Transforming Fair Price Shops (FPS) in India is a crucial aspect of revitalizing the country’s public distribution system (PDS), which plays a significant role in ensuring food security for millions of people. Read further to learn more.
The PDS is a government-sponsored chain of shops entrusted with the distribution of essential commodities, such as wheat, rice, sugar, and edible oils, at subsidized prices to the underprivileged sections of society.
However, the system has been plagued by issues of inefficiency, corruption, and leakages, necessitating a comprehensive overhaul.
The transformation of FPS into more efficient, transparent, and user-friendly outlets is central to these reform efforts.
Transforming Fair Price Shops
As per the National Food Security Act, 2013, FPS refers to shops licensed to distribute essential commodities to ration card holders under the Targeted Public Distribution System (TPDS).
Launched in 1997 TPDS provides for lower subsidized food prices for Below Poverty Line (BPL) families than those for Above Poverty Line (APL) beneficiaries.
The license for FPS is issued by an order under section 3 of the Essential Commodities Act (ECA), 1955. ECA provides for regulating control of production, supply, distribution, and trade of certain commodities in the general public interest.
Digitalization and Technology Use
One of the primary strategies for transforming FPS is the integration of digital technologies.
- E-governance initiatives, including the installation of Electronic Point of Sale (ePoS) machines, have been pivotal.
- These devices ensure biometric authentication of beneficiaries, which helps in curbing identity fraud and ensuring that the subsidies reach the intended recipients.
- Furthermore, the digitization of beneficiary databases and linking them with Aadhaar has streamlined the identification process, reduced leakages, and ensured better targeting of subsidies.
- Automation of FPS and end-to-end computerization of TPDS operation are other launches for the smooth functioning of the FPS.
Diversification of Services
The government is also exploring ways to diversify the services offered by fair-price shops, turning them into multi-service centers.
- This includes the provision of banking, insurance, and postal services through these outlets.
- Such diversification not only increases the viability of FPS but also brings essential services closer to the rural and marginalized populations, promoting financial inclusion.
- TDPS control order 2015 allows the sale of non-PDS items at FPS like oil, pulses, salt, spices, etc.
Capacity Building and Training
Improving the operational capabilities of FPS entails capacity building and training for shop owners and staff.
- Training programs on the use of digital tools, customer service, and ethical practices are essential to enhance the efficiency and effectiveness of service delivery at these shops.
- To provide banking financial services and postal services around 3200 FPS have been enabled as Banking correspondents.
- MUDRA loans through the Department of Financial Services for capital augmentation and business diversification.
Infrastructure Improvement
Upgrading the physical infrastructure of FPS is crucial for better storage and handling of goods, which can reduce wastage and ensure the quality of commodities distributed to beneficiaries.
- Improvements in infrastructure, including better warehousing and logistics facilities, are part of the transformation agenda.
- One nation one ration card has been launched to ensure food security for migrant workers in India.
Transparency and Accountability Mechanisms
Implementing transparent procedures and accountability mechanisms is critical to reforming FPS.
- The introduction of grievance redressal systems, regular social audits, and active involvement of local communities and civil society organizations in monitoring FPS operations can help enhance transparency and accountability.
Public-Private Partnerships (PPPs)
Engaging in Public-Private Partnerships (PPPs) is another avenue for transforming FPS.
- Collaboration with private sector entities can bring expertise, investment, and innovation to the PDS, helping to modernize FPS and improve service delivery. However, such partnerships need to be carefully managed to ensure that the primary objective of serving the needy remains paramount.
- About 43000 FPS have been enabled as Common services centers (CSC), serving as access points for delivery of various B2C and G2C services.
Challenges
While the transformation of fair price shops holds great promise for improving India’s PDS, it is not without challenges.
These include resistance to change among some stakeholders, the digital divide that may exclude the most marginalized, and the need for continuous monitoring and evaluation to ensure reforms are achieving their intended outcomes.
- Leakage and Diversion of Commodities: One of the most significant challenges is the leakage and diversion of subsidized goods to the black market. This not only deprives the intended beneficiaries of their rights but also results in financial losses to the government. The diversion of grains and other goods reduces the effectiveness of the PDS and undermines trust in the system.
- Corruption and Malpractices: Corruption at various levels of the PDS, from procurement to distribution, affects the proper functioning of fair price shops. Malpractices such as manipulation of records, selling inferior quality goods, or charging higher prices than stipulated, are not uncommon. These issues erode the integrity of the FPS and result in poor service delivery.
- Inadequate Infrastructure: Many fair price shops suffer from inadequate infrastructure, including poor storage facilities, which leads to spoilage and wastage of stock. The lack of proper warehousing and logistics support also complicates the timely distribution of commodities, affecting the availability of essential items for beneficiaries.
- Identification and Targeting Errors: The PDS is plagued by issues of exclusion and inclusion errors—where the intended beneficiaries are either left out of the system (exclusion errors) or non-eligible individuals receive benefits (inclusion errors). These errors stem from outdated beneficiary lists, improper identification, and the lack of a dynamic system to update beneficiary statuses.
- Digital Divide: While the introduction of technology, such as Electronic Point of Sale (EPoS) machines, has been aimed at improving transparency and efficiency, it also highlights the digital divide. Many beneficiaries, especially in rural or remote areas, may not be technologically savvy, leading to challenges in biometric authentication and other tech-based processes.
- Lack of Awareness: There is often a lack of awareness among beneficiaries about their entitlements and the functioning of the FPS. This ignorance can lead to exploitation by shop owners and deprive beneficiaries of the full benefits of the PDS.
- Inefficient Supply Chain Management: The PDS supply chain, encompassing procurement, storage, transportation, and distribution, suffers from inefficiencies that affect the FPS. Delays in transportation, poor quality of commodities, and irregular supply schedules impact the reliability of FPS as a source of essential goods.
- Financial Viability of FPS Owners: The financial viability of operating a fair price shop is also a concern for many FPS owners. The commission or margin provided to them is often not sufficient to cover operational costs, leading to disinterest and lack of motivation among FPS operators, which can adversely affect service delivery.
Why FPS is in the news?
As a step towards Digital India, the Department of Food and Public Distribution, Government of India launched a pilot to on-board the Fair Price Shops (FPSs) in Una and Hamirpur districts of Himachal Pradesh on the Open Network Digital Commerce (ONDC).
- This effort aims at providing additional avenues of income generation for FPS dealers along with enhancing beneficiary satisfaction.
- This initiative provides numerous benefits for FPS dealers including visibility in the digital marketplace, access to a larger customer base beyond NFSA beneficiaries, and the ability to compete on an equal footing with large retailers and e-commerce platforms.
- Additionally, beneficiaries who face difficulties in making online purchases can approach the FPS dealer to make online orders on their behalf.
Also, the standing committee on Consumer affairs, food, and pubic distribution submitted a report on transforming FPSs. The key recommendations were:
- Increase sales of non-PDS commodities such as Khadi & Ayush products from MSMEs.
- Form a monitoring cell to track the progress of model FPS in all states.
- Improve the working of Vigilance Committees (VCs) established under NFSA. VCs are established by Governments at the State, District, Block, and FPS levels to ensure transparency and accountability of the functionaries in TPDS.
- Ensure all ePoS machines are connected to and synchronized with weighing machines for effective delivery of ration.
Conclusion
Transforming fair-price shops in India is a complex but necessary task that requires a multi-faceted approach, involving technological upgrades, capacity building, infrastructure improvement, and enhanced transparency and accountability.
By reimagining FPS as more than just distribution points for subsidized goods, but as community-centric service hubs, the PDS can become a more effective tool in the fight against food insecurity and poverty in India. The success of these transformations will depend on the collaborative efforts of the government, private sector, civil society, and the communities they serve.
-Article by Swathi Satish
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