Lucia Ferretti, Lead Business Designer; Matteo Meschini, Business Designer @T...
Bethechange04
1. Submitted by:
SIBM BENGALURU
Gundeep Kaur
KumarVaibhav
Sunil KumarArya
Tejaswi S.
Vrushali Sawant
Improving reach and Efficiency of
Public Distribution System
2. Overview
PDS is a food security bill established by GOI under Minister Of consumer
Affairs, Public Distribution and is managed jointly with state governments
of India.
It distributes subsidized food and non-food items to India's poor,
major commodities distributed include staple food grains.
Distribution happens through a network of Public distribution shops, also
known as Ration shops established in several states across the country.
Central government is responsible for procurement, storage,
transportation, and bulk allocation of food grains.
State governments hold the responsibility for distributing the same to the
consumers through the established network of Fair Price Shops (FPSs).
3. Overview
State governments are also responsible for operational
responsibilities including allocation and identification of
families below poverty line, issue of ration cards, supervision
and monitoring the functioning of FPSs.
Under PDS scheme, each family below the poverty line is
eligible for 35 kg of rice or wheat every month, while a
household above the poverty line is entitled to 15 kg of food
grain on a monthly basis.
4. Flaws of P.D.S
Growing instances of the consumers receiving inferior quality food
grains in ration shops.
Deceitful dealers replace good supplies received from the F.C.I with
inferior stock and sell FCI stock in the black market.
Illicit fair price shop owners have been found to create large number of
bogus cards to sell food grains in the open market.
Lack of clarity to the people , mortgage their ration cards for money.
Poor supervision of FPS and lack of accountability
Middlemen corruption
5. Leakages & Diversion in PDS
Leakage and Diversion in PDS
“For every Rs. 4 spent on PDS, only Rs. 1 reaches the poor”
“57% of the PDS food grain does not reach the intended people”
The major reasons for leakage and diversion in PDS are:
Inclusion Error:
This is caused due to inclusion of people who are not eligible into BPL
and AAY category. It results in diversion of subsidies to unintended
beneficiaries and also in many cases poorer off take of food grains from
FPS which in turn incentivizes the FPS owners to divert this portion of
food grains to open market.
Ghost Cards:
Bogus ration cards in the name of fictitious owners, is a serious problem
causing significant leakages as it does not reach the intended
beneficiaries.
6. Leakages & Diversion in PDS
Shadow Ownership:
This is caused due to migrant families in search of work not able to
avail their quota or poor families due to paucity of funds keep the
ration cards with FPS owners or others to avail credit or get small
portions of cash.The non-viability of FPS’s is one of the major
drivers for the diversion of food grains from retail points.The FPS
owners in order to bridge the viability gap divert the food
grains intended for ration card holders to open market and report
unavailability of stock in the store.This is further supported by the
fact the leakage is predominant in states where FPS’s are highly
unviable. In order to decrease the exclusion errors we may relax the
rules for identification and include larger population but this in turn
leads to inclusion errors.This phenomenon is significantly witnessed
by southern states.
8. Leakages & Diversion in PDS
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 ofTPDS.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.
9. Leakages & Diversion in PDS
Wide inter-State variations in different types of leakages have
been observed. In the self-explanatory tables below, the
States are grouped w.r.t the intensity of the problem of
leakage of subsidized grains.
12. Leakages & Diversion in PDS
In addition to leakages,TPDS suffers from diversions of subsidized
grains to unintended beneficiaries (APL households) because of
Error of Inclusion.
While small inclusion errors and diversions could be ignored (as
these could be due to genuine measurement errors), in the States
ofAndhra Pradesh (36%), Himachal Pradesh (20%), Karnataka
(42%), Kerala (21%) andTamil Nadu (50%), the proportion of
subsidized grains received byAPL households is unacceptably
large. Notes prepared by the field units of PEO suggest that a
section of theAPL households holding BPL cards actually do not
lift their ration quota.
Thus, a part of the entitlement of theseAPL households holding
BPL cards is actually leaked out of the PDS supply chain.
It is, however, difficult to capture this form of leakage empirically
13. Recommendations
Operational
• Improving supply
chain
• Reducing the amount
of middlemen
• Inventory Control
• BringingTechnology
• Automation
• Quality Check
Legal
• Strict actions
• Exploitation
• Transparency
• Regulation and
selection of FPS
Awareness
• Awareness for poverty
stricken families.
• Extensive
Communication
• Awareness Programs
14. Operational
The main problem in the supply chain of PDS is MIDDLEMEN
who consume a good proportion of the stock meant for the poor.
There is a great need to control the amount of middlemen and to
alter the supply chain.
The government should not only look at the receiving end but the
supplying end also.The farmer from which the crop is being
purchased gets the minimal benefit as the major chunk of money
goes to the distributors(middlemen).
The employment should be created in a chain purchase from
farmer( giving him money) and supply to poor(people who
cannot afford food).
15. Network of Supply Chain:
•The central
government has to
ensure that these
people get the fair
price deal.
•The cycle of
employment will
happen then.
•Another major problem is wastage
of grain before being distributed,
sometimes the inventory gets
damaged due various reasons.
Problems at this level are huge:
•long waiting times
•exorbitant corruption
•rude behavior of shopkeepers
•poor service delivery.
16. The demand and supply of the grains should be done correctly.The
demand should be accurately forecasted to avoid wastages or
shortages.
Flow of information across all the stages of PDS should be there as
this will ensure availability of correct quantities of scheduled
commodities to fair price shop owners and the end customers thus,
improving the service delivery.
Maintain sufficient inventory in the warehouses(inventory control).
The improvement in PDS operations is possible when all the
activities of the system are analyzed in an integrated manner.
Procurement of food grains, their storage, their inter-state
movement, their allocation to various states and distribution by FPS
are not isolated problems and therefore, must be tacked in a holistic
perspective.
17. Automation:
Since the era ofADHAR CARD has started and the essence of this
is giving a unique identity to a card holder so what we propose is
having a strong automation process which will take care of the
following:
• When a buyer claims a P.D.S he should produce hisAdhar card
and the F.P.S owner should make a entry on the Adhar card.
• ThisAdhar card transaction would be linked to the centralized
system i.e. the government would be able to regulate the owners
of F.P.S and this will further reduce the leakages to huge extent.
• By having a proper automation system , the owner of the F.P.S
wont be able to indulge in inappropriate activities like selling to
other markets as there would be regular quantity check by the
government.
18. Legal
The legal norms of the country have to be more strict
towards P.D.S
No control on corruption and no check on the centers, the
food meant for he poor is sold at high prices in different
markets this should be addressed.
The state government should look into the exploitation at the
consumers end.The consumer is exploited at every stage,
which creates a hatred for the government and consumers
takes a step back which encourages the owners of the stores
to RULE.
19. Awareness
The whole essence of the P.D.S is helping poor get the basic
food requirements for those who cannot afford these and on
government record sheets every month the numbers gets
updated but the question s are people really getting the
benefit or for that matter do people really know what the
scheme is.
It is very important to make people educated about the rights
that they have or the power that has been invested in them.
The state government should take hold of this.
20. What we suggest is that every state should appoint some
local representatives to go to the extremely poor section
and inform those people about the process.These
representatives should also introduce these people to the
centers and make them familiar with all the procedure.
This local representative will closely observe these families
and should check the purchase level( quantity and frequency).
The shop owners should also contribute in the process and
should help creating awareness as an illiterate learns best from
others behavior and from his experiences.
The shop owners sells these grains to other markets or to the
same people at high prices, here people should be educated.
The communication should happen at a mass media level.
