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PUBLIC DISTRIBUTION SYSTEM

Introduction
2.3.1 The Public Distribution System (PDS) is the key element of the Government's food security
system in India. It is an instrument for ensuring availability of certain essential commodities at
easily affordable prices especially for the poor. The Government, via the Food Corporation of
India (FCI), procures and stocks foodgrains which are released every month for distribution
through the PDS network across the country. In addition to sugar, edible oils and kerosene,
foodgrains, mainly rice and wheat, are distributed to the public via a network of Fair Price Shops
(FPS). The system of procurement is also used by the Government of India to provide minimum
support prices to the farmers so as to stabilise farm output and income. To begin with, in the
sixties efforts were made to procure rice and wheat not only for normal distribution through Fair
Price Shops under the PDS but also to maintain buffer stocks, which were built in the years of
good production to tide over the periods of lean production. In the eighties, given the increases in
the foodgrains production and the resilience in the agricultural production scenario, the
Government of India decided to operate a system whereby certain norms were fixed regarding the
quantities to be held by the Food Corporation of India at different points of time during the year,
thus merging the stocks meant for normal distribution and buffer stocks.
2.3.2 The PDS, till recently, has been a general entitlement scheme to all consumers without any
targetting. On an average, about 15-16 million tonnes of foodgrains are issued by the FCI to the
States at a uniform Central Issue Price (CIP) which is much less than the economic cost incurred
by the Central Government by way of procurement, storage, transport and distribution. The
difference between the economic cost and the CIP, called the consumer subsidy, is borne by the
Central Government through its annual non-Plan budget. In addition to this, as mentioned above,
the FCI maintains a large buffer stocks of foodgrains, which entails a substantial carrying cost.
The consumer subsidy and the carrying cost of the buffer stock together add up to the total food
subsidy. One of the most important determinants of the changes in India's poverty level is the
price of foodgrains which has a major impact on the real income, especially for the relatively
poorer sections whose incomes are very largely spent on foodgrains. For example, at the all- India
level the people spend on an average about 63% of their total expenditure on food in the rural
areas and about 55% in the urban areas. Of the expenditure incurred on all food items the
expenditure on foodgrains accounts for 45% in the rural areas and about 32% in the urban areas.
The bottom 30-40% of the population spend over 70% of the total expenditure on food. Of their
expenditure on food, the bottom 30-40% of the population spend about 50% on foodgrains in the
rural areas and over 40% in the urban areas.
Targetting Public Distribution System:
Recommendations of the Working Groups(WG)
The logic of a targeted PDS described above was enunciated in the Report of the Working Group
on National Policy on Public Distribution System (June, 1996) set up in the Planning Commission
in August, 1995. The Working Group after discussing various forms and experiences of targeting,
such as, through wage employment programmes (JRY,EAS etc), area-based targeting (ITDP,
RPDS), exclusion of non-poor and the system of food stamps prevalent in some countries,
suggested a scheme of allocation of foodgrains out of the Central Pool to the States at two sets of
prices, namely, a highly subsidised price for the allocations meant for the poor and near open
market prices for the non-poor. The recommendations of the Working Group are given in Box.

 A ceiling limit should be imposed for each State based on the highest offtake of foodgrains in the past ten years. The present pattern of financial assistance is 50% loan and 50% subsidy. for construction of small godowns of the capacity upto 2000 tonnes in interior areas where it is necessary to maintain adequate stocks to ensure regular supplies under PDS. identification of beneficiaries etc. With the liberalisation of the scheme during 1992-93 the subsidy component of the assistance was enhanced from 25% to 50% and the financial assistance per van/truck was also raised to Rs. The scheme is supplementary in nature as the .  Based on the levels of procurement and allocations/offtake of foodgrains in the past. the Central Government should maintain an annual allocation level of 15 million tonnes.3. in the case of UTs without legislatures the entire assistance is in the form of subsidy only. Funds under the scheme are released for small godowns in places where Central agencies like CWC.e around 12 million tonnes for distribution to the States/UTs on the basis of their share of BPL population . Since 1983-84 this scheme was being implemented to supplement the resources of the State Governments. to augment the storage capacity in remote/inaccessible/hilly areas. Himachal Pradesh. Purchase of Mobile Vans/Trucks 3. Under this scheme. Till 1991 the scheme was restricted to North Eastern States. a decision was taken to extend the scheme to all such areas in the country where the need for such facilities may exist. vehicles can be used not only as mobile Fair Price Shops but also for effecting door delivery of PDS commodities to Fair Price Shops. In 1998.2. do not operate. The States should be allowed full freedom to decide on the mode of distribution.16 The Godowns scheme is intended to assist the State Governments /UTs. J and K. FCI etc.  Earmark about 80% of the annual allocation i. 1992 the scheme was further extended to cover all the identified RPDS areas. 2.3.4 lakh in the case of delivery van (for 4 tonner) and Rs. pricing. This will work out to an availability of 20 kgs per month per BPL household. Initially.8 lakh for big truck ranging from 8-10 tonnes and above subject to the ceiling of actual cost whichever is lower. However. Lakshadweep and Andaman and Nicobar Islands. Sikkim. With the launching of RPDS in January.50 lakh was being provided for a delivery van/truck with 75% loan and 25% subsidy. the Planning commission provide funds under its plan programmes for the following schemes: 1. an assistance of Rs. Training. The Mobile Vans scheme is intended to provide financial assistance to the State Governments /UT administrations for purchase of mobile vans/trucks for distributing essential commodities in rural/hilly/remote and other disadvantaged areas where static/regular Fair Price Shops are not found viable/feasible. 2.Recommendations of the Working Group on National Policy on Public Distribution System  The Central Government should adopt the Planning Commission's estimates of the proportion of population below the poverty line (BPL) available for 1987-88 as the criteria for allocating a feasible annual level of foodgrains to States/UTs for a targeted PDS.15 While the provision for food subsidy is made in the non-Plan budget of the Central Government. Construction of Godown 2. for strengthening the operational machinery of the PDS. Research and Monitoring.  12 million tonnes of foodgrains meant for the BPL population should be issued to the States at highly subsidised prices and allocations to any State over and above this at near open market prices.

through a network of public distribution shops (also known as ration shops) established in several states across the country. also known as fair price shop (FPS)or Ration Shop. transportation. it is considered to be the most important food security network. While the central government is responsible for procurement. It is a part of India's public distribution system established by Government of India which distributes rations at a subsidized price to the poor. there are concerns about the efficiency of the distribution process. villages towns and cities. while a household above the poverty line is entitled to 15 kg of foodgrain on a monthly basis. and bulk allocation of food grains. Today.[1] Distribution of food grains to poor people throughout the country is managed by state governments.000 Fair Price Shops (FPS) across India. supervision and monitoring the functioning of FPSs. These shops are operated throughout the country by joint assistance of central and state government. the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality.99 lakh fair price shops across India. Established by the Government of Indiaunder Ministry of Consumer Affairs. almost 1 percent of GDP. As of date there are about 4. However. The average level of consumption of PDS grains in India is only 1 kg per person / month.6 billion) per year. The item from these shops are much cheaper but are of average quality. a Government-owned corporation. In coverage and public expenditure. State governments are also responsible for operational responsibilities including allocation and identification of families below poverty line. Major commodities distributed include staple food grains. India has the largest stock of grain in the world besides China.[4] A below poverty line (BPL) card holder should be given 35 kg of food grain and the card holder above the poverty line should be given 15 kg of food grain as per the norms of PDS. issue of ration cards. rice. However. andkerosene. Under PDS scheme. such as wheat. 750 billion ($13. each family below the poverty line is eligible for 35 kg of rice or wheat every month. Ration shops are now present in most localities.000 shops constituting the largest distribution network in the world. and Public Distribution and managed jointly with state governments in India.[3] Overview The central and state governments shared the responsibility of regulating the PDS.running cost and its maintenance etc. The targeted PDS is costly and gives rise to much corruption in the process of extricating the poor from those who are less needy. Public distribution shop A public distribution shop.[2] As of date there are about 500. rice. India has 478. storage. This scheme was launched in India on June 1997. are borne by the respective State Governments from their own budget. state governments hold the responsibility for distributing the same to the consumers through the established network of Fair Price Shops (FPSs). sugar. procures and maintains the PDS. The PDS has been criticised for its urban bias and its failure to serve the poorer sections of the population effectively. . Food Corporation of India. [5] Locally these are known as "ration shops" and chiefly sell wheat. Food. To buy items one must have a ration card. These are also called fair price shops. kerosene and sugar at a price lower than the market price. Public distribution system (PDS) is an Indian food security system. the government spends Rs. Other essential commodities may also be sold. it distributes subsidized food and non-food items to India's poor. yet 21% remain undernourished.

This rationing system was revived in the wake of acute food shortage during the early 1960s. Deceitful dealers replace good supplies received from the F. if appropriate. There is also no clarity as to which families should be included in the BPL list and which excluded. [7] 2. illegal diversions of commodities. Growing instances of the consumers receiving inferior quality food grains in ration shops. Fallouts of PDS[edit] This article is in a list format that may be better presented using prose. There is no set criteria as to which family is BPL and which is APL . You c help by converting this article to prose. Many BPL families are not able to acquire ration cards either because they are seasonal migrant workers or because they live in unauthorized colonies.[8] 5. Several schemes have augmented the number of people aided by PDS. This is a decisive barrier to the efficient functioning and overall success of PDS in India. [10] . a review of the PDS has discovered the following structural shortcomings and disturbances:[6] 1. Limited information about the overall use of cards has discouraged BPL families from registering for new cards and increased illegal creation of cards by such families to ensure maximum benefit for the family members. Editing help is availab (September 2011) This section does not cite any references (sources).C.This non ambiguity gives massive scope for corruption and fallouts in PDS systems because those who are actually meant to be benefitted are not able to taste the fruits of PDS. holding and black marketing due to the minimum salary received by them.[9] 6. Many FPS dealers resort to malpractice. before the Green Revolution. 7. Identification of households to be denoted status and distribution to granted PDS services has been highly irregular and diverse in various states. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poor thus resulting in their food insecurity. namely the rural poor has been dismal. Lack of clarity in the planning and structuring of social safety and security programs in India has resulted in the creation of numerous cards for the poor. Poor supervision of FPS and lack ofaccountability have spurred middlemen who consume a good proportion of the stock meant for the poor. but the number is extremely low. Please help improve t section by adding citations to reliable sources. Illicit fair price shop owners have been found to create large number of bogus cards to sell food grains in the open market. The recent development of Aadhar UIDAI cards has taken up the challenge of solving the problem of identification and distribution of PDs services along with Direct Cash Transfers.The introduction of rationing in India dates back to the 1940s Bengal famine. 8. Regional allocation and coverage of FPS are unsatisfactory and the core objective of price stabilization of essential commodities has not met. 4. A lot of families also mortgage their ration cards for money. (January 2013) The public distribution system of India is not without its defects.I(Food Corporation of India) with inferior stock and sell FCI stock in the black market. The stock assigned to a single family cannot be bought in installments. 3. With a coverage of around 40 crore below-poverty-line (BPL) families. Unsourced material may challenged and removed. This results in the genuinely poor being excluded whilst the ineligible get several cards. Awareness about the presence of the PDS and FPS to poverty-stricken societies.

In aggregate. Centre for Development Studies.I. only about 42% of subsidised grains issued by the central pool reach the target group. Interestingly.[15] In a landmark judgment. and other prominent agencies should provide quality food grains for distribution. vouchers. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards. They instead have advised to go ahead and experiment with food stamps and other alternative methods and pointed out the flaws in PDS. Under that the government had plans to strengthen the food security program DS. Jawaharlal Nehru University. MIT. 6. decided on a common minimum programme (CMP) and on the agenda was food and nutrition security. Harvard. This set of economists hail from institutes like Delhi School of Economics.[11] But the United Progressive alliance.C. The Civil Supplies Corporation should open more fair price shops in rural areas. Vigilance squad should be strengthened to detect corruption. the following suggestions are furnished for: 1. Personnel-in-charge of the department should be chosen locally. 5. Food stamps given to the needy and to the underprivileged by issue of coupons.To improve the current system of the PDS. Princeton. A group of about 40 economists have cautioned the NAC headed by Sonia Gandhi against the food security bill as it would put an additional burden on the ex-chequer. they can purchase commodities at any shop or outlet. Operation Black Aaj Tak news channel on 14 October 2013 performed a sting operation on PDS [17] named Operation Black.[14] In the CMP the government had proposed that if it is viable it would universalise the PDS. It shows how the distribution reaches to mills instead of fair price shops. 4. F. 7. in which case the market system is more apt anyway. 2. finance minister Arun Jately in his budget speech went contrary to the idea proposed in the CMP and proposed the idea of the food stamp scheme. electronic card transfer etc. Indian Statistical Institute. [13] He has proposed to try the scheme in few districts of India to see its viability. Margin of profit should be increased for honest business. This should be enforced. Indira Gandhi Institute of Development Research. Distribution of food stamps Opportunities . Delhi High Court has ruled that fair price shops cannot be allotted to a below poverty line (BPL) card holder. which came to power in 2004. The state government would then pay back the grocery shops for the stamps said the finance minister in his budget. University of California and University of Warwick. Columbia.[18] Research on the PDS suggests (as these two programmes show) that the situation varies quite a lot across the country. London School of Economics. all the documentation via computerisation is clean. 3.[12] However. University of British Columbia. which is an added expenditure for taxpayers. which is again an added expenditure and not full proof. according to a Planning Commission study released in March 2008. which is a tall order for an agency that has no real incentive to do so. The fair price dealers seldom display rate chart and quantity available in the block-boards in front of the shop. if food stamps are introduced it would be a targeted public distribution system. NDTV did a show which documented how the Government of Chhattisgarh's food department managed to fix its broken system so that the diversion of grain came down from about 50% in 2004-5 to about 10% in 2009-10.

Also there would be a burden which would come on the poor class who has to benefit from the same of going and collecting the food stamps. banks or such other institutions. As a result. There is an immense need to develop appropriate marketing infrastructure and institutions to deal with trade in agricultural commodities. In this process there could be leakages which are a matter of concern. the government sold 1. Thus as a result importing was cheaper than buying from the domestic market. incidentally. ( Kaushik Basu 2007) 4. [14] .1. It provides incentive must to deregulate the domestic market and thus will induce private entrepreneurs 3. Appropriate policy changes are a must. It will reduce India's dependence on buffer stock for price stabilization and in turn reduce cost 2. came back for sale at high MSP’s for instance in 2002-03.682 million tones [19] The government may have to set up a complete system for the same or would have to put this responsibility on post office. for instance. the government levied 50% tariff on wheat and 80% percent tariff on rice which further resulted in one of the outlandish incidents in the Indian history that was accumulation of buffer stocks which were exported which.6 million tones to exporters but actual exports were only 0. But in India due to high MSP’s the prices were relatively high. in the post WTO period the international prices of wheat and rice came to their lowest levels.