Cash or grain transfer: The way ahead

The present paper is an attempt to study the performance of public distribution system (PDS) and look for a feasible alternative to it. There is failure of targeting below poverty line (BPL) approach in PDS still we failed to de-link National Food Security Bill (NFSB) from BPL targeting. There are problems related to identification and exclusion errors in BPL targeting. The NFSB gives power to the government to provide food security allowance in cash instead of kind. In the present Indian scenario, cash transfers and food coupons, as alternative to PDS seem difficult to administer. This is because banks and markets places are away from villages and moreover people prefer PDS to cash. Keeping in view the problems associated with identification of BPL families and impracticability involved in immediate widening of banking network required for cash transfer, the efficiently working PDS seems to be the only way ahead.