What is worse, practical problems of identification have further whittled down the BPL population. In a country with a large agricultural and informal economy, measuring income poverty is tricky, and, in practice, a large number of the "income poor" have been deliberately excluded from the BPL category. An extraordinary example of such exclusion comes from Mumbai: in Dharavi, Asia's largest slum settlement, which has a population of half a million, merely 151 families have been given BPL cards! In short, millions of undernourished persons and persons vulnerable to undernutrition have been excluded from the BPL category. And under the proposed dispensation, the excluded population no longer has even the limited benefits available to it as a possible part of the APL category.
 
Finally, by restricting the PDS to BPL households, the new scheme is likely to leave the FCI with even larger stocks of grain than at present. Stocks of rice and wheat with the FCI have been growing steadily in recent years, and amounted to 31.5 million tonnes in January 2000. Current BPL allocations are around 7.2 million tonnes. Let us assume that the allocation is doubled now to 14.4 million tonnes. If 90 per cent of the allocation is purchased by the States - this is an ambitious target - the offtake from the PDS will be around 13 million tonnes. After the BPL offtake, the FCI will be left with 18.5 million tonnes.
 
If the APL offtake falls sharply, as is likely given the new prices, the Central government will be left holding huge stocks. If the southern States of Andhra Pradesh, Tamil Nadu, Kerala and Karnataka (which accounted for 45 per cent of APL offtake in 1998), continue to purchase the same APL quantity as before from the FCI, then another four to five million tonnes will be distributed. It is irrational that stocks are amassed by the Central government while millions go to bed hungry. Are these stocks going to rot in the warehouses? Or are they going to be exported at prices below the economic cost? The point here is that the offtake from the PDS is likely to decline sharply and the FCI will be left holding even larger stocks.
 
Such a course will defeat the stated objective of the new policy - reducing the food subsidy bill. As the FCI is responsible for buffer stock operations, the total food subsidy includes the costs associated with maintaining buffer stocks (such as handling costs, costs of storage, interest payments and administration) as well as the costs of distribution (through the PDS). FCI performance budgets show that the subsidy incurred on carrying costs and on holding stocks for buffer stocking operations has risen steadily and rapidly in absolute and relative terms in the 1990s. In the mid-1990s, the costs associated with maintaining buffer stocks accounted for nearly 45 per cent of the total subsidy bill. In its eagerness to dismantle the PDS, the Central government has ignored the simple truth that any rise in stocks will imply a rise in carrying costs and a rise in the subsidy bill.
 
Not surprisingly, the States where the PDS provides some nutritional support to households, where the quantities distributed per capita are relatively large, and where the delivery system functions, although with problems, have all opposed the new move. Thus, Tamil Nadu Chief Minister M. Karunanidhi has announced that the price of rice in the PDS would remain at the old level of Rs.3.50 a kg; this will add Rs.300 crores to the State's food subsidy bill. Andhra Pradesh Chief Minister N. Chandrababu Naidu has also expressed unhappiness over the new policy. For his State, keeping PDS prices unchanged will mean a Rs.570-crore increase in the food subsidy, which will now be of the order of Rs.1,700 crores. In Left-ruled Kerala, the State with the most effective PDS, the Legislative Assembly has unanimously adopted a resolution that warns that the decision to raise the price of rice will "lead to runaway prices for rice in the open market and wreck the existing public distribution system."
 
The Central government is abdicating its responsibility with respect to the provision of a minimum quantity of low-cost food to consumers in all parts of the country. It has, cynically, decided to transfer the cost of the food subsidy to State governments. Of course, the current policy affects different States differentially, but it targets and penalises States that have performed better. State governments that have shown some commitment to the PDS in the past and wish to continue to provide a sufficient quantity of foodgrains to vulnerable sections of the population at low prices will now have to pay the bill themselves. On the other hand, in States such as Bihar, where the delivery network and administration are already weak and fail notoriously to reach the poor, the new scheme is likely to increase the incentives and scope for diverting grain meant for BPL households to the open market.
 
India is a country where poverty and nutritional deprivation exist on a large scale. In fact, India leads the world by far in the number of income-poor, food-insecure and malnourished people. Under the BJP-led Central Government, the attack on the PDS begun in the early 1990s has turned into a demolition job. The changes announced in the Budget for 2000-2001 portend the end of the PDS in India and worsening food and nutrition security for the mass of its population.
--------------------------------------------------------Madhura Swaminathan is a Professor at the Indian Statistical Institute, Calcutta.