2. THE PROBLEMS OF PUBLIC DISTRIBUTION SYSTEM
• At least 17,546 tonnes of food grains
was damaged between 2009-10 and July
2012 in Food Corporation of India (FCI)
godowns (RTI Query)
• Only 22.7% FPSs are viable in terms of
earning a return of 12% on capital
• In Bihar and Punjab, the total leakage
exceeds 75% while in Haryana and UP, it
is between 50 and 75%
• High supply chain costs - Rs 2579 crore
did not reach any consumer but was
shared by agencies involved in the
supply chain
• Upto 80% of kerosene distributed
through PDS does not reach the
intended beneficiaries as per the pilot
run of direct benefit transfer scheme in
Alwar, Rajasthan
Over
allotment
38%
Distribution
Leakage
39%
Active
suspect loss
17%
Transportatio
n cost
2%
Stolen
subsidy
4%
Components of PDS Losses
3. IDENTIFICATION OF BENEFICIARIES
• Use the data from the socio economic caste census once it is available
• Share SECC data with all local self governments
• Make Aadhar cards mandatory for all identified beneficiaries
• Automatic inclusion of widows, differently abled and old aged
Socio Economic Caste
Census
• The beneficiaries identified by SECC need to be approved and validated by
the Gram Sabhas and Gram Panchayats
• Approved beneficiaries will be eligible for entitlements for one year
• Re-approval of beneficiaries every year
Validation by
Panchayats
• Grievance redressal mechanism at every taluka level for errors of exclusion
• Anonymity and whistle-blower protection for complainants who report
errors of inclusion
Grievance redressal
Social Audit
• Gram Sabha will be authorised to appoint 3 eminent
citizens as local auditors of the FPS
• Social audit only meant to analyse the effectiveness of
PDS
• Social audit findings to be submitted to the Zilla
Parishad which will consolidate the findings and submit
it to the state’s PDS monitoring body
• Feedback mechanism to be available at every gram
panchayat which will be forwarded to the computerised
central feedback system to enhance the quality of PDS
4. SPREADING AWARENESS
• Printed messages on electricity bills
• Exhaustive coverage of all the households
• Minimal additional expenditure for the government
ELECTRICITY
BILLS
• Every village in India celebrates an annual event like a mela or celebrates festivals
where the entire village population comes together
• Such mass gatherings can be made use of by government to spread messages on
PDS
• Trained government officials can be sent to address such gatherings
FESTIVALS &
MELAS
• UG Curriculum to include mandatory course on challenges faced by the
government
• Field visits to be made compulsory which should include spreading awareness to
rural population
• Students can work along with village heads/sarpanch to conduct awareness
programs in villages
• Sample statistics – In Karnataka alone there are 1056 UG colleges, of which at least
500 students graduate per college. More than 5 lakh students graduate every year.
Such an activity can cover up to 3000 villages every year.
ENGAGE
STUDENTS
• Advertisements on PDS awareness to be telecasted on National television on a
regular basis
• Awareness messages on popular newspapers
TELEVISION &
PRINT MEDIA
• Radio is still an effective broadcasting medium in India. Awareness messages to be
conveyed during peak hours
• IVR system can be used to send recorded awareness voice messages
RADIO & IVR
5. PACKAGING AND DISTRIBUTION
Plastic coated, government sealed jute bags carrying a barcode
print.
Bundle the food grains in the packages of sizes of 2kgs, 5kgs and
10kgs. These sealed packages will be distributed directly to the
consumers.
Advantages
Protect food from rain/moisture and other environmental
pollution.
Extend shelf-life, and maintain the quality and safety of
food.
Barcode will help us improve supply management,
facilitate trace-back for food safety and quality purposes.
This will allow us to track the food throughout the
distribution process.
Passing on the sealed packaged grains directly to
consumers will ensure that the end consumers are getting
the same quality grains that the government is providing.
Cost incurred
Barcode sticker/print for every bag will cost approximately
₹10 for 1000 bags.
With the current allocation of 34 lakh tons of food grains
by the FCI and considering that we divide these into
packages of 2kgs, 5kgs and 10kgs with a percentage
distribution of 20%, 40% and 40% each, we would need –
340 lakh bags of 2kg
272 lakh bags of 5kg
136 lakh bags of 10kg
A total of 748 lakh bags. This will cost ₹ 7.48 lakh.
DIVISION GODOWNS
STATE GODOWNS
FCI WAREHOUSE
DISTRICT
GODOWNS
TALUKA
GODOWNS
FAIR PRICE SHOP CONSUMER
UN-PACKED
GRAINS PACKAGED
GRAINS
6. PLUGGING THE LEAKAGES
• Storage, distribution and packaging to be outsourced to private players for both FCI
and State food corporations.
• FCI to concentrate in procurement only and maintaining buffer stocks for food security
and price stabilization.
Storage
• Complete computerization of inventory management at FCI and private players.
• Electronic Data Capture on EDS along with finger print scanner in each FPS.
• Usage of Aadhar card with annual life certificate, needs to be swiped for each
purchase.
Ghost and
Duplicate
cards
• Social Audits by PRI
• Awareness of beneficiaries about their entitlement
• Citizen charter
FPS Level
To measure the effectiveness of PDS
PDS item utilization ratio =
(Total units sold as per Aadhar card transactions for a particular
commodity over a period) / (Total units issued of that commodity over a
period of time)
Decentralize procurements
For food security a buffer stock of 10mt–4mt of wheat and 6mt of
rice – would be adequate and if there is any temporary shortage,
foodgrains should be procured from open market. Excessive food
grains should be exported.
Maintain the optimal level of buffer stocks
Procurement should be made decentralized throughout all the
states, i.e. FCI supplies from its pool of food grains only when the
state falls short of the requirements
7. FCI
STATE FOOD CORPORATION
DISTRICT GODOWNS
TALUKA GODOWNS
FPS
BIOMETRIC
MACHINE
CONSUMER
DIVISION GODOWNS
BANK
- FPS dealer will give the procurement price to the State food
corporation for obtaining food grains, he may take bank loans under
priority sector lending from banks.
- PDS items will be only issued once the amount is received and
will be delivered to the FPS by private players through the
distribution
- Once the food grains are sold through the FPS shops by Aadhar
cards (after validation through the centralized server) for the issue
prices, we will return him the difference between the issue price
and the procurement price along with his commissions directly to
his bank account.
- As under this scheme, the FPS owner has already paid upfront
the procurement price, there will be very less incentive to divert the
food grains and as we have barcoded food grain packages, we can
track them.
CASH FLOW
VALIDATION
8. VIABILITY OF FPS
Reasons What can be done
Low off-take of foodgrains Improve awareness and quality. Focus
on APL as well.
Low commission Higher Commission based on type of
beneficiaries. More for targeted
population.
Delay in supply of PDS items PDS distribution, storage outsourced
to private players.
Lack of working capital Provide priority sector lending to FPS
owners.
Lower utilization of resources LFPS licenses to be given to women
SHG, will also sell other non competing
items. Use of FPS shops for other
programs involving foodgrains such as
food for work, Mid Day meals, ICDS,
other welfare schemes.
To make FPS more
accountable in rural areas
SHG reporting to Gram
panchayat
FPS run by local women SHG
Gram panchayat reporting to
Taluka panchayat
Taluka level panchayat to
report to District panchayat
India total population is around 1.24 billion and we have around 5 lacs FPS. It translates to around 2500 people per FPS shop But not
everyone buys at FPS and as per the latest NSSO report on PDS, round 66, PDS purchase percentage are as follows:
Monthly revenues thus calculated comes to be around Rs 1,16,338 per month on an average for each FPS. A 15 to 20% margin on
this amount will give a reasonable profits of Rs 17450 to Rs 23,268
Rice consumption 23.5 % - rural , 18 % urban
Wheat consumption 14.6% - rural, 9% urban
Assuming the percentage of population in rural areas to be 70% and in
urban areas to be 30%. Also the estimated consumption of wheat across
India in 2013 to be 83 million tonnes and that of rice to be 97 million
tonnes. The economic price of wheat to be Rs 19 and that of rice be Rs 24.
9. INFRASTRUCTURAL COST
• Number of FPS – 515996
• Each FPS will incur a fixed cost of approximately 25 thousand. This includes-
– Desktop
– Barcode and Fingerprint scanner
– Internet connection
Thus, the total fixed cost required will be ₹ 1290 crore.
• IT infrastructure cost (servers, GPS tracking devices) will be approximately ₹35
crore.
• Variable cost of development and maintenance of the related software will be
approximately ₹2000 crore for 10 years.
• For smaller states, this funding can be provided by the central gov.
Total additional fixed cost incurred = ₹3325 crore including 10 years software maintenance cost.
Total additional variable cost per month = ₹7.48 lakh + Maintenance cost (10% of IT
infrastructure cost)
= ₹ 11 lakh
10. ROLE OF INFORMATION AND
COMMUNICATION TECHNOLOGY (ICT)
•Biometric cards
•Check against ineligible beneficiaries
BIOMETRICS
•closed-circuit TV monitoring
•prevent diversion of subsidized food
grains
CCTV
•SMS alerts about availability of stocks
•IVR call in local languages giving
information about used/remaining
quota for food grains
SMS/IVR
•Accurate weighing of loaded food
grains
•Guards against over-weight trucks
COMPUTERIZED
WEIGH BRIDGE
GPS SATELLITE
GSM
TOWER
TRUCK WITH
GPS ANTENNA
CENTRAL SERVERCENTRALIZED LOCATION
(GPS MONITORING)
GPS system shall help in:
• tracking the movement of trucks
• provide route information
• provides alerts like stoppage, diversion, speed etc.
GPS TRACKING
11. GRIEVANCE REDRESSAL SYSTEM
Consumer
State level
GRO
Division
level GRO
District
level GRO
Taluk level
GRO
•Records complaints
from consumers
•Issues to be
addressed/escalated
within 15 days
•Accountable to
Panchayath Samithi
•Conducts audits and surprise
visits of fair price shops
•Suggests changes or new
implementations in the
system to state level GRO
•Addresses escalated issues
within 30 days
•Accountable to Zilla Parishad
•Powers to recommend
blacklist of FPS/vendors
•Transport related
complaints received
from Taluk level and
District level GRO’s to
be addressed •Powers to modify PDS
system
•Coordinates with
Central Government
Officials
•Reports to the Chief
Minister
Grievance Redressal Body
Independent body
4 levels of Grievance Redressal
Officers
Monitors PDS and has the powers
to dismiss officials/vendors in the
system
12. REFERENCES
• Statement regarding implementation of TPDS: http://dfpd.nic.in/?q=node/1137
• Targeted public distribution system: http://dfpd.nic.in/?q=node/101
• Tamil Nadu Civil Supplies Corporation:
http://www.tncsc.tn.gov.in/html/imp.htm
• The Programme Evaluation Organization’s (PEO’s) Study (2005)
• GAIN – Global Agricultural Information Network Report
• Eleventh Five Year Plan Report
• Food Packaging—Roles, Materials, and Environmental Issues: Kennethmarsh,
Ph.D., and Betty Bugusu, Ph.D.
• Graduate Colleges in Karnataka: http://www.worldcolleges.info/college-
category/15
• http://articles.timesofindia.indiatimes.com/2013-08-
26/india/41454640_1_damaged-foodgrains-storage-capacity-tonnes
• http://www.thehindubusinessline.com/government-and-policy/kerosene-
direct-subsidy-transfer-pilot-successful-in-alwar/article3294089.ece
