Syllabus
GS Paper III – Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security
Context
An ICRIER study estimates that the annual fiscal cost of leakage in distributing food grains to over 800 million beneficiaries under the free rations scheme is ₹69,000 crores.
Reforming Public Distribution System (PDS) to Curb Leakage
Introduction
India’s Public Distribution System (PDS) is currently facing significant challenges, with a recent report by the Indian Council for Research on International Economic Relations (ICRIER) revealing a 28% leakage of subsidized grains. This leakage translates to an estimated 20 million tonnes of rice and wheat being diverted annually, resulting in a staggering economic loss of ₹69,000 crores. The report highlights that these grains, intended to benefit 814 million people under government schemes, are likely being redirected to the open market or exported. Addressing these inefficiencies is crucial to ensuring that the PDS effectively reaches its intended beneficiaries and curbs such substantial losses.
Indian Council for Research on International Economic Relations (ICRIER)
- Establishment: Founded in 1981, ICRIER is an independent public policy organization.
- Motto: Its guiding motto is “Linking India with the world.”
- Focus Areas: Agriculture, Climate Change, Digital Economy, Economic Growth, Jobs and Gender, Trade, Industry, and Investment
- Role and Contribution:
- Provides insightful ideas to accelerate India’s inclusive development.
- Serves as a bridge between academia and policy-making.
- Advisory Role: Acts as a trusted advisor to governments, corporates, multilateral organizations, and foundations.
ICRIER Study Highlights
- Excessive Coverage and Economic Strain:
- Current Coverage under NFSA and PMGKAY: The schemes extend to 57% of the population (813.5 million out of approximately 1.43 billion in 2024).
- Criticism: Experts argue that providing free food to over 800 million individuals is economically unsustainable.
- Leakages in PDS:
- Significant Issue: A substantial portion of food grains fails to reach the intended recipients.
- Extent of Leakages: About 28% of the rice and wheat distributed under the PDS does not reach beneficiaries, causing an annual loss of 19.69 million metric tonnes (MMT) of grains (2022-23).
- Financial Loss: This results in a fiscal loss of ₹69,108 crore annually.
- State Variations: High leakage rates are reported in states like Arunachal Pradesh, Nagaland, and Gujarat.
- Improvements and Challenges: The introduction of Point-of-Sale (PoS) machines at Fair Price Shops has reduced leakages from 46% in 2011-12 to 28% in 2022-23.
- Nutritional Security Deficiency:
- Current System: The existing cereal-centric subsidy system does not adequately address nutritional needs.
- Malnutrition Indicators (NFHS 2019-21):
- Stunted Children: 35.5% of children under five are stunted.
- Wasted Children: 19.3% are wasted.
- Underweight Children: 32.1% are underweight.
- Cereal-Focused Subsidy: The subsidy largely targets cereals, with limited emphasis on nutrient-rich foods like pulses, vegetables, and fruits, which are essential to combating malnutrition.
- Fiscal Impact:
- Subsidy Expense: The food subsidy for FY23 was ₹2.72 lakh crore, reduced to ₹2.12 lakh crore in FY24 (RE).
- Potential Savings: Reducing leakages could free up resources for agricultural investment and rural development.
Additional Issues with PDS in India
- Ghost Beneficiaries and Fraud:
- Aadhaar Linkage: Despite Aadhaar linkage, duplicate and ineligible beneficiaries persist.
- Bogus Ration Cards: 47 million fake ration cards were cancelled between 2013-2021.
- Targeting Errors:
- Identification Issues: Mistakes in identifying beneficiaries lead to the exclusion of eligible households and inclusion of non-poor families.
- Storage Losses:
- Infrastructure Deficiency: Inadequate storage facilities result in 10% of food grains being spoiled annually.
- Corruption:
- Fair Price Shops (FPS): Corrupt practices at FPSs, such as under-weighing and overcharging, undermine the effectiveness of the PDS.
Public Distribution System (PDS)
- Original Purpose: Initially established to manage food scarcity by distributing essential grains at affordable rates.
- Evolution: PDS has become a vital element of India’s food security framework, complementing household grain needs but not covering the entire requirement.
Management of PDS
- Operational Framework: The PDS operates under the combined responsibility of Central and State/UT Governments.
- Central Government: Oversees procurement, storage, transportation, and bulk allocation of food grains via the Food Corporation of India (FCI).
- State Governments: Responsible for distribution, identifying eligible families, issuing ration cards, and supervising Fair Price Shops (FPSs).
- Primary Distribution Items:
- Common Goods: Wheat, rice, sugar, and kerosene are the main items distributed.
- Additional Items in Some States: Pulses, edible oils, and salt are included in certain states.
Importance of Public Distribution System (PDS) in India
- Food Security and Poverty Reduction:
- Access to Food: PDS ensures that vulnerable groups have access to essential food grains, especially since 129 million Indians are living in extreme poverty (World Bank, 2024).
- Crisis Response: Acts as a safety net during crises, such as the COVID-19 pandemic, where initiatives like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) provided free food grains to 800 million individuals.
- Price Stabilization and Market Regulation:
- Mitigating Price Volatility: By maintaining buffer stocks, PDS helps control market fluctuations.
- Example: In 2022-23, the Food Corporation of India (FCI) released 34.82 lakh tonnes of wheat to stabilize market prices.
- Mitigating Price Volatility: By maintaining buffer stocks, PDS helps control market fluctuations.
- Agricultural Support: Assured Markets and MSP: PDS offers assured markets and Minimum Support Prices (MSP), which support farm incomes and sustain rural livelihoods.
- Nutritional Security:
- Combatting Malnutrition: Some states distribute fortified rice, pulses, and millets to address malnutrition.
- Examples:
- Tamil Nadu: Provides fortified rice.
- Odisha: Promotes millet distribution through the Millets Mission.
- Examples:
- Combatting Malnutrition: Some states distribute fortified rice, pulses, and millets to address malnutrition.
- Social Equity and Regional Balance:
- Supporting Marginalized Communities: PDS aids marginalized groups, especially in remote and tribal areas.
- Migrant Worker Support: Initiatives like One Nation One Ration Card (ONORC) enhance ration card portability for migrant workers.
Government Measures to Enhance PDS Technology
- Technology-Driven Reforms:
- Digitization of Ration Cards: The government has digitized ration cards and beneficiary databases to eliminate duplicates and fake entries.
- Aadhaar Seeding: Mandatory Aadhaar integration for ration cards to address ghost beneficiaries and reduce leakages.
- ePoS Devices: Introduction of Electronic Point of Sale (ePoS) devices at Fair Price Shops (FPSs) for biometric verification during foodgrain distribution.
- Supply Chain Automation: Implementation of online systems to monitor the movement of food grains from procurement centers to FPSs.
- Portability of Ration Cards:
- One Nation One Ration Card (ONORC): Launched in 2019, this initiative allows beneficiaries, especially migrant workers, to access their PDS entitlements anywhere in India.
- National Program: ONORC has been rolled out across all states and UTs, improving access and portability, initiated in 2018 by the Department of Food & Supplies and Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution.
- Strengthening Infrastructure:
- Modern Storage Facilities: Investment in building modern silos, cold storage, and warehouses to minimize storage losses and ensure better quality of food grains.
- Doorstep Delivery: Implementation of doorstep delivery of food grains to FPSs in several states to ensure timely stock availability.
- Delhi Initiative: The Delhi government announced a plan for doorstep delivery of PDS rations in 2018.
- Introduction of Nutritional Reforms:
- Fortified Food Grains: Introduction of fortified rice in the PDS to address micronutrient deficiencies.
- National Nutrition Mission: Food fortification included in the National Nutrition Mission – POSHAN Abhiyan to reduce anemia and malnutrition rates.
- Grievance Redressal Mechanisms:
- Toll-Free Helplines: Establishment of toll-free helplines by states to address complaints related to PDS operations.
- Social Audits: Promotion of social audits to enhance transparency and accountability in the functioning of FPSs.
- Financial Support for FPS Dealers: Provision of financial incentives to FPS dealers through higher margins to maintain operational efficiency.
- Emergency Response Mechanisms:
- Mobile PDS Units: Introduction of mobile units in some states to serve beneficiaries in remote and disaster-affected areas.
- MERA RATION App: Launch of a mobile app named “MERA RATION” to assist people in utilizing the ONORC scheme effectively.
Challenges to the Public Distribution System (PDS) in India
- Leakages and Corruption:
- Extent of Leakages: Approximately 28% of allocated food grains fail to reach the intended beneficiaries, amounting to around 20 million metric tonnes of rice and wheat.
- Financial Impact: This results in an annual loss of approximately Rs 69,108 crore.
- Corruption: Instances of corruption and bureaucratic inefficiencies contribute significantly to these leakages.
- Inefficient Targeting:
- Identification Issues: Incorrect identification of Below Poverty Line (BPL) families leads to inefficiencies in food distribution.
- Excessive Coverage: The current PDS covers 57% of India’s population, raising questions about the necessity of such widespread distribution.
- Nutritional Security:
- Dietary Diversity: The Household Consumption Expenditure Survey (HCES) data shows a decline in spending on pulses and vegetables, contributing to poor dietary diversity.
- Malnutrition Rates: According to the National Family Health Survey (2019-21), 35.5% of children under five are stunted, 19.3% are wasted, and 32.1% are underweight.
- Infrastructure and Storage Issues:
- Storage Losses: Inadequate storage facilities and improper storage methods lead to significant food deterioration and wastage.
- Modernization Needs: Investment in modern silos, cold storage, and warehouses is essential to reduce storage losses and ensure better quality of food grains.
- Technological Challenges:
- Implementation of ePoS Devices: Despite technological interventions like biometric authentication, leakages remain a challenge.
- Data Discrepancies: Discrepancies in data interpretation and methodology used in studies highlight the need for more accurate monitoring systems.
Proposed Reforms by ICRIER for Enhancing PDS
- Targeted Free Food Coverage:
- Restricted Coverage: Free food benefits should be confined to the poorest 15% of the population.
- Cost Sharing: Beneficiaries above the extreme poverty line should pay at least 50% of the Minimum Support Price (MSP) for grains to reduce subsidy costs and enhance sustainability.
- Plugging Leakages in PDS:
- Expansion of PoS Machines: To minimize leakages, the use of Point-of-Sale (PoS) machines should be extended to all Fair Price Shops.
- Implementation of DBT: Direct Benefit Transfer (DBT) should be implemented to ensure food subsidies are directly transferred into beneficiaries’ accounts, reducing corruption and inefficiencies.
- State Achievements: States like Bihar and West Bengal have shown significant reductions in PDS leakage.
- Bihar: Leakage reduced from 68.7% in 2011-12 to 19.2% in 2022-23.
- West Bengal: Leakage decreased from 69.4% to 9% over the same period.
- Nutrition-Oriented PDS:
- Conversion of Fair Price Shops: Selected Fair Price Shops should be transformed into “Nutrition Hubs” offering a variety of food items, including eggs, pulses, millets, and fruits, alongside cereals.
- Digital Food Coupons: Beneficiaries should receive digital food coupons that can be redeemed at these Nutrition Hubs, promoting dietary diversity.
Way forward
- Digital Transformation: Adoption of blockchain and IoT technologies for real-time monitoring, along with AI-based analytics to detect pilferage and improve transparency.
- Modernized Infrastructure: Development of temperature-controlled silos and automated quality control systems to minimize storage losses and ensure food quality.
- Strengthening ONORC: Better interstate coordination and real-time tracking of migrant populations to improve the portability of ration cards under the One Nation One Ration Card (ONORC) scheme.
- Diversified Food Items: Incorporation of millets, pulses, and fortified foods in the PDS to tackle India’s nutritional challenges.
- E-Rupee Vouchers: Introduction of E-Rupee vouchers for nutrition to support vulnerable groups.
- Crisis Preparedness: Mobile PDS Units: Establishment of emergency mobile PDS units to serve populations affected
- Agricultural R&D: Redirecting savings from subsidy rationalization towards developing high-yield, climate-resilient, and nutrient-rich crop varieties.
- Sustainable Farming Practices: Focus on promoting climate-resilient and sustainable agricultural practices to combat climate change impacts.
- Farmer Skill Development: Prioritization of skill enhancement programs for farmers to increase agricultural productivity and income.
Conclusion
A restructured PDS with targeted free food, DBT for leakages, and diversified nutrition options is critical for addressing poverty and malnutrition effectively. Food subsidy savings must focus on investments that offer long-term returns and improve overall food and nutritional security. Ultimately, the key to a more effective Public Distribution System (PDS) lies in comprehensive reforms that address current inefficiencies and leakages. By implementing advanced technologies, modernizing infrastructure, and focusing on nutritional diversity, India can significantly enhance the PDS. This holistic approach will not only reduce economic wastage but also ensure that the most vulnerable populations receive the support they need. Furthermore, channeling subsidy savings into agricultural development and nutrition-focused programs will promote sustainable growth and resilience, aligning with India’s broader developmental objectives.
Source: ET
Related PYQ
What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent? [ UPSC Civil Services Exam – Mains 2022]
Practice Question
Evaluate the challenges and suggest comprehensive measures to make the Public Distribution System (PDS) more effective and efficient in India. (250 words)
Guidelines to Answer the Question
- Introduction:
- Briefly explain the purpose and significance of the Public Distribution System (PDS) in India.
- Mention the issue of leakage and its impact on the efficiency of the PDS.
- Challenges:
- Leakages and Corruption: Discuss the extent and financial impact of food grain leakages.
- Inefficient Targeting: Highlight problems in identifying and reaching the actual beneficiaries.
- Nutritional Inadequacies: Explain how the current system fails to address diverse nutritional needs.
- Infrastructure Issues: Address problems related to storage and transportation facilities.
- Technological Gaps: Discuss the need for better technology to monitor and track the distribution process.
- Measures to Improve PDS:
- Digital Transformation: Propose digitization of the entire supply chain and beneficiary databases using advanced technologies.
- Direct Benefit Transfer (DBT): Suggest implementation of DBT to minimize corruption and ensure direct transfer of subsidies.
- Nutritional Reforms: Recommend inclusion of diverse and fortified food items to improve nutritional outcomes.
- Strengthening Infrastructure: Advocate for investment in modern storage and transportation infrastructure.
- Emergency Response: Suggest establishing mobile PDS units for disaster-affected areas.
- Conclusion:
- Summarize the importance of addressing PDS leakages to ensure food security.
- Highlight the potential benefits of proposed reforms in enhancing the efficiency and effectiveness of the PDS.