Public Distribution System

Introduction

The Public distribution system (PDS) is an Indian food Security System established under the
Ministry of Consumer Affairs, Food, and Public Distribution.
PDS evolved as a system of management of scarcity through distribution of food grains at
affordable prices.
PDS is operated under the joint responsibility of the Central and the State Governments.

The Central Government, through Food Corporation of India (FCI), has assumed the
responsibility for procurement, storage, transportation and bulk allocation of food grains to
the State Governments.
The operational responsibilities including allocation within the State, identification of
eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops
(FPSs) etc., rest with the State Governments.
Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being
allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of
mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

Evolution of PDS in India

PDS was introduced around World War II as a war-time rationing measure. Before the 1960s,
distribution through PDS was generally dependant on imports of food grains.
It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the
government set up the Agriculture Prices Commission and the FCI to improve domestic
procurement and storage of food grains for PDS.
By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food
Till 1992, PDS was a general entitlement scheme for all consumers without any specific target.
The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to
strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote
and inaccessible areas where a substantial section of the underprivileged classes lives.
In June, 1997, the Government of India launched the Targeted Public Distribution System
(TPDS) with a focus on the poor.

Under TPDS, beneficiaries were divided into two categories: Households below the
poverty line or BPL; and Households above the poverty line or APL.
Antyodaya Anna Yojana (AAY): AAY was a step in the direction of making TPDS aim at reducing
hunger among the poorest segments of the BPL population.

A National Sample Survey exercise pointed towards the fact that about 5% of the total
population in the country sleeps without two square meals a day. In order to make TPDS
more focused and targeted towards this category of population, the "Antyodaya Anna
Yojana” (AAY) was launched in December, 2000 for one crore poorest of the poor
families.
In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies
largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This
marks a shift by making the right to food a justiciable right.
How PDS system functions?

The Central and State Governments share responsibilities in order to provide food grains to the
identified beneficiaries.
The centre procures food grains from farmers at a minimum support price (MSP) and sells it to
states at central issue prices. It is responsible for transporting the grains to godowns in each
state.
States bear the responsibility of transporting food grains from these godowns to each fair price
shop (ration shop), where the beneficiary buys the food grains at the lower central issue
price. Many states further subsidise the price of food grains before selling it to beneficiaries.

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Importance of PDS

It helps in ensuring Food and Nutritional Security of the nation.

It has helped in stabilising food prices and making food available to the poor at affordable
prices.
It maintains the buffer stock of food grains in the warehouse so that the flow of food remain
active even during the period of less agricultural food production.
It has helped in redistribution of grains by supplying food from surplus regions of the country to
deficient regions.
The system of minimum support price and procurement has contributed to the increase in food
grain production.

Issues Associated with PDS System in India

Identification of beneficiaries: Studies have shown that targeting mechanisms such as TPDS
are prone to large inclusion and exclusion errors. This implies that entitled beneficiaries are
not getting food grains while those that are ineligible are getting undue benefits.

According to the estimation of an expert group set up in 2009, PDS suffers from nearly 61%
error of exclusion and 25% inclusion of beneficiaries, i.e. the misclassification of the poor as
non-poor and vice versa.
Leakage of food grains: (Transportation leakages + Black Marketing by FPS owners) TPDS
suffers from large leakages of food grains during transportation to and from ration shops into the
open market. In an evaluation of TPDS, the erstwhile Planning Commission found 36% leakage of
PDS rice and wheat at the all-India level.
Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted even if
buffer stock is filled, creates a shortage in the open market.
Issues with storage: A performance audit by the CAG has revealed a serious shortfall in the
government’s storage capacity.
 Given the increasing procurement and incidents of rotting food grains, the lack of
adequate covered storage is bound to be a cause for concern.
The provision of minimum support price (MSP) has encouraged farmers to divert land from
production of coarse grains that are consumed by the poor, to rice and wheat and thus,
discourages crop diversification.
Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus in food
grains, which are water-intensive, has been found to be environmentally unsustainable.

Procuring states such as Punjab and Haryana are under environmental stress, including
rapid groundwater depletion, deteriorating soil and water conditions from
overuse of fertilisers.
It was found that due to cultivation of rice in north-west India, the water table went down
by 33 cm per year during 2002-08.

PDS Reforms

Role of Aadhar: Integrating Aadhar with TPDS will help in better identification of beneficiaries and
address the problem of inclusion and exclusion errors. According to a study by the Unique
Identification Authority of India, using Aadhaar with TPDS would help eliminate duplicate and ghost
(fake) beneficiaries, and make identification of beneficiaries more accurate.
Technology-based reforms of TPDS implemented by states: Wadhwa Committee,
appointed by the Supreme court, found that certain states had implemented computerisation and
other technology-based reforms to TPDS. Technology-based reforms helped plug leakages of food
grains during TPDS.

Tamil Nadu implements a universal PDS, such that every household is entitled to
subsidised food grains.
States such as Chhattisgarh and Madhya Pradesh have implemented IT measures to
streamline TPDS, through the digitisation of ration cards, the use of GPS tracking of
delivery, and the use of SMS based monitoring by citizens.

Technology-based reforms to TPDS undertaken by some states

Type of reform Benefits of reform States implementing

reforms
Digitisation of Allows for online entry and verification of Andhra Pradesh,
ration cards beneficiary data Chhattisgarh, Tamil Nadu,
Online storing of monthly entitlement of Madhya Pradesh,
beneficiaries, number of dependants, Karnataka, Gujarat, etc.
offtake of food grains by beneficiaries
from FPS, etc.
Computerised Computerises FPS allocation, declaration Chhattisgarh, Delhi,
allocation to FPS of stock balance, web-based truck Madhya Pradesh, Tamil
challans, etc. Nadu, etc.
Allows for quick and efficient tracking of
transactions
Issue of smart Secure electronic devices used to store Haryana, Andhra Pradesh,
cards in place of beneficiary data Odisha etc.
ration cards Stores data such as name, address,
biometrics, BPL/APL category and
monthly entitlement of beneficiaries and
family members
Prevents counterfeiting
Use of GPS Use of Global Positioning System (GPS) Chhattisgarh, Tamil Nadu
technology technology to track movement of trucks
carrying food grains from state depots to
FPS
SMS based Allows monitoring by citizens so they can Chhattisgarh, Uttar
monitoring register their mobile numbers and Pradesh, Tamil Nadu
send/receive SMS slerts during dispatch
and arrival of TPDS commodities
Use of web-based Publicises grievance redressal machinery, Chhattisgarh
citizens' portal such as toll free number for call centres
to register complaints or suggestions

PDS vs. Cash Transfers

National Food Security Act,2013 provides for reforms in the TPDS including schemes such as Cash
transfers for provisioning of food entitlements.
Direct Benefit Transfer (DBT) aims to:

reduce the need for huge physical movement of foodgrains

provide greater autonomy to beneficiaries to choose their consumption basket
enhance dietary diversity
reduce leakages
facilitate better targeting
promote financial inclusion

Advantages and disadvantages of PDS and other delivery mechanisms

Machanism Advantages Disadvantages

PDS Insulates beneficiaries from Low offtake of food grains
inflation and price volatility from each household
Ensures entitlement is used High leakage and diversion
for food grains only of subsidised food grain
Well-developed network of Adulteration of food grain
FPS ensures access to food Lack of viability of FPS due
grains even in remote to low margins
areas
Cash transfers Cash in the hands of poor Cash can be used buy non-
increases their choicess food items
Cash may relieve financial May expose recipients to
constraints faced by the price volatility and inflation
poor, make it possible to There is poor access to
form thrift societies and banks and post offices in
access credit some areas
Administrative costs of
cash transfer programmes
may be significantly lesser
than that of other schemes
Potential for making
electronic transfer
Food coupons Household is given the Food coupons are not
freedom to choose where it indexed for inflation; may
buys food expose recipients to
Increases incentive for inflation
competitive prices and Difficult to administer; there
assured quality of food have known to be delays in
grains among PDS stores issuing food coupons and
Ration shops get full food reimbursing shops
grains from the poor, no
incentive to turn the poor
away

Way Forward

PDS is one of the biggest welfare programmes of the government, helping farmers sell their
 produce at remunerative prices as well as the poorer sections of society to buy food grains at
affordable rates.
Its effectiveness can be enhanced with technology based solutions as is evident from some of
the states’ successes towards the same. Shifting towards DBT is another idea, but with caution.

In its report on State finances, the Reserve Bank of India (RBI) has advised States that
are planning to shift to cash transfer to be cautious while effecting the migration.
Economic survey 2016-17 also highlighted the need for more caution and better
infrastructure while replacing subsidised PDS supplies with DBT.
Strengthening of the existing TPDS system by capacity building and training of the implementing
authorities along with efforts to plug leakages is the best way forward.
It can be further strengthened by the increased public participation through social audits and
participation of SHGs, Cooperatives and NGOs in ensuring the transparency of PDS system at
ground level.
To enhance the nutritional level of masses, bio-fortified foods need to be distributed through the
PDS that will make it more relevant in the backdrop of prevalent malnutrition in India.

For Mind Map

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