1. Team details:
Anjali Aswal
Shweta Singh
Soumya Vishwanath
Malika Bansal
Abha Karki

2. Public Distribution System
 The Public Distribution System (PDS) designed under FCI(Food Corp. Of India), India is the world’s
largest food distribution system supplying essential commodities(rice,wheat,sugar,kerosene,edible
oils) to around 18 million families. The Central and the State governments are jointly responsible for
the functioning of the PDS. PDS serves the two-fold goal of guaranteeing a stable selling price for the
farmers and providing essential commodities to the poor at affordable prices. Role of the PDS is set
to expand with the introduction of the National Food Security Ordinance.
 In the In the present scenario, Public Distribution System strives to meet the twin objectives - the
price support to the farmers for their product and maintenance of stocks.
 Schemes Handled:
 . BPL RICE @ Rs.4.75 [ IN ITDP AREAS ]
 BPL RICE @ Rs.6.30 [ IN NON-ITDP/ITDP/ULBs]
 BPL RICE FOR SC & ST HOSTELS
 BPL RICE FOR APL FAMILIES [ IN KBK DIST. ]
 ANNAPURNA RICE
 ANTYODAYA ANNA YOJANA
 APL WHEAT
 LEVY SUGAR

3. Year Commodities Allotment Lifting Offtake offtake %
to Allot.
offtake %
to Lifting
2005-2006 BPL Rice @ 4.75 / kg 314022.85 308191.99 299626.69 95 97
BPL Rice @ 6.30 / kg 851363.76 389080.00 386536.16 45 99
BPL Rice for APL Families 110808.00 31698.40 30923.74 28 98
Antyoday Anna Yojana Rice 430507.21 438324.28 453803.71 105 104
Annapurna Rice 7776.00 7769.91 7751.87 100 100
SC & ST Rice 22042.50 5716.07 7228.68 33 126
Wheat 151252.48 108464.26 107394.98 71 99
Sugar 104613.00 42159.37 41556.35 40 99
2006-2007
(Up to
Dec'06)
BPL Rice @ 4.75 / kg 228044.69 226622.46 222748.71 98 98
BPL Rice @ 6.30 / kg 589611.85 410699.76 413262.14 70 101
BPL Rice for APL Families 57886.00 40637.30 39172.69 68 96
Antyoday Anna Yojana Rice 397917.74 401161.23 399795.04 100 100
Annapurna Rice 5832.00 5756.93 5781.21 99 100
SC & ST Rice 10728.20 10314.66 10597.61 99 103
Wheat 113870.00 97671.11 96399.14 85 99
Sugar 80178.20 47535.14 45252.88 56 95
ALLOTTMENT,LIFTING & OFFTAKE POSITION OF LAST FIVE YEARS FOR DIFFERENT COMMODITIES

4. PDS is often blamed for its inefficiency and rural-
urban bias
India is the largest stock of grain in the world, the government spends Rs. 750 billion per annum,
almost 1% of GDP, Yet 21% remain undernourished.
 Fallouts of PDS:
1) Growing instances of the consumers receiving inferior quality food grains in ration shops.
2) Replacement of higher quality stock with inferior one.
3) Bogus cards created by shopkeepers to sell grains at false price.
4) Regional allocation and coverage of FPS are unsatisfactory .
To overcome the fallouts of PDS, in June 1997, the Government of India launched
the Targeted Public Distribution System (TPDS) with focus on the poor. Under the
TPDS, States are required to formulate and implement foolproof arrangements for
identification of the poor for delivery of food grains and for its distribution in a
transparent and accountable manner at the FPS level.

5. Failure of TPDS
 The Targeted Public Distribution System (TPDS), budgeted at
around Rs. 25,000 crore annually, is affected by targeting
errors (both inclusion and exclusion errors), spurious
beneficiaries and diversion. The success of TPDS depends
largely on the ability of State Governments in identifying
genuine poor families and putting in place an effective and
efficient delivery system.
 A major criticism of the TPDS has been that it has wrongly
excluded a large number of deserving persons .
 No survey had been undertaken in 18 out of 31 States and
Union Territories for identification of BPL families till then.
 The Report also said that ration cards had not been
provided to many BPL households in States that had
completed the identification survey.
 Nationally, according to the ORG-MARG survey conducted
for the CAG, 18 per cent of BPL households did not have
ration cards.
 Further, the performance of TPDS was poor in states with
larger BPL population families.

6.  The implementation of TPDS is plagued by large Errors of Exclusion ( BPL families) and
Inclusion (of APL), and by the prevalence of ghost BPL cards. Some States have issued more
cards than the number of households, while some others have the problem of unidentified
households.
 High exclusion errors imply low coverage of the target group (BPL households). Of the
estimated 45.41 million BPL households (March 2000), TPDS has extended coverage to only
57% BPL families.
 The problems of targeting errors and ghost cards have serious implications for the
performance, impact and delivery cost of TPDS. These, along with certain weaknesses in the
delivery mechanism (Chapter 3), have led to large scale leakages (36.38%) and diversion
(21.45%) of subsidized grains to unintended beneficiaries.
 The study reveal that transition from universal PDS to TPDS has neither led to a reduction of
budgetary food subsidies, nor has it been able to benefit the large majority of the food
insecure households in the desired manner. However, the performance of TPDS can be
improved if some corrective measures are taken to reduce delivery cost, bring in transparency
in the delivery mechanism and make the operation of retail outlets financially viable.

7. States Exclusion Error Inclusion Error Shadow
Ownership Error
1 2 3 4
Andhra Pradesh 3.20 36.39 0.00
Assam 47.29 17.16 12.30
Bihar 29.81 12.20 13. 55
Gujrat 45.84 9.78 11.87
Haryana 27.90 14.16 0.42
Himachal Pradesh 8.86 20.39 7.01
Kerala 23.38 42.43 20.58
Karnataka 16.28 21.04 4.05

8. PDS/FPS New Architecture System
FPS(Fair Price Shop) to be Co-operative Stores : First and foremost, there is need for a total
change in the Organisational set-up of the PDS / FPS. The entire chain of FP shops, both in
Urban and Rural areas, should be taken out of the hands of individual Agents, wherever it is
so, and run as a Co-operative set-up – Co-operative Stores – with proper arrangements for the
Accounting of Stocks, Sales and Revenues and strict monitoring of FP stores by Citizens’
Oversight Committees in each area. The FP Co-op. Stores will be placed under the Co-
operative/ Civil Supplies Deptt. in the States.
Capacity of a FP Store : Presently, a FP store may be catering to / serving 500 to
800 families (Ration Card holders) in Urban areas and about 200 too 500 families ( or
even less depending on the population in the village(s) covered ) in Rural areas. FP stores
in Urban areas could serve more families to make the store a viable entity, especially
after their re-organization, modernization and computerization as envisaged in this
paper.
Why the Need for Better Infrastructure for FPS ?
Middle and Upper classes source their requirements of Groceries, etc. at large,
modern Supermarkets, Departmental Stores, etc. which have now been mushrooming in
Urban and even semi-Urban centres. As against this, the Low Income/ BPL Groups get
their Essentials through the ill-equipped, congested and unhygienically-located FP Shops,
which not only present a forbidding appearance but also offer most unsatisfactory
services with complaints galore ( of non-supply of items even when FP Shops receive
adequate stocks, over-pricing, under-weight supply, false entries in Ration Cards, etc.,)
which go virtually unheeded. This discriminatory situation in facilities available to
different classes of society creates a ‘Class Divide’ and feeling of neglect and
dissatisfaction among the lower sections who now suffer it silently.

9. At present, though Rules provide for this procedure, either a Board is not kept
at all or if the board is displayed, it is intentionally not filled up to keep information
on Stocks received and sold under wraps.
Notice Board
Date :
Item Unit Price Opening New stock Total Balance
( Per kg/ltr) stock received sold stock
Computerised operations & Accounting :
All FP stores should be provided with Electronic Cash Registers (ECR’s) at
each Sales Counter in which every sale effected will be automatically recorded and the
transaction will be simultaneously printed by feeding the Family/Ration Cards into the
ECR (just like Bank transactions are printed by Banks in the Pass Books of Depositors ).
The ECR’s will be so programmed as to record every transaction done with quantities
sold and price charged for each item for each Ration Card with the Ration Card No. and
give Total sales effected and Balance stocks held of each item at the close of the day
automatically. As and when fresh stocks are received, they will be entered in the ECR.
• Ration cards with bar codes: To prevent extra storage of food grains ration cards with bar
codes should be explored and scanned for every transaction
• Unique Identification Card (Aadhaar) is also issued to PDS benefactors for additional checking.
• A Managing and Oversight committee should be established by Govt. for proper checking.
Entire reforms and schemes should be time bound.

10. • No one has doubted the utility of PDS being the need for supply of food grains to the poor of
the country at affordable rates. Procurement and distribution of food grains is a huge and
gigantic task but then the whole system is built on corruption. There are more leakages and
maladministration and benefits to the poor are low. Inefficiency and corruption has made
PDS corrupt at several levels. The system lacks transparency, accountability, monitoring and
enforcing. Survey is not being conducted regularly and properly, with the result people Above
Poverty Line (APL) have been issued Below Poverty Line (BPL) cards and those eligible for BPL
cards have been ignored. Bogus cards are in abundance. Immediate measures are required to
reduce the diversion of food grains. Delivery systems under the PDS have to be improved so
that the real beneficiary gets its due entitlement at fixed price, fixed quantity, fixed time and
wholesome quality. Innovative methods are required to improve the system. The whole
system has to be totally revamped and modern technology would appear to be the only
answer.
 Committee has suggested that in order to combat corruption and strengthening PDS there has
to be zero tolerance approach.

11. Main points to focus on:
 a) The mode of appointment of the dealers,
 b) The ideal commission or the rates payable to the
dealers,
 c) Modalities as to how the committees already in place,
can function better, and
 d) Modes as to how there can be transparency in
allotment of food stock to be sold at the shops

12. References
 planning.commision.nic.in
 www.nic.in/projects/e-pds
 fciweb.nic.in/articles/view/271
 economictimes.indiatimes.com
 digitalknowledge.centre.in
 Righttofoodindia.org
 Pdscvc.nic.in/orissa-report.htm(Justice Wadhwa)