Monday, June 9, 2025 4:08 PM

Public Distribution System

The Public Distribution System (PDS) is an Indian food security system which evolved as a
system for distribution of food grains at affordable prices and management of emergency situations.
It distributes subsidized food and non-food items to India’s poor. This scheme was launched in June
1947. Over the years, PDS has become an important part of Government’s policy for management
of food economy in the country. PDS is supplemental in nature and is not intended to make available
the entire requirement of any of the commodities distributed under it to a household or a section of
the society.
PDS has helped bring about the socio-economic justice by helping alleviate hunger, malnutrition,
anaemia among poorest of the poor, BPL citizens, women and children. The use of ICT to reduce
the touch-points will further increase the efficiency of PDS.

Objectives and Significance of PDS

The objectives of the PDS

• To protect the low income groups by guaranteeing the supply of certain

minimum quantities of food grains at affordable price.
• Ensuring equitable distribution.
• Controlling the price rise of Essential Commodities in the open market.
• To have a moderating influence on the open market prices of cereals, the
distribution of which constitutes a fairly big share of the total marketable surplus
• To attempt socialisation in the matter of distribution of essential commodities.
Mission of PDS

• Food grains to the poor, at prices lower than the price of food grains at private
shops.
• Food grains are directly purchased from farmers, assuring farmers with a greater
price.
• Make goods available to consumers, especially the disadvantaged /vulnerable
sections of society at fair prices.
• Rectify the existing imbalances between the supply and demand for consumer
goods. Check and prevent hoarding and black marketing in essential commodities.
• Ensure social justice in distribution of basic necessities of life.
• Even out fluctuations in prices and availability of mass consumption goods.
• Support poverty-alleviation programmes, particularly, rural employment
programmes, (SGRY/SGSY/IRDP/ Mid-day meals, ICDS, DWCRA, SHGs and
Food for Work and educational feeding programmes.
Importance of PDS

• PDS ensures Food and Nutritional Securityof the nation by making the food
affordable, accessible and available to the poorest of the poor.
• PDS helps to maintain a buffer stock of food grainsensuring flow of food remain
active even during the periods of crisis.
• It has helped in redistribution of grainsby 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.
• It helps in stabilising food prices.

Functioning – Fair Price Shops, FCI, Ration Cards,

Aadhar Linking, etc.
Functioning

New Section 7 Page 1

• PDS is operated under the joint responsibility of the Central and the State/UT
Governments.
• The
central government is responsible for making available the food grains need
ed for the PDS through the Food Corporation of India and providing
a subsidy to make it affordable.
• The state governments are responsible for ensuring that beneficiaries can
access commodities sold under the PDS, co-
ordinating the entire supply process
from FCI godowns to the beneficiaries and monitoring PDS
• Fair price shops
(FPSs) functioning under the PDS are nodal points of immense importance
since beneficiaries purchase subsidised PDS goods through the FPS.
• The method of licensing
FPSs and monitoring compliance through vigilance committees and other go
vernment officials are elaborately discussed in the PDS Control Order 2001 (GOI
2001), issued by the Department of Food and Public Distribution, Government of
India.
• The FCI purchases food grains from farmers at
the minimum support price (MSP) and
issues food grain at a uniform central issue price (CIP) to all states.
• The CIP is lower
than the economic cost incurred by the central government to procure food
• The main components of economic cost include payment to growers and
costs for
transporting, handling, storing and distributing the grain, in addition to the co
st of maintaining the prescribed buffer stock.
• The difference between the economic cost and the CIP
is the food subsidy borne by the central government from its annual non-
Plan budget.
• The
states fix consumer end prices (CEP) at the FPS level at not more than
Re.0.50 per kg over the central issue price (CIP), particularly for the popula
tion below the poverty line.
• The states are also free to add to the coverage under the BPL category and meet
the subsidy from their own resources.
• The operational responsibility including allocation within 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

New Section 7 Page 2

 • Some States/UTs also distribute additional items of mass consumption through the
PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

Food Corporation of India (FCI)

FCI was formed in 1960’s and was part of larger plan directed toward food security and self-sufficiency.
Other major institution was CACP. These two institutions along with MSP regime and Public distribution
system were expected to work in tandem. FCI’s responsibility was to procure, Store and discharge grains
as per policy of the government. Over the time, as in other cases these institutions too failed to adapt to
changing circumstances such as changing demands of economy. As a result FCI now reels under chronic
inefficiency through huge wastages, and storage cost of grains keeps on cumulating.
Critical role being played by Food Corporation of India in countering the challenges posed by COVID-19:

• Notwithstanding its dubious reputation, the FCI has consistently maintained the
PDS, a lifeline for vulnerable millions across the country.
• Currently, in the middle of the COVID-19 pandemic, FCI with its buffer stocks holds
the key to warding off a looming crisis of hunger and starvation, especially in
regions where lakhs of migrant workers have returned home with little money or
food.
• The FCI has already moved 3 million tonnes (post-lockdown) to States, including
Uttar Pradesh, Bihar, West Bengal and Karnataka and those in the Northeast,
where demand outstrips State procurement and/or stocks.
• The FCI has also enabled purchases by States and non-governmental
organisations directly from FCI depots, doing away with e-auctions typically
conducted for the Open Market Sale Scheme (OMSS).
• Given the extended lockdown, the FCI is uniquely positioned to move grains
across State borders where private sector players continue to face formidable
challenges.
Concerns related to FCI

• FCI’s operations are regarded as expensive and inefficient. There are long-term
concerns regarding the costs of food subsidy.
• The FCI has witnessed mounting debts which currently stands at an estimated ₹55
lakh crore in March 2020, in the form of National Small Saving Funds Loan.
• FCI faces serious storage problems and is plagued by the issue of shortage of
modern storage facilities. In the 1970s and 1980s, poor storage conditions meant a
lot of grain was lost to pests, mainly rats.
• There have been reports of widespread diversion of grains and high leakage
losses.
• FCI has lacked a “pro-active liquidation policy” for excess stocks which leads to
market distortion in some instances. The distribution of subsidised grains is
sometimes blamed for depressing food prices and affecting farmers.
• Some experts have argued that given the increasing role of the market economy,
the FCI seems to have long outlived its purpose.
Measures needed to revamp FCI

• Use of Roads for transportation:

○ The FCI has long back recognized the road movement as better suited for
emergencies and for remote areas.
○ However, in 2019-2020 (until February) only 24% of the grains moved by
road.
○ FCI needs to increase the use of roads more imperatively to move grains with
least cost and efforts to the remote areas where the need is greatest
• Decentralized storage:
○ In the current context, it would be useful for the State government and the FCI
to maintain stocks at block headquarters or panchayats in food insecure or
remote areas.
• Fiscal Burden:
○ The centre should release stocks over and above existing allocations under
PDS and Pradhan Mantri Garib Kalyan Yojana, but at its own expenses rather
than by transferring the fiscal burden to States.
• Activating Vibrant Network:
○ In many States, there is a vibrant network of self-help groups formed under
the National Rural Livelihoods Mission (NRLM) which can be tasked with last
mile distribution of food aid other than the PDS.
○ Consultative committees presumably exist already in each State to coordinate
with the FCI on such arrangements.
• First in, First out (FIFO) principle:
○ Typically, the FCI’s guidelines follow a first in, first out principle (FIFO) that
mandates that grain that has been procured earlier needs to be distributed
first to ensure that older stocks are liquidated, both across years and even

New Section 7 Page 3

 first to ensure that older stocks are liquidated, both across years and even
within a particular year.
○ It is time for the FCI to suspend this strategy, which will enables movement
that costs least time, money and effort.
• Farmer Producer Organisations (FPOs):
○ The FCI along with the National Agricultural Cooperative Marketing
Federation of India Ltd. (NAFED) has required expertise to manage the
logistics to help farmers across the country to reach out to consumers
directly.
○ The FCI should consider expanding its role to support FPOs and farmer
groups, to move a wider range of commodities including agricultural inputs
such as seeds and fertilizers, packing materials
The Shanta Kumar Committee recommendations however was criticized due to suggestions like limiting
NFSA, cash subsidy, privatization of FCI despite suggesting useful reforms to reform FCI, PDS. A closer
scrutiny in the recommendation is needed today in times of agricultural distress & drought prone years.
The FCI needs to overhaul its operations and modernise its storage

National Food Security Act, 2013 and Right to Food

NFSA was enacted with the objective to provide for food and nutritional security in human life cycle
approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a
life with dignity. The objective is to provide for food and nutritional security in human life cycle
approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a
life with dignity.
Salient features of National Food Security Act 2013:

• Coverage and entitlement under Targeted Public Distribution System (TPDS): The
TDPS covers 50% of the urban population and 75% of the rural population, with
uniform entitlement of 5 kg per person per month. However, the poorest of the poor
households will continue to receive 35 kg per household per month under
Antyodaya Anna Yojana (AAY).
• Subsidised prices under TPDS and their revision: For a period of three years from
the date of commencement of the Act, Food grains under TPDS will be made
available at subsidised prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains.
• Identification of Households: The identification of eligible households is to be done
by States/UTs under TDPS determined for each State.
• Nutritional Support to women and children: Children in the age group of 6 months
to 14 years and pregnant women and lactating mothers will be entitled to meals as
per prescribed nutritional norms under Integrated Child Development Services
(ICDS) and Mid-Day Meal (MDM) schemes. Malnourished children up to the age of
6 have been prescribed for higher nutritional norms.
• Maternity Benefit: Pregnant women and lactating mothers will also be receiving
maternity benefit of Rs. 6,000.
• Women Empowerment: For the purpose of issuing of ration cards, eldest woman of
the household of age 18 years or above is to be the head of the household.
• Grievance Redressal Mechanism: Grievance redressal mechanism available at the
District and State levels.
• Cost of transportation & handling of food grains and FPS Dealers’ margin: the
expenditure incurred by the state on transportation of food grains within the State,
its handling and FPS dealers’ margin as per norms to be devised for this purpose
and assistance to states will be provided by the Central Government to meet the
above expenditure.
• Transparency and Accountability: In order to ensure transparency and
accountability, provisions have been made for disclosure of records relating to
PDS, social audits and setting up of Vigilance Committees.
• Food Security Allowance: In case of non-supply of entitled food grains or meals,
there is a provision for food security allowance to entitled beneficiaries.
• Penalty: If the public servant or authority fails to comply with the relief
recommended by the District Grievance Redressal Officer, penalty will be imposed
by the State Food Commission according to the provision.
The NFSA act marks a watershed in the approach to food security from welfare to a rights-based
approach.

• The National Food Security Act gives statutory backing to the TPDS.
• This legislation marks a shift in the right to food as a legal right rather than a
general entitlement.
• The Act classifies the population into three categories: excluded (i.e., no
entitlement), priority (entitlement), and Antyodaya Anna Yojana (AAY; higher
entitlement).
It establishes responsibilities for the centre and states and creates a grievance

New Section 7 Page 4

 • It establishes responsibilities for the centre and states and creates a grievance
redressal mechanism to address non-delivery of entitlements.
• Leakages and diversion of subsidised food grains under the TPDS continue to be
at unacceptable levels whereas the rollout of the National Food Security Act
(NFSA) has led to comparatively better outcomes, going by an NCAER survey.
Way forward to increase the efficiency of NFSA

• Use of Information Technology right from the time of purchase of food grains till its
distribution will help in increasing the overall efficiency of the entire process, while
maintaining transparency and curbing corruption.
• It is imperative that there is a seamless flow of information online between the FCI
and States and therefore they need to be integrated so that exact information
about how much food grain has been procured from which mandi, which
warehouse it is stored in and for how long and when it has been released for
distribution can be available.
• There should also be information about the quality of food grains at the time of
purchase, storage conditions in the warehouse, when it is given to PDS shops and
when the shops have distributed it to the beneficiaries.
• Move towards One Nation One Ration Card (RC) which will ensure all beneficiaries
especially migrants can access PDS across the nation from any PDS shop of their
own choice. This will provide freedom to the beneficiaries as they will not be tied to
any one PDS shop and reduce their dependence on shop owners and curtail
instances of corruption.
• Expand the coverage of Integrated Management of PDS (IMPDS) to all the states.
The right to food is a well-established principle of international human rights law. It has evolved to
include an obligation for state parties to respect, protect, and fulfil their citizens’ right to food security.
As a state party to the Universal Declaration of Human Rights and the International Covenant on
Economic, Social and Cultural Rights, India has the obligation to ensure the right to be free from hunger
and the right to adequate food. India needs to adopt a policy that brings together diverse issues such as
inequality, food diversity, indigenous rights and environmental justice to ensure sustainable food
security.

Targeted Public Distribution System

About TPDS

• The Government of India revamped

the almost universal PDS and launched the Targeted Public Distribution
System (TPDS) in 1997 to narrow its coverage to a focused group of
• The aim was to provide food grains to a targeted population below the poverty
line (BPL).
• Identification of BPL families was carried out through the BPL census conducted
by the Ministry of Rural Development, Government of India.
• Food grains were sold to this group at half the economic cost, while people above
the poverty line (APL) were offered food grains at economic
• There was a fixed entitlement of
food grains per month consisting of rice and wheat/atta for BPL families,
while there was no fixed entitlement for APL
• The entitlement for BPL families increased over
• A supplementary food security scheme was launched in the year 2000 to
cater to the poorest of the poor stratum
of society, namely, the Antyodaya Anna Yojna(AAY).
• There
was a set of five criteria to identify these families following a Supreme
Court order. The entitlement was fixed at 35 kg per month per family
covered under AAY.
• The scheme was expanded in two phases, in 2003 and in 2004,to increase
coverage.
Efficacy of NFSA and TPDS

• During Covid crisis, the country’s technology-driven PDS swiftly came to the fore
by successfully scaling up to distribute almost double the quantity of food grains to
more than 80 crore beneficiaries in the country during April to November 2020
• 100% digitizedration cards/beneficiaries’ data under NFSA in all States/UTs.
Details of almost 5 Crore ration Cards covering nearly 80 Crore beneficiaries are
available on transparency portals of States/UTs.
• Nationally, achieved nearly 67% biometrically/Aadhaar authenticateddistribution of
monthly allocated foodgrains to States/UTs under NFSA.
• Under PMGKY, each person who is covered under the National Food Security Act
would get an additional ration for free, in addition to already subsidised food grain
provided through the Public Distribution System (PDS).

New Section 7 Page 5

 provided through the Public Distribution System (PDS).
• The Ministry of Consumer Affairs, Food and Public Distribution reported that an
average of 93-94 per cent food grains per month was distributed under NFSA and
PMGKAY. So, only 6-7 per cent of food grains was not lifted by eligible or excluded
beneficiaries.
Drawbacks

• While the integrated management of PDS through automation of operational fair

price shops (FPS) or Aadhaar-seeding of ration cards helps deepen the portability
of One Nation One Ration Card (ONORC), reducing targeting (inclusion/exclusion)
errors, foodgrains access, and mitigating diversion or leakage should draw
attention for an inclusive food safety net.
• The second dimension is targeting errors by assessing and analysing the per cent
of inclusion/exclusion errors in NFSA list.
• The other dimensions of evaluation are awareness and education on ONORC
portability, effectiveness of grievance redress system and social audit, and supply
chain and PDS reforms.
Way forward

• The Food and Civil Supplies Department should keep a vigil on the functioning of
FPSs, checking for any diversion of subsidised food grains to the open market.
• There can be graduated sanction for unscrupulous FPS dealers if they do not
extend working hours for a stipulated period and fail to maintain a daily transaction
ledger and update stocks/inventories.
• Data governance should be put in place to increase transparency and
accountability of TPDS that can help deepen portability benefits of ONORC and
scale up the implementation of integrated management of PDS.
• States and UTs should allocate food grains to those who are excluded from the
TPDS by means of food coupons, cash transfer, and release of surplus stocks
from the Central pool in a phased manner.
• The community kitchen concept must work with the support of civil society
organisations to serve the excluded sections.

Shortcomings or Problems Associated with

PDS
Procurement

• Open-ended Procurement: All incoming grains accepted even if buffer stock is

filled creating a shortage in the open market.
• The recent implementation of Nation food security act would only increase the
quantum of procurement resulting in higher prices for grains.
• The gap between required and existing storage capacity.
• The provision of minimum support price has encouraged farmers to divert land
from production of coarse grains that are consumed by poor, to rice and wheat.
Storage

• CAG audits have time and again highlighted the Inadequate storage capacity with
FCI.
• Food grains rotting or damaging on the CAP or Cover & Plinth storage.
• The storage of foodgrains inculcates high carrying costs on the government.
Allocation of food grains

• Identification of beneficiaries:
○ Identification of beneficiaries by the states is not fool proof.
○ Lots of errors occur in exclusion and inclusion of Below Poverty Line (BPL)
and Above Poverty Line (APL) families in beneficiary data.
○ The problem of targeting is compounded by the lack of good quality regular
data; no regular official estimates of the actual income of households.
○ The true beneficiaries are not getting food grains while those that are
ineligible are getting undue benefits.
○ The high prevalence of ghost cards, made in the name of non-existent
people in several states indicates that grains are diverted from deserving
households into the open market.
• Illicit Fair Price shops:
○ Part of this leakage occurs at the level of the fair price shops, where some
store owners exchange the high-quality goods provided from the government
for distribution through the PDS with lesser quality goods from the general
stores..
Transportation

Leakage and diversion of food grains during transportation.

New Section 7 Page 6

 • Leakage and diversion of food grains during transportation.
• Uneven spread of Food production, procurement and distribution. For
example: north eastern states are very far from Punjab and Haryana, from where
wheat is procured. To transport food grains from Punjab to far flung areas in North
east will entail cost and time both.
Other issues

• Many times, good quality food grains are replaced with poor quality cheap food
grains.
• Public distribution system includes only few food grains such as wheat and rice, it
does not fulfil the requirement of complete nutrition.
• Fair Price Shop owner gets fake Ration cards and sell the food grains in the open
market.

Measures to Improve the loopholes & lacunas

associated with PDS
Government initiatives undertaken

• Aadhaar Linked and digitized ration cards: This allows online entry and
verification of beneficiary data. It also enables online tracking of monthly
entitlements and off-take of foodgrains by beneficiaries.
• Computerized Fair Price Shops: FPS automated by installing ‘Point of Sale’
device to swap the ration card. It authenticates the beneficiaries and records the
quantity of subsidized grains given to a family.
• DBT: Under the Direct Benefit Transfer scheme, cash is transferred to the
beneficiaries’ account in lieu of foodgrains subsidy component. They will be free to
buy food grains from anywhere in the market. For taking up this model, pre-
requisites for the States/UTs would be to complete digitization of beneficiary data
and seed Aadhaar and bank account details of beneficiaries. It is estimated that
cash transfers alone could save the exchequer Rs.30,000 crore every year.
• Use of GPS technology: Use of Global Positioning System (GPS) technology to
track the movement of trucks carrying foodgrains from state depots to FPS which
can help to prevent diversion.
• SMS-based monitoring: Allows monitoring by citizens so they can register their
mobile numbers and send/receive SMS alerts during dispatch and arrival of TPDS
commodities
• Use of web-based citizens’ portal: Public Grievance Redressal Machineries,
such as a toll-free number for call centers to register complaints or suggestions.
Measures needed

• The Justice Wadhwa Committee Report for PDS (2011)

• It recommended end to end computerisation to prevent diversion, and to enable
secure identification at ration shops.
• The Committee recognised Chhattisgarh as a model state for prevention of
diversion and Gujarat as a model for identification at ration shops.
• Other states have embarked upon the ambitious effort of computerising the whole
supply chain, most notably Karnataka, where electronic PDS (e-PDS) covers
transactions with authorised wholesale dealers and a biometric database of users.
• As part of Beneficiary Data Digitisation, States/UTs have been requested to seed
the Aadhaar Number wherever available so as to weed out
bogus/duplicate/ineligible beneficiaries.
• A universal PDS such that every household is entitled to subsidised food grains
as seen in Tamil Nadu will go a long way in reducing exclusion errors.
• Primacy should be given to ensuring that the functioning of FCI is streamlined and
fast paced as per recommendations of the Shanta Kumar Committee.
• Storage capacities need to be improved ensuring proper storage of procured
food grains for PDS schemes.
○ Thus, storage capacities have been augmented across the country by using
funds under plan schemes as well as through private investment in Public
Private Partnership (PPP) mode.
○ 100 lakh ton silo storage capacity must be created in the country. For this,
RITES has been assigned the task of changing the silo model and they will
give their recommendations in 90 days to FCI.
• To improve the usage of Information Technology in FCI, a Human Resource
Management System (HRMS) must be implemented.
High Level Committee (HLC) constituted under the chairmanship of Shanta Kumar to
restructure, reorient and reform the Food Corporation of India (FCI)
The government had set up a six-member committee under Shanta Kumar to suggest
restructuring or unbundling of FCI to improve its financial management and operational efficiency in
procurement, storage and distribution of food grains.

New Section 7 Page 7

procurement, storage and distribution of food grains.

Important recommendations made:

• Reduce the number of beneficiaries under the Food Security Act—from the current
67 per cent to 40 per cent.
• While the poor under the Antyodaya category should keep getting the maximum
food subsidy, for others, the issue price should be fixed at, say, 50 per cent of the
procurement price (as was done under Atal Bihari Vajpayee for the BPL category)
• Allow private players to procure and store food grains.
• Stop bonuses on minimum support price (MSP) paid by states to farmers, and
adopt cash transfer system so that MSP and food subsidy amounts can be directly
transferred to the accounts of farmers and food security beneficiaries.
• Limit the procurement of rice particularly in the north-western states of Punjab
and Haryana where the groundwater table is depleting fast, and invite private
sector participation in grain management
• FCI should involve itself in full-fledged grains procurement only in those states
which are poor in procurement. In the case of those states which are performing
well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and
Odisha, the states should do the procurement.
• Abolishing levy rice: Under levy rice policy, government buys certain percentage
of rice (varies from 25 to 75 per cent in states) from the mills compulsorily, which is
called levy rice. Mills are allowed to sell only the remainder in the open market.
• Deregulate fertiliser sector and provide cash fertiliser subsidy of Rs 7,000 per
hectare to farmers.
• Outsource of stocking of grains: The committee calls for setting up of negotiable
warehouse receipt (NWR) system. In the new system, farmers can deposit their
produce in these registered warehouses and get 80 per cent of the advance from
bank against their produce on the basis of MSP.
• Clear and transparent liquidation policy for buffer stock: FCI should be given
greater flexibility in doing business; it should offload surplus stock in open market
or export, as per need.
Way forward
Suggested measures to improve efficiency in PDS functioning

• Distribution of food coupons maybe adopted to stop leakages at the FPS

level, especially in poorly performing states like Assam and Uttar Pradesh.
Twelve coupons a year maybe distributed through village Beneficiaries
will exchange one coupon every month when collecting their
quota of food grain. Their entitlement and exact issue price of grains should
be written clearly on the coupons.
Ration cards should be digitised. It is important to minimise red tape

New Section 7 Page 8

 • Ration cards should be digitised. It is important to minimise red tape
and distribute the digitised cards at the earliest.
• The introduction of electronic weighing machines in place of conventional
ones may help resolve the problem of beneficiaries receiving less than
their entitlement of food grain under the Frequent power cuts and
problems with Internet usually hinders the use of such machines. Therefore, it
is also important to ensure uninterrupted supply of electricity, proper power
back-up and Internet connectivity.
• To decrease leakage of food grains, one important step is to authenticate
whether the food grain distributed through the PDS is received by an
eligible household. Collecting biometric information of all cardholders in a
household (head of
the family and other members of the household), linking it with their Aadhar
number and storing the data may solve the problem. This will also
enable any member of a household to collect monthly Karnataka
has already collected biometric information of ration cardholders in
selected districts.
• Lack of awareness regarding their entitlement and the issue price among
beneficiaries is another Display boards containing the correct
information about entitlement, availability of food grain and issue price should
be maintained at all FPSs. Information must be written in the local
language so that it is easily read by beneficiaries.
• A significant proportion of PDS beneficiaries are illiterate and may not be able to
read the information on the display board. Hence, information related to the
PDS can also be
disseminated through awareness campaigns conducted by NGOs and
government officials on a regular basis in villages.
• The introduction of an SMS alert at the beneficiary level is an important
measure to increase
• A sample of the food grain to be distributed is not kept in the
majority of FPSs. Some FPS dealers complained that they
do not even see such samples in the godown from where they collect the
PDS The practice of keeping such samples needs to be re-
introduced. It will help beneficiaries to match the quality of food grain that they are
supposed to receive with the food grain they actually receive from the FPS.
Suggested measures to introduce an effective monitoring mechanism

• Unbiased inspection of FPSs by the state department of food and civil

supply
should be arranged on a regular At present, inspectors visit FPSs only
occasionally, and they do not always check all the registers in the FPS. The
process is characterised by corruption.
• Introducing a corruption-free monitoring mechanism will be crucial to the
success of the food security programme.
• Gram panchayat members should be made aware of their role in the PDS.
Such awareness may be increased through the involvement of civil
society and local NGOs
• Representatives from state food departments should meet beneficiaries in
villages or urban wards to listen totheir complaints and address their concerns at
regular intervals.
• The grievance redressal mechanism in all states needs to be revamped
immediately. The Department of Food in each state should open a special
cell on grievance redressal and appoint a grievance redressal officer as the nodal
person
• State governments should take initiatives to reconstitute the vigilance
committee(VC) in all villages and urban wards. Awareness of the existence of the
committee should
be increased among The VCs should be elected by local villagers and
should consist of representatives from the gram panchayat and the beneficiaries.
• Appropriate
budget allocation should be made to maintain the monitoring
system.
Suggested measures to identify target households

• The identification process needs to be state or region-

specific since state
priorities are different across the However, the criteria adopted should help
to easily identify the target group.
In several instances,

New Section 7 Page 9

 • In several instances,
the respondents’ lack of education results in their giving incorrect
information. Therefore, interviewers need to be trained rigorously.
• Organisations
conducting identification surveys should have a strong local base
and proficiency in the local language to get the right They must be
chosen at the state level.
• Organisations
participating in such surveys should be unbiased with no political inclination.
The survey will become error-free only when it can be conducted in a non-corrupt
environment without interference from any political party.

Recent developments in PDS

Aadhar & PDS
Aadhar and functionality of PDS

• Aadhaar as an identifier:
○ People belonging to marginalized sections of the society often do not have a
valid proof of identity. As a result, they miss out on availing social benefits
provided by the government. Aadhaar has been successful in solving this
problem.
○ One of the quintessential properties of Aadhaar is its uniqueness. It is an
identification that a person can carry for a life time and potentially use with
any service provider thus, fundamentally becoming a pro-poor identification
infrastructure.
• It provides a single view of beneficiary data and information, aiding in streamlining
policy decisions for the state
• Social benefits delivery services:
○ Enables State Governments to directly transfer benefits to beneficiary
accounts under various schemes.
• Beneficiary Identification:
○ Helps in sanitizing the State’s/Department’s databases and uniquely
identifying beneficiaries by removing ghost/duplicate identities
• Demographic and development planning:
○ Enables valuable anonymized demographic data to help development
planning at State, District and local government levels.
• Preventing leakages:
○ Welfare programs, where beneficiaries need to be confirmed before service
delivery, also stand to benefit from UIDAI’s verification service.
○ Examples of such usages include subsidized food and kerosene delivery to
Public Distribution System (PDS) beneficiaries.
○ This usage would ensure that services are delivered to the right beneficiaries
only.
Challenges
However, the use of Aadhaar-based biometric authentication (ABBA) in the public distribution
system has its own share of challenges:

• ABBA requires not only Aadhaar seeding, but also successful fingerprint
authentication at the ration shop every month. That, in turn, requires a functional
Point of Sale (PoS) machine, adequate connectivity, and reasonably smooth
fingers. Despite some alleged safeguards, the system is far from perfect
• Evidence from Jharkhand suggests that ABBA is of little use in reducing PDS
corruption.
• Neither seeding nor the ABBA can stop quantity fraud.
• If PDS dealers give people less than their due, biometric authentication does not
help.
• Cases of deaths due to hunger as people could not collect rations because of a
biometric mismatch at the PDS shop.
• Disenfranchisement of the elderly and the disabled, as ABBA requires
beneficiaries to visit the PDS outlet personally for fingerprint authentication.
• Seeding issues:
○ When benefits are paid through Aadhaar-enabled means such as the
Aadhaar Payments Bridge System (APBS), the first step is to seed the list of
beneficiaries with the corresponding Aadhaar numbers. Seeding is a tedious
operation and it has to be done each time a new scheme is inducted. Those
who have failed to comply are simply removed from the lists
○ Seeding often creates inconsistencies between ration-cards database and the
Aadhaar database.

New Section 7 Page 10

 ○
Aadhaar database.
○ Many poor people do not know the rules of Aadhaar seeding and biometric
authentication.
• Inclusion errors increase the financial burden of the state, exclusion errors can
often leave poor families vulnerable to hunger.
• Deprivation of poor:
○ Poor people often find themselves deprived of their rights in the process. For
instance linking one’s pension or ration card or bank account with Aadhaar is
a tedious process as data-entry errors are common.
○ And even without such errors, Aadhaar linking often fails because a person’s
demographic details in the Aadhaar database do not match the corresponding
details in her job card or ration card.
○ The government failed to address these issues as job cards, ration cards and
pensions have been mass-cancelled in many states
Way forward

• Inconsistencies need to be resolved for successful Aadhaar seeding.

• It is essential to deal with issues of duplication, use less disruptive methods than
Aadhaar such as food coupons, smart cards, and last-mile tracking
• Using other technology to curb corruption like computerisation, SMS alerts, online
availability of official records, toll-free help lines and so on.
• It is imperative that the Union Government enact a privacy legislation that clearly
defines the rights of citizens consistent with the promise of the Constitution.
• The government should factor in privacy risks and include procedures and systems
to protect citizen information in any system of data collection. It should create
institutional mechanism such as Privacy Commissioner to prevent unauthorised
disclosure of or access to such data.
• Our national cyber cell should be made well capable of dealing with any cyber
attack in shortest time.

One Nation One Ration Card Scheme

The scheme which will allow portability of food security benefits. This means poor migrant workers
will be able to buy subsidized rice and wheat from any ration shop in the country. Recently the
Supreme Court (SC), asked the Union government to examine the feasibility of implementing
the “one nation one ration card” (ONORC) scheme during the national lockdown. Consequently,
Finance Minister announced the national rollout of a ‘One Nation, One Ration Card’ system in all
states and Union Territories by March 2021. As of now, about 20 states have come on board to
implement the inter-state ration card portability.

New Section 7 Page 11

5555222
Highlights of the scheme

• The poor migrant workers will be able to buy subsidised rice and wheat from any
ration shop in the country but for that their ration cards must be linked to Aadhaar.
• Migrants would only be eligible for the subsidies supported by the Centre, which
include rice sold at Rs. 3/kg and wheat at Rs. 2/kg, it would not include subsidies
given by their respective state government in some other state.
• This scheme will ensure that no poor person is deprived of subsidised grains.
• The scheme can be implemented as already 77% of the ration shops across the
country have PoS machines and more than 85% of people covered under the
National Food Security Act (NFSA) have their cards linked to Aadhaar.
• For remaining beneficiaries, all the States have been given one more year to use
point of sale (PoS) machines in the ration shops and implement the scheme.
• The new system, based on a technological solution, will identify a beneficiary
through biometric authentication on electronic Point of Sale (ePoS) devices
installed at the FPSs, and enable that person to purchase the quantity of
foodgrains to which she is entitled under the NFSA.
• The Annavitran portal enables a migrant worker or his family to avail the benefits of
PDS outside their district but within their state.
• While a person can buy her share of foodgrains as per her entitlement under the
NFSA, wherever she is based, the rest of her family members can purchase
subsidised foodgrains from their ration dealer back home.
Significance of Scheme

• For migrant labourers:

○ India has had food security benefit schemes which have domicile based
access.
○ 36 crore people or 37% of the population is that of migrant labourers. The
scheme is therefore important for anyone who is going to move from one
place to the other.
○ It happens that when one moves from one place to the other (for e.g. a
government employee being transferred from one place to another), it takes
about two to three months to get a ration card at that next place and then
further more time to start getting commodities against the same.
○ After the implementation of the scheme, it would be ensured that a migrant is
able to access the benefits which are due to him in any part of the country.
○ This would be ensured on the basis of Aadhaar authentication and a validated
data.
• For Women:
○ ONORC will be particularly beneficial for women and other disadvantaged
groups, given how social identity (caste, class and gender) and other
contextual factors (including power relations) provide a strong backdrop in
accessing PDS.
• Provides Choice:
○ ONORC will give the beneficiaries the opportunity to opt for the dealer of their
choice. If any dealer misbehaves or misallocates, the beneficiary can switch

New Section 7 Page 12

 ○
choice. If any dealer misbehaves or misallocates, the beneficiary can switch
to another FPS shop instantly.
○ ONORC lets the beneficiaries choose the PDS shop that best delivers on the
attributes.
• Curbing corruption:
○ In ONORC Scheme, the fundamental prerequisite is de-duplication so that it
is ensured that the same person does not figure as a beneficiary in two
different locations of the country.
○ With the help of the scheme, the government would be able to rightly target
the beneficiaries to provide them with the foodgrains under the PDS. The
scheme is linked with Aadhaar and biometrics, this removes most possibilities
of corruption.
○ The government is creating a central data repository to get all the details of
ration card which are being maintained by states so that the repository acts
as a clearing house or a server to do the cross checking on the basis of
Aadhaar authentication.
○ This ensures that there is no corruption or duplication of the benefits that are
being passed on to the beneficiaries. The government will ensure all these
things with the help of technology.
Challenges

• Since the scheme is based on technology, the government may face some
technical challenges during the implementation of the scheme.
• The scheme will increase the woes of the common man and, the middlemen and
corrupt PDS shop owners will exploit them.
• Tamil Nadu has opposed the proposal of the Centre, saying it would result in
undesirable consequences and is against federalism.
• Within some states issue of intra state portability.
• Different states have different rates and these mismatching rates will be a big
challenge.
• Few regional parties have expressed apprehensions on bearing the cost of
additional ration cards. This is a matter which is to be settled between the states
and the Government of India.
• One of the apprehensions mentioned by few states is the cost of additional food
grain to be supplied to the migrant workers.
• However, the whole system is based on the entitlements mandated under the
NFSA and this prevents the charges of additional cost. Beneficiaries will continue
to pay the same issue prices that are fixed under the NFSA.
• The quality of services is markedly inferior for the subaltern groups with latent
methods of discrimination such as lack of information, mixing of inferior grains,
longer waiting time and, at times, even verbal abuse.
Way Forward

• The current migrant crisis should be seen as an opportunity to develop a national

migration policy addressing the challenges faced by migrant workers’ productivity,
living conditions and social security.
• While this must be done, the government must also fast-track the ONORC scheme
because India’s present rights-based regime is based on the assumption that
people are sedentary.
• The food security scheme under the NFSA costs more than Rs 1 lakh crore per
year. It is very expensive but is highly needed. There is a need to ensure that
subsidized food grains ultimately go to the person or the family that is entitled to.
• The ONORC should also include access to health and other things.
• At the principal level, within the government, there is broad consensus on having a
unified kind of service delivery system based on technology and identity.
• A unified service platform combining all the citizen centric services on the basis of
few parameters of identity and other indicators of technology, is the need of the
hour.
• ONORC combined with a rating system based on the experiences akin to the
Uber/Ola system, the government can improve PDS by closer monitoring and
control. Those PDS dealers who perform better could be rewarded.
While ONORC has the potential to improve outcomes particularly for the subaltern groups, like any
delivery mechanism, the entire value chain of making the system work needs to be closely
monitored and backed by infrastructure. The availability of point of sale (PoS) systems at PDS
shops, and its functioning needs to be ensured to check compromises in the entitlements. Even after
the coronavirus pandemic is over, this will be useful. Migration is bound to restart because of
unemployment. When migrant workers again start boarding trains and buses for the destination
cities, they must have their PDS cards that are valid across India with them.

Food Subsidy system in India

The Economic Survey, rightly flagged the issue of a growing food subsidy bill, which, in the words of the

New Section 7 Page 13

The Economic Survey, rightly flagged the issue of a growing food subsidy bill, which, in the words of the
government, “is becoming unmanageably large”. The reason is not far to seek. Food subsidy, coupled
with the drawl of food grains by States from the central pool under various schemes, has been on a
perpetual growth trajectory.
During 2016-17 to 2019-20, the subsidy amount, clubbed with loans taken by the Food Corporation of
India (FCI) under the National Small Savings Fund (NSSF) towards food subsidy, was in the range of
Rs.1.65-lakh crore to Rs.2.2-lakh crore. In future, the annual subsidy bill of the Centre is expected to be
about ₹2.5-lakh crore. Even the Economic Survey 2020-21 has made important recommendations to
improve the Public Distribution System.
Implementation

• Food Security of beneficiaries is ensured by distributing food grains at subsidized

prices through the Targeted Public Distribution System (TPDS). It protects them
from price volatility due to inflation.
• Over the years, while the spending on food subsidy has increased, the ratio of
people below the poverty line has decreased.
• The Ministry of Consumer Affairs, Food, and Public Distribution is the nodal
ministry for the implementation of food subsidy. This Ministry has 2 Departments
which are given below
○ Department of Food and Public Distribution
○ Department of Consumer Affairs
• 98% of this Ministry’s budget is allocated to the Department of Food and Public
Distribution.
Challenges to Food Security in India

• Beneficiaries have complained of receiving poor quality food grains.

• Farmers receive Minimum Support Price (MSP)from the Government for crops
such as wheat, paddy, and sugarcane.
• The MSP is higher than the market price. There is very minimum procurement of
other crops by the Government at MSP.
• Due to this factor farmers do not have the incentive to produce other crops such as
pulses. This puts immense pressure on the water table as the above crops are
highly water-intensive.
• Due to the possibility of increasing nutritional imbalance in food grains, the
Government must expand subsidies and include other protein-rich food items.
• Under the National Food Security Act, the identification of beneficiaries is to be
completed by State Governments.
• As per the findings of the Comptroller and Auditor General in 2016, a massive 49
% of the beneficiaries were yet to be identified by the State Governments.
• The available storage capacityin states was inadequate for the allocated quantity
of food grains as per the report of the Comptroller and Auditor General (CAG).
Quantity of Food grains: High drawal rate by the states

• During the three years, the quantity of food grains drawn by States (annually)
hovered around 60 million tonnes to 66 million tonnes. Compared to the allocation,
the rate of drawal was 91% to 95%.
• As the National Food Security Act (NFSA), which came into force in July 2013,
enhanced entitlements (covering two-thirdsof the country’s population), this
naturally pushed up the States’ drawal.
• Based on an improved version of the targeted Public Distribution System (PDS),
the law requires the authorities to provide to each beneficiary 5 kg of rice or wheat
per month.
• For this financial year (2020-21) which is an extraordinary year on account of
the COVID-19 pandemic,the revised estimate of the subsidy has been put at about
₹4.23-lakh crore, excluding the extra budgetary resource allocation of ₹84,636
crore.
• Till December 2020, the Centre set apart 94.35 million tonnes to the States under
different schemes including the NFSA and additional allocation, meant for
distribution among the poor free of cost.
• Importantly, the government has decided to abandon the practice of extra
budgetary resource allocation and include in the food subsidy amount itself,
arrears in loans outstanding of the FCI drawn through the NSSF.
Problem of Allocating funds: Increase in the Food Subsidy Bill:

• The food subsidy bill has increased from 1.2 lakh crores in 2014-15 to 3.8 lakh
crores in 2020-21.
• In order to pay the food subsidy bill, the Government has been borrowing from
National Small savings Fund (NSSF) through the issuance of special G-Secs.
• However, this practice of borrowing from NSSF has been discontinued from this
year as announced in the Union Budget 2021-22.
Food subsidy comprises of:

New Section 7 Page 14

 • Food subsidy comprises of:
○ Subsidy provided to FCI for procurement and distribution of wheat and rice
under NFSA and other welfare schemes and for maintaining the strategic
reserve of food grains and
○ Subsidy provided to States for undertaking decentralized procurement. The
Food subsidy bill is calculated as the difference between Economic cost of
Food grains and Central Issue price (CIP).
Way Forward: Recast the food subsidy system is the need of the hour:

• In this context, it is time the Centre had a relook at the overall food subsidy system
including the pricing mechanism.
• It should revisit NFSA norms and coverage. An official committee in January 2015
called for decreasing the quantum of coverage under the law, from the present
67% to around 40%.
• For all ration cardholders drawing food grains, a “give-up” option, as done in the
case of cooking gas cylinders, can be made available.
• Even though States have been allowed to frame criteria for the identification of
PHH cardholders, the Centre can nudge them into pruning the number of such
beneficiaries.
• As for the prices, the existing arrangement of flat rates should be replaced with a
slab system.
• Barring the needy, other beneficiaries can be made to pay a little more for a higher
quantum of food grains.
• The rates at which these beneficiaries have to be charged can be arrived at by the
Centre and the States through consultations.
• These measures, if properly implemented, can have a salutary effect on retail
prices in the open market.
There are no two opinions about reforms implemented in the PDS through various steps, including end-
to-end computerisation of operations, digitisation of data of ration cardholders, seeding of Aadhaar, and
automation of fair price shops. Yet, diversion of food grains and other chronic problems do exist. It is
nobody’s case that the PDS should be dismantled or in-kind provision of food subsidy be discontinued.
After all, the Centre itself did not see any great virtue in the Direct Benefit Transfer (DBT) mode at the
time of giving additional food grains free of cost to the States during April-November last year. A
revamped, need-based PDS is required not just for cutting down the subsidy bill but also for reducing
the scope for leakages. Political will should not be found wanting.

Pradhan Mantri Gareeb Kalyan Anna Yojana

Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) is a scheme as part of Aatmanirbhar Bharat to
supply free food grains to migrants and poor. In a major relief to the poor amid the devastating
COVID-19 pandemic, Prime Minister Narendra Modi announced on Monday that the government has
extended the scheme to distribute wheat and rice free of cost to around 80 crore people till November
2021. Earlier in April 2021, the Centre had announced distribution of free food grains for the months of
May and June under the Pradhan Mantri Garib Kalyan Anna Yojana to help people during the second
wave of the pandemic.
Features

• Considered as world’s largest food security scheme, the Pradhan Mantri Garib
Kalyan Anna Yojana aims at ensuring sufficient food for the poor and needy during
the coronavirus crisis.
• It was announced as part of the first relief package during the COVID-19
pandemic.
• Part of the scheme, the food needs to be provided to all the beneficiaries under
public distribution system (TPDS) for Antyodaya Anna Yojana (AAY) and priority
household (PHH) ration cardholders.
• As per updates, the eligible beneficiaries will receive 5kg of foodgrains and 1 kg
Gram per month

New Section 7 Page 15

New Section 7 Page 16