: How Effectively Does It Reach The Poor?'. Sarvek,shunu. Vol. XVII, No. 3, pp 1-34.
12 Dreze, Jean and Amartya. Sen (1995), India: Economic 1)evelopment and Social Opportunity. Oxford Univ~zrsity Press, Delhi.
l 3 Radhakrishna et. al (199'7), Indiu's Public Distribution $vstem: A National and International Per,spective, W4orld Bank Discussion paper No. 380.
14 Nair, K.N. (2000). "Food !Sec:urity and the Public Distribution System in Kerala", Strategies for Human llevelopment in India: Public Support for Food' Security - The Public Distribution System in India, Vol. I (Edited), Sage Publications, New Delhi, p. 316. Saxena N.C (2000), .'How Have the Poor Done? Mid-term Review of Ninth Plan'', Economic and Polit~cal Wtzekly, Vol. XXXV, No.41, October.
16 Mani. K.P. (2002) "Indian Agriculture in the Era of Reforms - Clhallenges Ahead, UGC- DRS Sponsored National Seminar Volume on Agricultural, Environmental Scenario and Tax Refbrms in India, Maduc3i Kamaraj University, Madurai, p. 17 1- 179.
The Sixth F~ve 'fear Plan recognised that for the effective functioning of
the public distribution system, it would be necessary to revamp and strengthen
its infrastructure and expand the system quickly to cover all areas in the
country. part~cularly the backward, remote and inaccessible areas. The public
distribution system has been effective to control the adverse impacts of drought
during 1987-88. It war; also instrumental in transferring foodgrains from
surplus areas to the food deficit states and regions in India.
The targeting of public distribution system was strengthened in the
1990's with the introduction of revamped public distribution system (RPDS) in
the tribal, hilly and arid parts of the country. Under RPDS, 1775 RPDS blocks
in the states were allocated rice and wheat at prices lower by Rs.50 per quintal
than the issue prices for normal PDS. On the basis of the recommendations of
the chief minister's conference held in July 1996, an effort was also made to
streamline the public distribution system and consequently the targeted public
distribution system (TPDS) replaced the erstwhile PDS from June 1997. TPDS
envisages a two-tier system of delivery - to supply the same variety of grains at
subsidised prices to the poor and at the regular price to the non-poor. The
following tables (see tables 5. I , 5.2, 5.3, 5.4 and 5.5) summarises the extent of
utilisation and significance of PDS in India. The tables are based on data for
the year 1986-87, available: from Government of India, NSSO 42nd round. The
latest data are not available yet. eventhough a few crude indications are
available, they are not in a compilation form. The non-availability of latest
information is a serious data deficiency in the discussions on PDS.
Table 5.1
Utihsat~on of PDS-Ilistribution of persons purchasing selected items over (different sources- rural- 1986-87*
i Items of Purchase (in percentage) I -7- Source of ;
Purchase Edible
Rice
I I vanaspati I
Only from other 1 60.26 68.71 83.22 32.06 sources
Both fronl PDS 25.57 4.80 12.10 31.86 and from other sources
~ ~
Total j 100.00
Kerosene
Source: Govenunent of India (1 990), N.S.S.O., 42nd round, July 1986-June 1987, quoted from Rural Development Statistics, 1998. National lnst~tute of Rural Development, Hyderabad p. 278.
* Data since 1986-87 were not available.
From table 5.1 it is seen that only 14.17 percent of customers purchase
rice Gom PDS, while 60.26 per cent absolutely depend on other sources. In the
case of wheat, eventho~lgll the share from PDS is marginally high, still the
dominating source is open market. In the case of sugar, the distribution is
almost even between PUS. open market or both. In the case of kerosene, 44
percent purchases were made from PDS and 48 percent from other sources.
Based on &s table. we may infer that sugar and kerosene are the most preferred
items from PDS.
Table 5.2
Percentage of quantity of purchases from PDS to total purchases by stem in India ( 1 986-87)
) ltern +- --
1 Rural 1 LJrban 1 k c e
i 19.02
----- , ' Wheat 1 12.64 1 19.33 ( . Bajra 1 1.04 0 9 8 1
- 1 Jowar 2.28 1.49 1
Other cereals / 4.23 1 3.59 1 Pulses
- -. .. . - i 0.42 1 0.51 I
Edible oi:l and 11.04 14.51 vanaspatl
Kerosene 1 25.86 1 59.27 1 Standard cloth 1 3.55 1 ;!.43 1
Source: Government of India (1990), Sarvekshana, Vol. :YIII, No. 4, Issue No. 43, April- June, pages S.161, S.171.
Table 5 2 presents lthe percent of quantity of purchases from PDS to the
total purchases by Item in India. Considering the major items dealt by the PDS
such as rice, wheat, edible oil, sugar and kerosene it is seen that there are no
notable differences between rural and urban India, except in the case of
kerosene. In the case of'kerosene. while 25.86 percent of purchases were made
from PDS in rural India, in urban India this share came to 59.27 percent. This
may be because of relatively high price of kerosene in the open market.
Table 5.3
Purchase from PDS to total value of purchases- rural areas state wise (1987-87)
State
Andhra Pradesh
Assam
Bihar
Gujarat --
Haryana
Himachal Pradesh
Jammu & Kashmir
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajastan
Tamil N adu
Tripura
Uttar Pradesh
Rice Wheat Edible oil
& Vanaspati
(in percentage) I I
Kerosene Standard Sugar 1 1 cloth
I West Bengal 1 50.0'7 1 44 23 1 3 .52 / 59.68 1 71.55 1 13.01 1 Source.Government of India. N S.S.O., 42nd Round July 1986 - June
1987 Quoted from Rural Development Statistics, 1998, National Institute of Rural Development, Hyderabad, p.28 1.
Table 5.3 presents the state-wise percentage share of PDS to total value
of purchases of rice, wheat, edible oil, sugar, kerosene and standard cloth in
rural India. It is seen from the table that the maximum dependence on PDS for
the purchase of rice is found in West Bengal followed by Kerala, Gujarat,
Himachal Pradesh and Jiunmu & Kashrnir. In the case of wheat, the maximum
dependence is found in Kerala, followed by Tamil Nadu, West Bengal,
Karnataka and Maharashtra. In the case of sugar and kerosene, majority of the
rural purchases were f o m PDS. In the case of rural Andhra Pradesh, the
dependence on PDS for sugar even goes to the extent of 95.37 percent. In the
case of Kerala, the dependence level is 48.02 per cent. Of the total purchases
of kerosene in rural Kerala, 88.06 percent were from PDS. Heavy dependence
for kerosene is found in Tripura, west Bengal, Tamil Nadu, Hariyana and
Andhra Pradesh also. If: is also felt that certain states like Bihar, Hariyana,
Madhya Pradesh, Pubjab and Uttar Pradesh depend on PDS only marginally for
majority of items. It is {interesting to note that dependence on PDS in Bihar,
one of the poor state:: in the country is very limited. However the trends
revealed from this table cannot be judged as very accurate and reliable position
because of two reasons. Firstly, the National Sample Survey Organisation
rounds are based on limited simple and the data belong to a veIy old period.
Tables 5 4 and 5.:5 explain the per capita purchases of rice and wheat
from PDS and also the details of cereals purchases from PDS by rural bottom
20 per cent of households.
Table 5.4.
Per capita purchase of Rice and Wheat from PDS in 1986- 87 (kg. / month)
I I
Rural I I Urban I State t- I
Rice Wheat
Gujarat P I
-- 4- !
Jammu & Kashrnir I 1.64
0.56
Madhyapradesh 0.27
Maharashha 0.39 0.67 0.67 0.81
Orissa 0.03 0.02 0.31
0.00
0.22 d-
Tamilnadu 1.18 0.11 0.25 -. . +-
Uttarpradesh I 0.12 0.10 10.14 0.17
West Bengal 0.50 1 0.44 1 1.53 1 1.78 1 All India 0.62 0.24 0.84 0.48
S0urce:Radhakrishna et. a1 (1997), India's Public Distribution System: A National and International Perspective, World Hank Discussion paper No. 380, p. 39.
Table 5 4 reveals that per capita purchases of rice from PDS is higher, as
compared to national average in Andhra Pradesh, Assam, Jammu & Kashmlr,
Karnataka, Kerala, Tanlihadu and m the urban areas of West Bengal. In the
case of per caplta purchase of wheat from PDS, the quantity of purchase
exceeds the national tiverage in Gujarat, Jammu & Kashmir, Kerala,
Maharashha, West Bengal and rural areas of Rajastan.
Table 5.5
Cereals purchased from PDS by Rural Bottom 20 per cent of households (1986-87).
I Estimated 1 1 I I
Orissa - i 5.23 1 98.80 1 1,30
0 1 Bihar 15.38 98.70 0.70 0.70
I nxal
' population in States 1 bottom 20%
1
i of households
U"arpradesb ~(6.06 1 98.60
@3: 1 1.10 1 - Haryana 21.79 96.10 2.40 - Manipur I
I 0.21 1 93.30 1 2.40 1 4.30 1
No purchase from PDS
i 110.75 1 88.60 1 6.70 1 4.70 1 Madhyapradesh 1
0 8 5 . 5 5 . 3 I::: 1 West Bengal 9.94 75.30 20.50
--
Partial purchase froE, PDS
y -..+:;;;I +*I Assam I_-
Contd . . .
All purchases fromPDS
Jammu & i
Kashrnir 1 18.60 1 14.70 1 1 2 0 , Himachal pradesh 1 66.70
Maharashha 1 9.92 47.40 36.30 16.40
Estnmated i
p - ~ - - Y T ~ ~ ~ ~ Tamilnadu
Partial purchase
PDS
rural 1 popuiatlon m States i bottom 20% of households
I
Tripura i i 0.55 1 23.60 1 74.80 1 1.70 1 -
I 0.23 L 8 . 7 0 82.10 9.20 t-.. -
All purchases from PDS
No purchase from PDS
0.07 V . . O 1 43.50 1 47.80 1 Kerala 5.11 6.30 80.40 13.20
-
I (i~ulhons)
Source: Parikh (1994) Quoted from Sunanda Roy (1997) Public Provision of Basic Needs: L,essons from Indian experience, Reserve Bank of India Occasional Papers,(1997). Vol. 18. No. 2 & 3, special issues June & September. P.567.
Table 5.5 suggests rhat among the rural bottom 20 percent of households
population in India, m;xjority of the people in Punjab, Orissa, Bihar, Uttar
Pradesh Hanyana, Mani~plu, Madhya pradesh, Rajastan, West Bengal, Sikkim,
Assam, Delh~, Meghalaya, Jammu Kashmir and Himachal Pradesh are not
making any purchases of cereals from PDS sources.
5.3 Recent issues in Public Distribution System
The Union Budget 2000-2001 has declared the government's
policy to fix the issue price of foodgrains to below poverty line (BPL)
families under PDS at: 50 per cent of the economic cost. The issue price
of wheat for B P L families has been enhanced from Rs.2.50 paise per
kilogram to Rs.4.50 per kilogram, registering an increase of 80 per cent
in the issue price. The issue price of rice was also increased from
Rs.3.50 paise per kilogram to Rs.5.90 paise per kilogram. The above
poverty line (APL) families has to pay double the rate to meet the
economic cost of foodgrains distribution. In addition the Central
government has barred the income tax assessees from the entitlement for
PDS sugar. Eventhough the issue price under PDS has been hiked, the
government has doubled the allocation of foodgrains to BPL families,
under the targeted public distribution system, from 10 kg to 20 kg. As a
consequence of these measures, the expenditure on food and sugar
subsidy is projected to be Rs.82 10 crore in 2000-200 I . However, in July
2000, the Central Government has lowered the issue price of rice and
wheat to BPL and APL, families marginally.
The higher allocations and poor offtake of rice and wheat from
PDS are the major areas of concern since 1991. The status of allocations
and offtake of rice an'd wheat since 1991-92 under the PDS is given in
Table 5.6.
Table 5.6
As evident from Table 5.6, over the years, the gap between
Foodgrains Allocati~ons and offtake under Public Distribution System (million tonnes)
allocations and offtake of foodgrains has widened. High procurement
-- --- --
Wheat I
Year - Offtake
~ .
7.85
1.993-94 5.91
1994-95 1080 4.83
1995-96 11.31l 5.29 .-
8.52 .-
7.08 i--- t--
10.11 7.95 1998-99 1-1- --
and a decline in offtake has resulted in a huge stock pile. At the end of
July 2000. foodgrain:: stock stood at 41.20 million tonnes as against
Source: Government of India (2000), Economic Survey 1999-2000, Ministry of Finance, New Delhi, p.58.
Rice
30.70 million tonnes a year ago. In order to minimise the wastage and
Allocation
11.36
11.48
12.41
13.32
14.62
15.16
12.83
12.93
damage of foodgrains, the Central Government has adopted the open
Offtake
10.17
9.69
8.87
8.03
9.46
11.14
9.90
10.74
market sale of foodgrains at prices below the economic cost. While the
central issue price for wheat to APL categories under PDS was Rs.8.30
per kg., it was sold to private millers at Rs.6.50 per kg., in July-August
2000. The sale of foodgrains to API, cardholders under PDS at a price
higher than the open market sale price by Food Corporation of India
signifies the need for revamping the public distribution system (Thomas,
2 0 0 0 ) ' ~ Price revisions with an intention to reduce the food subsidy
without the necessary institut~onal reforms will damage PDS in India.
Realising the significance of institutional reforms in the public
distribution system, the government of India introduced in July 2000 a
'Sarva Priya Yojana', to provide eleven consumer articles to more than
32 crore people below poverty line in the country. The procurement of
the consumer articles wlould be undertaken by the National Cooperative
Consumers' Federation and the distribution of the items would be
through the network of 4.50 lakh fair price shops. The scheme is
intended to be operated on 'no loss, no profit basis' and will not draw
from the state exchequer in terms of subsidy (Adhikasi, 2000)".
Eventhough the involvement of the National Cooperative
Consumers' Federation in the 'Sarva Priya Yojana' is a step in the right
direction, the distribution of goods through the private fair price shops
may impose serious limitations such as leakages to open market, lack of
price advantage etc. In the wake of globalisation, there is an urgent need
for the involvement of people's organisations like primary consumer
cooperatives to strengthen the public distribution system. Whenever
people are directly iinvolved in the affairs of consumer cooperative
societies at the grass root level, these institutions will become viable and
17 Thomas Paul Kattookaran (2000), "Scientific Pricing Inevitable in the Public Distribution System", Mathrubhumi dally, (Malayalam all edtions), 14" Augusi:, p. 4. Adhikari, T.T. (2000). o p ~ i t , p.212
vibrant organisations to act as an effective channel of public distribution
system. The revamped public distribution system through the
involvement of consutrier cooperatives and other related structures can
play a vital role in the poverty alleviation measures in India.
The Central govenment has converted the public distribution system in
to a statutory entity with effect from 2, September 2001, through a Public
Distribution System Order 2001, under the Essential Commodities Act, which
makes it mandatory to ][denti@ the families below the poverty line within three
months and plug all loopholes in the PIIS. With this, it is now mandato~y for
all the states to run PDS for the poor. The Central government has empowered
itself with legal powers to prosecute those responsible for any flaw in the
operation of the PDS (CMIE, 2001) l y .
5.4 Public Distribution System in Kerala
As mentioned in the introductory chapter, Kerala has received
considerable appreciation and acclaim for its achievements in different aspects
of human development through deliberate public policy in spite of its low level
of per capita state domelstic product. (Dreze and Sen, 1995)'~. One such policy
is relating to the public distribution system which has been instrumental in
ensuring physical access to foodgrains in Kerala. The PDS evolved in its
present form only after 1964 and now covers virtually the entire population.
There is a two-tier system of PDS in Kerala today. At the first level, public
19 CMIE, (2001) Monthly Review of fhe Indian Economy, Centre for Monitoring Indian Economy. Mumbai. September, p.19.
20 Dreze, Jean and Amartya Sen (1995) India: Economic Development and Social Opportunify, Oxford U~versi ly Press. Delhi, p.112.
distribution of foodgrains procured from the Centre through the Food
Corporation of India (FCI) is handled by the Department of Civil Supplies of
the Government of Kerala. This is supplemented, at the second level, by the
Kerala State Civil Supplied Corporation set up in 1974, which procures rice,
wheat products. sugar, pulses, vegetables etc. from the open market and
distributes through a network of 'Maveli stores'. As per the Government of
Kerala assessment, such state-wide coverage of public distribution of essential
commodities has benefited the under-privileged sections of society and has
reduced the ~mpact of poverty (Government of Kerala, 1994))~'
Table 5.7
Publi~: Distribution System in Kerala
Source: Government of Kerala, Economic Review, K.erala State Planning Board. Thiruvananthapuram (various issues).
As on 3 1 st A~iglust 1999, PIIS covered a ration population of
304.63 lakh, which cc~nstitutes 96 per cent of the projected population of
21 Government of Kerala (16)94), Eighth Five Year Plan 1992-97: ljinal Outlay Approved by the Planning Commission (Summary Features), State Planning Board, Thiruvmanthapuram. p. 9.
320 lakh (Government of Kerala, 2 0 0 0 ) ~ ~ . Table 5.7 illustrates the extent
of public distribution system in Kerala. The number of ration cards and
the number of retail ratron shops in the state are increasing continuously.
Since Kerala State is not self-sufficient in the production of foodgrains
and essential goods for consumption, public distribution system has a
prominent place in the state's economy. The extent of dependence on
PDS in Kerala is ava.iliible from a comparison with neighbouring states
as given in Table 5.3. Further table 5.8 explains the relative dependence of
PDS by select fractile groups of households in Kerala (Rural and Urban).
Table 5.8
Relative dependence Ion PDS by select fractile groups of households: Kerala (Rural & Urha:n) (Quantity purchased from PDS as per cent of
Total Quantity purchased from the market) 1986-87
R ~ c e Wheat Sugar Ed~hle 011 Kerosene
Source: Government of llndia (1990), NSSO, 42"* round Sarvekshana, Vol.XII1, No.4. p.S 166.
22 Government of Kerala (2000), Economic Review 1999, KeraYa State Planning Board, Thiruvananthapuran~. p.3;:.
Table 5.8 show,s that the relative dependence of the poorest fractile
groups of households on the PDS IS much higher than that of the populahon as
a whole and that of the: richer fractile groups for rice, wheat, sugar, kerosene;
edible oils seems to be the only item where the relative dependence of the
richer fractile groups seems to be higher (Table 5.8). In general, the benefits of
the PDS seem to be equitably spread across fractile groups of households in
both rural and urban Kerala. This is further confiined by the available
evidence for 1986-87 which shows that from among those depending
exclusively on the PDS, 54.55 per cent for rice and 41.55 per cent for wheat
belong to the poorest 40 per cent of the rural households in Kerala; as regards
urban Kerala. the corresponding estimates are 56.44 per cent and 53.16 per
cent23. On the basis of these aggregate measures, it appears that there is
considerable scope for targeting of the PDS in Kerala. Distribution of rice and
wheat through PDS in IKerala reveals a declining trend since 1998. Table 5.9
gives an idea of off-take through the PDS in Kerala since 1995.
Table 5.9
Quantity of R~ce and Wheat D~st~lbuted through PDS in Kerala (Lakh Tonnes) YlI h c e 1- 1 1'395 11.32 4.23
Source: Government of Kerala (2001) Economic Review 2000, State Planning Board, Thiruvanathapuram, p.33.
23 Government of India ( 1990). op.cit., pp.S-117 & S-146
Eventhough the PIIS has evolved as an important food security measure
in Kerala, ~ t s effecttveness in recent years has been slowly eroded. Under the
fiscal crisis, the state has increased the price of ration rice significantly, there
by narrowing down differences between the open market and PDS prices.
Apart from the above factor, the quality of PDS rice in general is relatively
inferior compared to that of rice available in the open market (Nair, 2000)'~.
As the quantity of rice and wheat distributed through PDS in Kerala
shows a declining trend in recent years, reforms in the public distribution
system is inevitable. During the post independence period, the demand for
making the country's governance more democratic through a meaningful
process of decentralisaiioo of power continued to enjoy pride of place on the
national agenda (Thomi~s Isaac and Harilal, 1999)~'. Hence in the measures for
reforms in the public distribution system, democratic institutions like
cooperatives and panchyati raj institutions are to be made instrumental.
5.5 Cooperatives in the Public Distribution System in Kerala
Raman and Halbhavi (1997)'~ stated that the role of cooperatives
assumes a greater significance in the context of :structural adjustment
programme as the latter would imply deregulation and removal of price controls
on the essential comtnociitues consumed by vast population in India. According
to them the unique featur'es of PDS in Tamilnadu is that no private trader is
given the license to run the fair price shops and the cooperatives occupy a
24 Nair, K.N. (2000). opcit . , p.318. 25 Thomas Isaac. T M and K.N.Harilal (1999), "Democratisation of the Planning Process -
Experience of People's Campaign in Kerala", Rethinking Development: Kerala k Development Experience (Ed) Vol. 11; Institute of Social Sciences, p. 492.
26 Raman and Halbhavi S.G. (1997), op.crl., p.322.
unique place m the distribution of essential commodities: under PDS. Just like
Tamil Nadu and other states, consumer cooperative societies are also involved
in the activities of PDS in Kerala (See table 5.10)
Table 5.10
Sources: Government a~f Kerala, Economic Review, State Planning Board, Thiruvananthapuam (various issues).
Number of authorised wholesale dealers in the PDS of Kerala
Table 5.10 reveals that the share of cooperatives in the wholesale
dealership in the PDS of'K.erala, declined from 22.43 percent in 1980 to 15.21
Percentage of cooperative wholesalers
22.43
15.86
15.21
14.45
15.00
11.70
1 1.52
11.08
--
No. of No. of other
- t
1990 262 --
1995 3 02
54 3 06
1997 ; 42 317 A. .- - --
I 4 1
$2 +;- 1999 I
-__i_---_-
percent in 1990 and to the low level of 11.08 percent in 1999, which later
Total
214
290
309
353
360
359
356
370
recorded a marginal increase to 12.17 percent in 2000.
The number of retail ration shops (public distribution centres) in the
cooperative sector alscl declined gradually. The share of cooperatives in the
retail public distribution centres is presented in table 5.11
Table 5.1 1
Author~sed Retail 1 Ration Shops (public distribution centres) in Kerala
Percentage of shops under
sector retail shops in cooperative cooperative
rationshops sector sector
-
1980 103 18 15.83
1401 11.11
1990
1995 1080 7.62
1996 10'70 13 154 14224 7.52 - -- -
1997 1 1053 14255 7.39
1998 13212 14263 7.37 --
1037 13250 14287 7.26
2000 7.18 - ~ ~
Source: Government of Kerala, Economic Review, State Planning Board, Thiruvananthapurarn (various issues).
From table 5.11, it is revealed that in the case of retail shops also, the
role played by the coop~:rrrtives 1s steadily diminishing over the years from 1980
to 2000. In 1980, the p:roportion of cooperatives in the retail public distribution
centres in the state was 15.83 percent which has come down to just 7.18 percent
of the total retail ration shops (public distribution centres) in 2000. This
indicates that the involvement of cooperative sector m PDS of Kerala is
relatively low and over the years the number of cooperative institutions directly
involved in PDS has been decreasing sharply. Of the 4,49,386 fair price shops
(FPS) in India, the coop~:ratives accounted for 94,111 FPS as on December
1997, thus representing 21 percent FPS under PDS with cooperatives (NCDC
Annual Report 1999-2000). While the national average was 21 percent for the
cooperatives in PDS, in K,erala it was only 7.39 percent in 1997.
A few scholars attempted to examine the reasons behind this trend
(Sasikumar, 1989)~', Ushiadevi (1990)'~, Nair (2000)'~). In their opinion, the
major reason for this fall is the uneconomic operations of the consumer
cooperatives involved in the PDS and the consequent loss suffered. In this
study also, an attempt was made to mobilise the opinions of the customers
towards the involvement of primary consumer cooperatives in the PDS and to a
great extent, the need far people's participation in this process.
5.6 People's Participation, Consumer Cooperatives and Public Distribution System
In order to get a cross sectlon opinion about the services of cooperative
outlets and the necessity of consumer cooperatives in involving in PDS outlets,
information were gathered from 300 customers who made purchases from
primary consumer cooperative stores.
Table 5.12 shows that among the 300 customers surveyed with the pre-
tested schedule 37 customers (12.33 percent) used to receive their PDS supplies
from the public distribution centres managed by the consumers' cooperative
27 Sasikumar ( 1989) opcir. p. 177. 28 Ushadevi, K . N . (1990). op.cit., p.84
29 Nair, K.N. (2000). op.cil.. p.318.
stores. Among these 37 customers the maximum number of customer
respondents, (16) rece~vecl thelr PDS supplies from consumers9 cooperatives in
the central region, followed by the north region (14).
Table 5.12
The nature of ownership of public distribution centre (ration shop) supplying PDS goods to the customers.
1- --
Co-operative 1
No reply 5.34 I-- -- Total 100 100 100 300 100.00
i --
Source: Survey data.
The customers' perceptions towards the statement that the PDS supplies
are satisfactory from the public distribution centres of the consumer cooperative
store were gathered on a 5 point scale and perception index* was computed.
Perception index reveal that in the northern region 60.71 percent, in the
central region 50.00 percent and in the south region 57.14 percent of the
customers were satisfie'd .with the PDS supplies which signifies that the public
distribution centres run by the consumers' cooperative stores are lying in the
moderately favourable zone
~
* Customer'~ perception index was prepared by assigning weights 12, +1, -1, -2 and 0 respectively for strongly agree, agree. disagree, strongly disagree and no opinion expressed towards the given statement.
Table 5.13
Customers' perceptions towards the statement that I'DS supplies are satisfactory from the public distribution centre of the consumers' cooperative
store.
Disagree
Strongly disagree
No opinion
Total 16 I! 4 37 ~-
Source: Survey data.
Opinions of the remaining 247 respondents (16 did not respond towards the
statement) who were 1101: making purchases from the cooperative run PDS
outlets were also gathered and their distribution is available &om table 5.14.
Table 5.14
Customers' opinion about the need for the involvement of consumer co- operatives in the ownership and management of public distribution centres
1 Southe111
Necessary +-- .-
+- Y T V G repli . 1 p J 2 . 3 5
Total 100.00 79 LOO.00 83 100.00 247 100.00
Source: Survey data.
As revealed fro~n Table 5.14, 61.94 percent of the customers who are
receiving their PDS supplies from the public distribution centres managed by
the private traders opined that it is necessary to involve consumers' cooperative
stores in the ownership and management of public distribution centres. This
validates our hypothesis t.hat the users of public distribution system prefer the
public distribution centre!; run by the consumer cooperative stores. Hence the
customers of consumer cooperatives in Kerala, favour the greater involvement
of consumer cooperatives in the public distribution system. Tlus offers further
potential for the cooperatives to involve in PDS.
5.7 Need and Relevanc~e of People's Participation
It is being recognised that in the race for economic development, the
solutions to the proble:m,s that are directly faced by the people rest on the
initiatives taken by themselves. Participation should include the notions of
contributing, influencing, sharing or redistributing power and of control,
resources, benefits. knsouiledge and skills to be gained through beneficiary
involvement in decision making. Participation is a voluntary process by which
people, including the disadvantaged (in income, gender, caste or education)
influence or control the decisions that affect them (Saxena, 1 9 9 ~ ) ~ ' .
In India 73rd and 7 , 4 ~ Constitutional Amendments (1993) have widened
the powers of Panchayath Raj Institutions. To empower the Panchayathi Raj
Institutions, Kerala enacted a new legislation, Viz. the Kerala Panchayathi Raj
Act, 1994. In the Third Schedule of the Kerala Panchayath Raj Act, 1994
30 Saxena N . C . ( I "'What is meant by people's participation?" Journal of Rural Developmmt. Vol 17 (I); pp. 1 1 1-1 13
sector wise distribution of responsibilities of the gama panchayaths are
specified. The responsibilities of g a n a panchayaths with respect to public
distribution system are
1. Examination of complaints against PDS and taking of remedial measures.
2. Organisation of' campaigns against weights and measures offences
3 . General supewrsion and guidance of ration shops and Maveli Stores and
other public distribution centres and if necessary, starting new public
distribution centres.
With respect to the Co-operative sector, the Act stipulates that the gama
panchayath has the responsibility to
1) Organisation of cooperatives within the jurisdiction of the panchayath, and
2) Strengthening of existing cooperatives
The ~dent~ficatlon of the poor is also a specified responsibility of the
grama panchayaths under the poverty alleviation in the Third Schedule of the
Kerala Panchayathi Raj Act, 1994 Similar functions of Block Panchayaths and
District Panchayaths ire incorporated in the Fourth Schedule and Fifth
Schedule of the Act respectively.
As the government of India has introduced 'Sawa Priya Yojana', there
is an urgent need for str1:ngthenmg and promoting consurrier cooperatives in the
Kerala State. The decliliing trend of the cooperative sector in the ownership of
public distrlbutlon centres is a matter of concern to the people in the state.
After the introduction of economic reforms i r ~ 1991, the policy of
the Government is to curtail subsidies in a phased manner. But real
rationalisation of subsidies requires not merely price revisions but
substantial 1nstitutiona:l reforms. The introduction of 'Sarva Priya
Yojana' is expected to take a lead in the institutional reforms of PDS in
India (Thomas and Fdani, 2001)". The Government has entrusted the
National Cooperative Consumers' Federation .with the task of
procurement of eleven c:onsumer articles for the distribution through the
ration shops and primary cooperatives. Eventhough ration shops and
primary cooperatives in general are entrusted with the retail distribution
of consumer articles under 'Sarva Priya Yojana', the success of the
implementation of '!iarva Priya Yojana' lies in the promoting and
strengthening of primary consumer cooperatives at the grass root level to
cater to the needs of the consumers in general and for the maintenance of
public distribution system in particular. Hence the promoting and
strengthening of consumer cooperatives at the primary level may be
regarded as a substantial institutional reform to revamp PDS in India.
Undeniably, consumer c~ooperatives have great potential for accelerating
the pace of' rural development in India. Consumer cooperatives are
aiming at promotion of social good and social welfare through reducing
exploitative tendencies, unleashed by the private traders. The supremacy
of the consumer cooperai:ives over other forms of organisation can hardly
be over emphasised as far as their distinct advantages in terms of
democratic functioning, and social objectives are concerned.
31 Thomas Paul Kattookaran and Man1 K . P (200 lb), up.cit., p. 340
In the context of new economic policy, emphasis is now being laid
on disengagement of the Government from the cooperative sector in a
phased manner. As consumer cooperatives are fulfilling the social
obligations. there is a need to support and empower the consumer
cooperatives under thlc guidance of the Government. The panchayathi raj
institutions are to be made instrumental for the development of consumer
cooperatives in the changed economic conditions in India. Article 243
(G) of the 73rd Constitutional Amendment has enabled State
Governments to provide necessary powers and functions to the
panchayati raj institutions to (I) function as institutions of local self-
government and (ii) plan and implement schemes for economic
development and social justice as enlisted in the Eleventh Schedule. The
concept of democratic decentralisation requires that not only appropriate
institutions and opportunities but also necessary capabilities would have
to be created at the lower levels so as to facilitate greater participation of
the members of governance. Revamping the public distribution system
through the promoting and strengthening of consumer cooperatives paves
the way for democratic decentralisation and meaningful participation at
the lower levels. As people participate in decision making, it leads to
changes in their attitude, behaviour, confidence and leadership qualities.
Being close to people and democratically elected institutions, the
involvement of panchaythi raj institutions in the promotion and
strengthening of consumer cooperatives may help to equip them to act as
an economically viable c~rganisation and also to play a major role as an
effective channel in the: public distribution system.
5 .8 Patronage to Public Distribution System and Consumer Cooperatives under People's Campaign in Kerala
The primary objective of the People's Campaign in Kerala has
been to empower the local bodies to prepare and implement their own
development plans, given the various constraints within which they
operate. A key feature of Kerala's grama panchayats is their relatively
larger size when compared to those in other states. An average grama
panchayat in Kerala is 37.83 sq.km in area and has a population of
25199. Grama Sabha with organised neighbouhood groups of 25 to 50
families can take a leading role in the formulation and implementation of
appropriate projects in the area of public distribution system and
consumer cooperatives;.
In order to assess the s~gnificance given to PDS and consumer
cooperatives, the sectoral investment pattern of State Plan Assistance
Component of Local Plans in Kerala is given in Table 15.
Table 5.15 shows that the number of pro-jects on PDS and
consumer cooperatives under People's Campaign and the total outlay for
these two key sectors are not much significant. Both these sectors
together accounted for less than one per cent of the total outlay in the
service sector. In the vvake of economic liberalisation, decline in the
number of projects in the consumer cooperative societies is a matter of
concern to the consum'ers in the state. During the period of comparison,
the total outlay for consumer cooperative societies decreased from 0.25
per cent to 0.19 per cent.
Table 5.15
Sectoral development pattern of state plan assistance component of local plans in Kerala
r---- - --TI,-Yy 1998-99 - Items
projects cent) cent)
- .- ~. -- - Productive Sector Total
l ~ i t h i n the service sectol- I .~
Public Distribu1:ion Projects
.
b) Projects for consu1me:r societies 0.16 0.16
~ ~
Source: Government of Kerala (2000) Compiled from Economic Review, 1999, Kerala St,ate Planning Board, Thiruvananthapuram.
As public distr~bution and consumer cooperative projects have a
significant role to rais~: the standard of living of the people, there should
be greater allocat~on to the projects under PDS and consumer cooperative
societies in the decentralised planning process.
5.9 Policy Perspective
1) The panchayati raj institutions at three tiers should make greater
allocations for various projects in the area of consumer cooperatives
in future. The Grama Sabha should be made instrumental to impart
the values of cooperative education. In the context of globalisation
and liberalisation. t:he need to strengthen the consumer cooperatives
should be made known to the common man through the interactions
in the ne~ghbourhood groups of Grama Sabha. Whenever people are
made aware about the values and significance of cooperatives in the
economy. these institutions, would become viable and vibrant
alternatives of tlevelopment process. Hence, panchayathi raj
institutions shoultd make greater allocations for projects to impart
awareness about the significance of consumer cooperatives to the
masses.
2) Kerala, being a consumer state, should set-up an outlet of the
consumer coopera.tive society in each and every ward of the Grama
Panchayath. As the number of consumer cooperative outlets in
Kerala are not sufficient, there should be greater allocations by the
panchayathi raj i.nz;titutions to finance the projects to build the
necessary 1nfrastrul:ture facilities for the consumer cooperative
outlets to be set up in the state.
3 ) The non-availability of preferred brands of products from the
consumer cooperatives and lack of scientific inventory management
are some of the deficiencies in the operations of consumer
cooperative outlets. Panchayati raj institutions should prepare
projects to provide Inore shopping space and storage facilities to the
consumer cooperative outlets.
4) Marketing and promotion strategies adopted by most of the consumer
cooperatives are r ~ o t scientific. Panchayathi raj institutions should
formulate some strategies to induce people to make their purchase
requirements from the consumer cooperative outlets. In addition to
it, panchayathi raj institutions should make it mandatory to purchase
the available goods for its requirements from the consumer
cooperatives.
5) 'The development of human resources in consumer cooperatives is
another challenge to be tackled through the assist:ance of panchayathi
raj institutions. District panchayaths should make allocations for
projects to establish and maintain training institutes to impart
professional training to the employees of consumer cooperatives.
6) .Along with the promotional and developmental assistance to the
consumer coopertitives, the panchayathi raj institutions should devise
some tools to msonitor the performance of consumer cooperative
societies. The provision for grants-in-aid to the consumer
cooperatives enga.ge:d in the public distribution system should be
based on proper elraluation of the performance.
7) 'The panchayathi raj institutions should take the lead to mobilise
public opinion to initiate the measures to revamp the cooperative
structure in the Sta.te. Panchayathi raj institutions may draw the
attention of the State Government to amend the State Cooperative
Societies Act so to enable the consumer cooperative societies to
adopt scientific anti professional methods in the management of
consumer cooperatives. Whenever the panchayathi raj institutions
realise the potential of consumer cooperatives and make higher
allocations for the projects in the area of consumer cooperatives, we
may hope to resist the adverse impacts of globalisation and
liberallsat~on through the survival of people's organisation like
consumer cooperalive socletles
Public distribution system was conceived as an instrument of
poverty alleviation to raise the standard of living of the people. PDS has
a significant role to c'ontrol the price line and to save the poorest strata
from the exploitation of private traders. With the announcement of the
New Economic Policy, the Government of India has introduced TPDS
and resorted to significant hike in the issue price of foodgrains under the
PDS. As the Central Ciovernment has announced its policy to reduce the
food subsidy in a phased manner, there is an urgent need to develop and
strengthen people's organisations like consumer cooperatives to play a
major role in the public distribution system. Consumer cooperatives
being democratic organisations and being subject to public audit are
more reliable than private agencies for ensuring the supply of essential at
the right places, in right time and at fair prices. PDS and consumer
cooperatives have greater significance for those States like Kerala which
are not self-sufficient in the production of foodgrains and other
consumer articles. The availability of right quantity of quality goods at
fair prices will indirectly enhance the standard of living of the people in
the region.