Editorial 1: The Food Security Act has revamped the PDS

Context

The implementation of Public Distribution System (PDS) reforms as mandated in the National Food Security Act, has reduced leakages.

Introduction

During the discussion on the 2013 National Food Security Act, concerns arose about ensuring food security through the Public Distribution System (PDS) due to its poor track record. NSS data from 2011-12 showed leakages at 41.7% nationwide.

Arguments in favour of Public Distribution System

• States Role: States that had undertaken PDS reforms had witnessed major improvements.

• Between 2004-5 and 2011-12, several early reforming States saw a dramatic reduction in leakages: Bihar (from 91% to 24%), Chhattisgarh (from 52% to 9%) and Odisha (from 76% to 25%).
• With the same package of PDS reforms being mandated by the NFSA 2013, there was hope that more States could improve.
• The NSS’s Household Consumption Expenditure Survey (HCES): is the first large-scale nationally representative survey after the implementation of the NFSA 2013 suggesting that PDS leakages were down to 22% in 2022-23.

Understanding the data and methodology

• Defining leakages: PDS “leakages” refer to the proportion of PDS rice and wheat released by the Food Corporation of India (FCI) that fails to reach consumers.
• Estimating leakages: Leakages are estimated by matching NSS data on household PDS purchases with “offtake” data reported in the Monthly Food Grain Bulletin of the Food Ministry.
• Grain distribution: From August 2022 to July 2023, PDS ration card holders received NFSA grain—five kilograms per person for “Priority” households and 35 kg per month for “Antyodaya” households. They also received PMGKAY grain until December 2022, when the Covid-19 relief program ended.
• Dual checks: To arrive at the estimates presented here, offtake under NFSA including tide-over rations, Non-NFSA and PMGKAY is matched with HCES 2022-23 PDS purchase of (paid for and free) wheat and rice by households.
• Any mismatch between offtake and purchase is attributed to leakage, though there could be other reasons (transport losses, lags in supply and so on).

Why is there an underestimation?

• Expanded PDS by states: providing PDS grain to non-NFSA beneficiaries using central contributions (for example, tide-over rations and non-NFSA allocations) as well as State contributions (for example, local procurement).

• For example, Chhattisgarh’s food security act, passed in 2012, made the PDS quasi-universal using local procurement.
• The all-India leakage estimates of 17.6%-18.2% are underestimates, because they only take into account central contributions, and not State contributions.
• State financial support: There are 14 crore non-NFSA beneficiaries, of whom at the most six crore are supported entirely through State contributions.
•  If we add the State’s contribution for State-supported non-NFSA beneficiaries to total offtake, the all-India leakage estimate rises to 22%.

Impact of NFSA on PDS coverage

• PDS reforms: included in the NFSA 2013 was an expansion of PDS coverage that was aimed at reducing exclusion errors, but had a ‘spillover effect’ on reducing leakages.

• Improvement over 2004-05: In 2011-12, before the NFSA, less than 50% of households had ration cards, and only about 40% were receiving anything from the PDS. At that time, just 24% of households were actually using the PDS.
• The improvement driven by reforms: in States such as Chhattisgarh and Odisha where the PDS coverage increased substantially in this period.

• For instance, in Chhattisgarh, there was a three-fold increase (from 21% to 63%) in the proportion of households using the PDS.
•  According to HCES data, in 2022-23, the proportion of households buying from the PDS has increased further to 70%. In large part, this is the result of the rollout of the NFSA.
• Shortfall in NFSA Coverage: Despite improved coverage, the Centre is still below the NFSA mandate of covering 66% of the population (50% rural and 75% urban). Administrative data shows only 59% access the PDS as NFSA beneficiaries. According to the HCES, while 70% use the PDS, only 57%-61% have NFSA ration cards, with around 10% being non-NFSA beneficiaries.

• PDS reforms undertaken by early reforming States: such as Chhattisgarh and Odisha included  reduction in PDS prices, doorstep delivery of foodgrains, digitisation of records, de-privatising management of PDS outlets by handing them over to panchayats, and self-help groups.
• Reduction in PDS leakages: By 2011-12, PDS leakages in early reforming states had already dropped significantly. Since then, more high-leakage states have followed suit. As per HCES 2022-23, leakage rates were 9% in Rajasthan, 21% in Jharkhand, and 23% in Uttar Pradesh, all previously high-leakage regions.
• Role of Aadhar reforms: Many believe that the integration of Aadhaar, especially Aadhaar-based biometric authentication (ABBA), led to the improvements in the PDS. Data from primary surveys, however, do not support this.

• Two surveys in 2017 in Jharkhand shed light on this issue. A study by Muralidharan, Niehaus and Sukhtankar found that leakages before the introduction of ABBA were already less than 20%.
• Drèze, Khera and Somanchi reported that the purchase-entitlement ratios (the proportion of entitlement that people actually purchased) in offline villages and ABBA villages were virtually the same — 94% and 93%, respectively. Both surveys found little evidence of ghost cards.
• Somewhat, leakages in States where the PDS traditionally worked better have not experienced further improvements; in fact, in some, estimated leakages have increased (example, in Tamil Nadu from 12% in 2011-12 to 25% in 2022-23).

Conclusion

The PDS is now a functional instrument of social policy, guaranteeing a modicum of food security to many. During the COVID-19 lockdowns, it formed the backbone of relief efforts, along with the National Rural Employment Guarantee Act. However, the PDS remains an endangered instrument of social policy, constantly subjected to “innovations”. These include cash transfer experiments, door-step delivery to people’s homes (in Delhi), and imposing inappropriate technologies (such as Aadhaar-based biometric authentication). Instead of expending energy on ill-conceived measures (such as the ongoing eKYC drive for the PDS) that can easily derail the PDS, scarce government capacity should be channelled to expediting the delayed Census, that is leading to the exclusion of over 100 million people. Other demands such as the inclusion of more nutritious items such as pulses and edible oil remain relevant. This will ensure a holistic coverage.

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Editorial 2: ​Africa can make India’s ‘critical mineral mission’ shine

Context

India will have to collaborate with countries in the continent which has a significant amount of the world’s known critical mineral reserves.

Introduction

In the Union Budget 2024-25, Union Finance Minister Nirmala Sitharaman announced the setting up of a Critical Mineral Mission. In August the Ministry of Mines organised a seminar to discuss its objectives. Officials noted that efforts are being fast tracked in ‘mission mode’ towards three aims: expand domestic production, prioritise the recycling of critical minerals, and incentivise overseas acquisition of assets.

Indo-African dynamics on critical minerals

• Entry of the private players: The amendment made to the Mines and Minerals (Development and Regulation) Act of 1957, resulted in the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 removing six minerals from the atomic list, thus allowing the private sector to explore these in India.
• Overseas engagement: with mineral-rich countries overseas with a mandate to secure supply of critical minerals for the Indian economy, a joint venture of three public sector undertakings, Khanij Bidesh India Limited (KABIL), was founded in 2019.
• About the joint venture: Its first major agreement for lithium exploration and mining was signed in January 2024 and provides access to five blocks owned by Camyen, in the Catamarca province in Argentina.
• New entrants: Major and medium-scale mining companies in India are also seeking opportunities to ensure a steady feedstock of minerals.
• Need for upskilling: India’s capacity for exploration and processing such minerals is nascent. It lacks manufacturing capacity of end-use components, and needs to upskill its labour force, which is crucial for battery manufacturing.

Situating Africa in India’s supply chain

• Leveraging existing partnership: For India’s Critical Minerals Mission to succeed, countries in Africa, a region that houses 30% of the world’s known critical mineral reserves could be used.
• Familiar geography for Indian enterprise: New Delhi shares deep political, economic, and historic connections with the continent, with wide commercial networks created by a three million strong diaspora.
• Described by External Affairs Minister S. Jaishankar as the “land of the future”, the recognition of Africa’s importance in advancing global priorities is reflected in New Delhi introducing new diplomatic missions in Africa.

• Collaborating on critical minerals: Will bring in a new dimension to the multifaceted energy partnerships between the regions. Of the total bilateral trade of $98 billion in 2022-23, $43 billion is attributed to the mining and mineral sectors.
• Public sector investment by India:  A significant portion of the $75 billion that India has already invested in Africa, is by public sector units for the acquisition of energy assets.
• India-Africa mineral relations:  Sources approximately 34 million tonnes of oil — accounting for 15% of its total demand — from Africa, alongside rising imports of natural gas, minerals, and mineral fuels.
• Further, as part of the International Solar Alliance, the Government of India has benchmarked $2 billion for solar projects in Africa.
• Building resilient supply chains: To Africa is being imagined at a time when African governments are employing an array of policy instruments to diversify away from a ‘pit-to-port’ model.

• Tanzania is developing a multi-metal processing facility
• Zimbabwe and Namibia have banned the export of raw minerals to ensure value addition
• Ghana has approved a new policy for the exploitation and management of green minerals.
• The forthcoming African Green Mineral Strategy champions ideas for Africa’s minerals-based industrialisation. This presents opportunities for India to support a developmental agenda.

The China factor on critical mineral

• Chinese dominance over value chain: Increasing international attention, especially the extent of control China exerts over the value chain, poses economic and security risks for India.
• Chinese manufacturing capacity: With its early acquisition of assets, development of processing and manufacturing capabilities, Beijing enjoys enormous influence.
• Chinese mining companies presence: In cobalt mining in the Democratic Republic of Congo and recently signed a $7 billion ‘minerals-for-infrastructure’ deal.

Way forward: Opportunities for collaboration

In this geopolitically fraught environment, where the African agency is looking to build viable alternative partnerships, there are some unique advantages that India could leverage.

• Infrastructural boost:  Indian construction companies have completed several projects in 43 African countries, which include transmission lines in Tunisia, hospitals in Tanzania, and railway lines in Ghana.
• Identifying strategic projects: In the African critical minerals landscape, with host countries and building mining-adjacent infrastructure are key to development.
• Cooperation between India and African states: India has signed memoranda of understanding with Zambia and Zimbabwe for cooperation in geological mapping, mineral deposit modelling, and capacity building.
• To build a critical mineral workforce, leveraging initiatives like the Indian Technical and Economic Cooperation, which has trained 40,000 Africans over 10 years, can boost energy partnerships.

Conclusion

There is an increasingly nuanced role of Indian technology start-ups across the mining value chain. From innovating tools that accelerate mining exploration and extraction while minimising ecological impacts, to utilising technology for beneficiation of mineral ores, and providing reconnaissance services, there is a whole suite of services that private technology companies provide. Their expertise in niche areas of mining brings an element of value addition that African governments could explore. Marit Kitaw, Director of the African Minerals Development Center, emphasized that adding value is key to transforming lives. Therefore, India’s Critical Mineral Mission should focus on responsible practices amid the geopolitics of the energy transition.