Public Distribution System (PDS): Challenges and Reforms

The Public Distribution System (PDS) in India is a government-run program that aims to distribute essential food items to the country’s economically vulnerable populations at subsidized rates. It plays a crucial role in ensuring food security for millions of Indians. In this post, let us cover the Public Distribution System (PDS) in India.

We all need food grains for consumption. From where do you purchase food grains?  Is there any government mechanism apart from private shops for the delivery of food grains?

The Public Distribution System is a critical social welfare program in India, but it continues to face challenges related to implementation and coverage. Ongoing efforts to modernize and improve the system are aimed at making it more efficient, transparent, and accountable while ensuring that food reaches those in need.

The PDS plays a crucial role in ensuring food security for millions of Indians.

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The Public Distribution System (PDS)

The Public Distribution System (PDS) evolved as a system for the distribution of food grains at affordable prices and the management of emergencies. Over the years, the term PDS  has become synonymous with the term ‘food security’ and is also an important part of the Government’s policy for the management of the food economy in the country.

Info bit: PDS comes under the Ministry of Consumer Affairs, Food, and Public Distribution.

Till 1992, PDS was a general entitlement scheme for all consumers without any specific target. But in 1992, PDS became RPDS (Revamped PDS) focusing the poor families, especially in the far-flung, hilly, remote, and inaccessible areas. In 1997 RPDS became TPDS (Targeted PDS) which established  Fair Price Shops for the distribution of food grains at subsidized rates.

The objectives of the PDS are:

• To provide essential food items at affordable prices to vulnerable sections of the population.
• To stabilize prices of essential commodities in the market.
• To prevent hoarding and black marketing of food grains.
• To reduce hunger and malnutrition among economically disadvantaged communities.

Also read: Breakfast scheme: Feeding the future

Significance of TPDS

In the People’s Union for Civil Liberties v. Union of India case, the Supreme Court contended that the “right to food” is essential to the right to life as provided in Article 21 of the Constitution.

In line with this Parliament passed the National Food Security Act (NFSA) in 2013. The NFSA seeks to make the right to food a legal entitlement by providing subsidized food grains to almost two-thirds of the population.

It relies on the existing Targeted Public Distribution System (TPDS) mechanism to deliver these entitlements

Why is PDS important?

• 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.
• The PDS provides essential commodities such as rice, wheat, sugar, and kerosene oil. The specific commodities and their quantities may vary from state to state.
• The PDS primarily targets below-poverty-line (BPL) families, although the identification of beneficiaries has evolved.
• Some states have expanded the PDS to include Antyodaya Anna Yojana (AAY) beneficiaries, who are considered the poorest of the poor.
• Additionally, the National Food Security Act (NFSA) of 2013 extended PDS coverage to a broader category of beneficiaries, including priority households and eligible households.

Also read: 100+ Government Schemes and the Implementing Ministries

How does the Public Distribution System (PDS) function?

The steps involved are (1) Procurement of food grains (2) Storage of food grains (3) Allocation for families (4) Transportation of food grains.

Procurement of foodgrains

• The center is responsible for procuring food grains from farmers at a Minimum Support Price (MSP).
• The MSP is the price at which the FCI purchases the crop directly from farmers; generally, the MSP is higher than the market price.
• This is intended to provide price support to farmers and incentivize production.
• Commission for Agricultural Costs and Prices (CACP) sets the MSP
• Procurement: Two types of procurement, Centralised Procurement, and decentralized procurement.
• Centralized procurement is carried out by the FCI (Food Corporation of India) where FCI buys crops directly from farmers.
• Decentralized procurement is a central scheme under which 10 states/Union Territories procure food grains for the central pool at MSP on behalf of FCI.
•  Why decentralized procurement? The purpose is to encourage local procurement of food grains and minimize expenditure incurred when transporting grains from surplus to deficit states over long distances.

Procurement issues:

• Open-ended Procurement: All incoming grains are accepted even if buffer stock is filled creating a shortage in the open market. The recent implementation of the 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.

Storage of food grains

According to the storage guidelines of the FCI, food grains are normally stored in covered godowns and silos. In case FCI has insufficient storage space, it hires space from various agencies such as central and state warehousing corporations (CWC, SWC), state government agencies, and private parties.

Storage issues:

• Inadequate storage capacity with FCI.
• Food grains rotting or damaging on the CAP or Cover & Plinth storage.

Allocation of foodgrains

• The central government allocates food grains from the central pool to the state governments at uniform Central Issue Price (CIP) for distribution through PDS.
• Identification of poor people- The onus is on the state Government to identify the eligible households in each state. Apart from the allocation of food grains within the State, the issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs), etc. rest with the State Governments.
• Allocation for BPL and AAY(Antyodaya Anna Yojana –poorest among the BPL families) families is done based on the number of identified households.

However, allocation for APL families is made based on

• The availability of food grain stocks in the central pool
• The past lifting of food grains by a state from the central pool.

Issues with the allocation of food grains:

• Inaccurate identification of beneficiaries.
• Illicit Fair Price shops: The shop owners have created a large number of bogus cards or ghost cards(cards for nonexistent people) to sell food grains in the open market.

Transportation of food grains to FPSs

The responsibility of distributing food grains is shared between the center and states. The center, specifically FCI, is responsible for the interstate transport of food grains from procuring to consuming states, as well as delivering grains to the state godowns. Once FCI transports grains to the state depots, distribution of food grains to end consumers is the responsibility of state governments

Issues with Transportation:

• Leakage and diversion of food grains during transportation.

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Public Distribution System (PDS) reforms

The need of the hour is PDS reforms to ensure that public distribution functions the way it is intended.

End-to-end computerization would bring transparency to the whole process. It would help to prevent leakages and diversion of food grains to a great extent.

The different types of reforms undertaken by different states are:

• Adhaar 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 food grains by beneficiaries.
• Computerized Fair Price Shops: FPS automated by installing ‘Point of Sale’ 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 instead of the foodgrains subsidy component. They will be free to buy food grains from anywhere in the market. For taking up this model, prerequisites for the States/UTs would be to complete the digitization of beneficiary data and seed the 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.

The PDS has undergone various reforms, including computerization of records, Aadhar-based authentication, and the use of technology to track beneficiaries and prevent leakage.

• The “One Nation, One Ration Card” initiative aims to enable beneficiaries to access their PDS entitlements from any FPS in the country, regardless of their home state.

Also read: Core of the Core Schemes, Core Schemes, and Major Central Sector Schemes in Union Budget 2018

Summary

The government has achieved significant milestones in the PDS reforms. As part of the implementation of NFSA, almost all states have undertaken PDS reforms.

The PDS has faced challenges related to the identification of beneficiaries, leakage, corruption, and inefficiencies in the distribution system.

• Inadequate storage and logistics infrastructure can lead to food grain wastage.
• Market prices of food commodities can fluctuate, impacting the effectiveness of price stabilization efforts.

The PDS is a critical social welfare program in India, but it continues to face challenges related to implementation and coverage. Ongoing efforts to modernize and improve the system are aimed at making it more efficient, transparent, and accountable while ensuring that food reaches those in need.

Article contributed by: Sree Resmi S