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.