Flaws in Public Distribution System Article - Grp6

Flaws in Public Distribution System
Flaws in Public Distribution

System
Group 6, Section A
NMP-29, MDI Gurgaon
Course Name: Research Methods
Instructor: Amit Kumar Gupta
Date: 10/09/2016
Abstract:
Public distribution system (PDS) is an Indian food security system which
distributes subsidized food and non-food items to India's poor. The central
government holds the responsibility of regulating the PDS and is responsible
for procurement, storage, transportation and bulk allocation of food grains as
well as for distributing the same to the consumers. But recent reviews of the
PDS system have found out major flaws and shortcomings. Through this
study, we try to find out the problems which exist in the PDS system today
and the reasons why all PDS beneficiaries do not receive benefits of the
subsidised food. We use the Online survey method to collect responses from
people who reside in the rural areas around Gurgaon. For testing our
hypothesis, we have used the Normality & T- test method. The final finding of
this paper is that Black-marketing, Inadequate warehouses and Flaws in
logistics are responsible for BPL families not getting the allocated quota of
grains from PDS.
Public Distribution System: Public distribution system (PDS) is an Indian food security
system. Established by the Government of India under Ministry of Consumer Affairs, Food, and
Public Distribution and managed jointly with state governments in India, it distributes subsidized
food and non-food items to India's poor. This scheme was launched in India on June 1997. Major
commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene,
through a network of fair price shops (also known as ration shops) established in several states
across the country. Food Corporation of India, a Government-owned corporation, procures and
maintains the PDS.
In coverage and public expenditure, it is considered to be the most important food security
network. However, the food grains supplied by the ration shops are not enough to meet the
consumption needs of the poor or are of inferior quality. The average level of consumption of
PDS grains in India is only 1 kg per person / month. The PDS has been criticized for its urban
bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is
costly and gives rise to much corruption in the process of extricating the poor from those who are
less needy. Today, India has the largest stock of grain in the world besides China, the government
spends Rs. 750 billion ($13.6 billion) per year, almost 1 percent of GDP, yet 21% remain
undernourished. Distribution of food grains to poor people throughout the country is managed by
state governments. As of date there are about 500,000 Fair Price Shops (FPS) across India.
The central and state governments shared the responsibility of regulating the PDS. While the
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). 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.
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. However,
there are concerns about the efficiency of the distribution process.
Objective of PDS Research: Determine the reasons why all PDS beneficiaries (which
include AAY, BPL and APL card holders) do not receive benefits of the subsidized food.
Why research is required? The public distribution system of India is not without its
defects. With a coverage of around 400 million below-poverty-line (BPL) families, a review of
the PDS has discovered the following structural shortcomings and disturbances:
Growing instances of the consumers receiving inferior quality food grains in ration shops.
Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of
India) 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.
Many FPS dealers resort to malpractice, illegal diversions of commodities, holding and
black marketing due to the minimum salary received by them.
Numerous malpractices make safe and nutritious food inaccessible and unaffordable to
many poor thus resulting in their food insecurity.
Identification of households to be denoted status and distribution to granted PDS services

has been highly irregular and diverse in various states. 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.
Regional allocation and coverage of FPS are unsatisfactory and the core objective of
price stabilization of essential commodities has not met.
There is no set criteria as to which family is BPL and which is APL .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.
Several schemes have augmented the number of people aided by PDS, but the number is
extremely low. Poor supervision of FPS and lack of accountability have spurred middlemen who
consume a good proportion of the stock meant for the poor. There is also no clarity as to which
families should be included in the BPL list and which excluded. 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, namely the rural poor has been dismal.
The stock assigned to a single family cannot be bought in installments. This is a decisive
barrier to the efficient functioning and overall success of PDS in India. Many BPL families are
not able to acquire ration cards either because they are seasonal migrant workers or because they
live in unauthorized colonies. A lot of families also mortgage their ration cards for money. 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. 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.
Methods:
Research Design
Survey research is used: to answer questions that have been raised, to
solve problems that have been posed or observed, to assess needs and set
goals, to determine whether or not specific objectives have been met, to
establish baselines against which future comparisons can be made, to
analyze trends across time, and generally, to describe what exists, in what
amount, and in what context. (Isaac & Michael, 1997, p. 136) Kraemer
(1991) identified three distinguishing characteristics of survey research (p.
xiii). First, survey research is used to quantitatively describe specific aspects
of a given population. These aspects often involve examining the
relationships among variables. Second, the data required for survey research
are collected from people and are, therefore, subjective. Finally, survey
research uses a selected portion of the population from which the findings
can later be generalized back to the population. In survey research,
independent and dependent variables are used to define the scope of study,
but cannot be explicitly controlled by the researcher. Before conducting the
survey, the researcher must predicate a model that identifies the expected
relationships among these variables. The survey is then constructed to test
this model against observations of the phenomena. In contrast to survey
research, a survey is simply a data collection tool for carrying out survey
research. Pinsonneault and Kraemer (1993) defined a survey as a means for
gathering information about the characteristics, actions, or opinions of a
large group of people (p. 77). Surveys can also be used to assess needs,
evaluate demand, and examine impact (Salant & Dillman, 1994, p. 2). The
term survey instrument is often used to distinguish the survey tool from the
survey research that it is designed to support.
Measures
The questionnaire use 5 point Likert scale. On the responses we applied
Normality and T-Test to reject or not reject the Hypothesis
Participants
For our research done through Online survey, we have used one person per
village from the rural areas of Gurgaon as the population unit and sample
frame. Around 50 respondents has participated in the survey who are from

rural background of Gurgaon. 60% of this population is male rest are
females.
Procedure:
For our research study we have used the Non-probability sampling. It is
the sampling technique in which units of the sample are selected on the
basis of personal judgment or convenience; the probability of any particular
member of the population being chosen is unknown. Under this sampling
method we have the used the Convenience sampling technique. It refers
to sampling by obtaining people or units that are conveniently available.
Researchers generally use convenience samples to obtain a large number of
completed questionnaires quickly or economically, or when obtaining a
sample through other means is impractical.
The mode of our sampling method is online i.e. through Internet surveys.
They participated alone. They were asked to fill the questionnaire.
Test Results
1. Black marketing Test
H0: Is Black marketing of food grains and kerosene sold in open
market responsible for BPL families not getting enough food grain from
PDS?
Normality Test
T-Test
Conclusion
Since H0 > 3 (3.47 approx.). Since the difference is
significant and positive. Our value is in zone of significance. So
we can conclude that people accept this fact that the reason BPL
families (Below Poverty Line) are not getting the grain due to
black marketing

2. Inadequate Warehouse Test
H0: Is inadequate number of warehouses responsible for BPL families
not getting enough food grain from PDS?
Normality Test
T-Test
Conclusion
inadequate warehouses.

3. Flaws in Logistics to Warehouses Test
H0: Are flaws in logistics to warehouses responsible for BPL families
not getting enough food grain?
Normality Test
T-Test
Conclusion
flaws in Logistics of PDS.

Location of PDS Test
H0: Is location of PDS supporting Black Marketing thus leading to
BPL families not getting enough food grains?
Normality Test
`
T-Test

`
Conclusion
Since H0 > .005. Since the value is greater than .05, test is
insignificant. So we can conclude that people accept this fact
that location of PDS supporting Black Marketing thus leading to BPL families
not getting enough food grains.

4. Flaw in Logistics to PDS Test
H0: Are flaws in logistics to PDS from warehouses, responsible for
BPL families not getting enough food grain?
Normality Test
T-Test
Conclusion
Since H0 > 3. Since the difference is significant and
positive. Our value is in zone of significance. So we can conclude
that people accept this fact that the reason BPL families (Below
Poverty Line) are not getting the grain due to flaws in logistics to PDS
from warehouses.

5. Flaw in Logistics to PDS Test
H0: Are flaws in logistics to PDS from warehouses, responsible for
BPL families not getting enough food grain?
Normality Test
T-Test
Conclusion
Since H0 > 3. Since the difference is significant and
positive. Our value is in zone of significance. So we can conclude
that people accept this fact that the reason BPL families (Below
Poverty Line) are not getting the grain due to flaws in logistics to PDS
from warehouses.
6. Factors priority
H0: What is the priority of multiple factors on the Final conclusion
ANOVA
Group
Sum of Squares
Between Groups
df
Mean Square
3.433
.858
Within Groups
229.563
235
.977
Total
232.996
239
Sig.
.879
.477
Conclusion: Since significant value (.477) is greater than .05, we can conclude that all the
factors have same significant impact.
Discussion
1. Black Marketing Test: People accept this fact that the reason BPL families (Below Poverty
Line) are not getting the grain due to black marketing
2. Inadequate Warehouses Test: People accept this fact that the reason BPL families (Below
Poverty Line) are not getting the grain due to inadequate warehouses.
3. Flaws in Logistics of PDS Test: that people accept this fact that the reason BPL
families (Below Poverty Line) are not getting the grain due to flaws in
Logistics of PDS.
4. Location of PDS Test: people accept this fact that location of PDS
supporting Black Marketing thus leading to BPL families not getting
enough food grains.
5. Flaws is Logistics to PDS Test: that people accept this fact that the reason
BPL families (Below Poverty Line) are not getting the grain due to flaws in
logistics to PDS from warehouses.
References
Gulati. A, Saini S (2015). Leakages from Public Distribution System (PDS) and the Way
Forward, ICRIER January , 2015
Dr, Kattumuri, R, (2011) Food Security and the Targeted Public Distribution System in
India, ASIA RESEARCH CENTRE WORKING PAPER 38, 2011.
Sharma,V.P, (2012) Food Subsidy in India:Trends, Causes and Policy Reform Options,
IIM A, Research & Publication,W.P. No.2012-08-02,August 2012
Tarozzi, A , (2002) The Indian Public Distribution System as Provider of Food Security:
Evidence from Child Anthropometry in Andhra Pradesh Princeton University, May 2002
Seema Bathlaa*, Paramita Bhattacharyab and Alwin DSouzaa (2015)

Indias National Food Security Act 2013: Food Distribution through Revamped Public
Distribution System or Food Stamps and Cash Transfers?
www.wikipedia.com
http://pdsportal.nic.in/
http://dfpd.nic.in/
http://planningcommission.nic.in/plans/planrel/fiveyr/10th/volume2/v2_ch3_4.pdf

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