Smart Public Distribution System

Plugging the Leaks Improving reach and efficiency of the Public Distribution System

The Social Transformers

Akriti Chadda Manish R. Thigale Nikhil Iyer Rangesh R. Vittal Shubham Jha
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Public Distribution System In India

Targeted Public Distribution System launched in 1997 Aims at benefitting the poor and keeping the budgeted food subsidies under control. Main objective is to sell food grains to APL Households at economic cost and confine budgeted food supply to the identified BPL families. Main commodities include Rice, Wheat, Sugar and Kerosene. Managed jointly by the Government of India under the Ministry of Consumer Affairs, Food, and Public Distribution with respective state governments in India. Food Corporation of India (FCI), a central government-owned corporation, procures, maintains and issues food grains to the states. Distribution of food grains to the poor throughout the country is managed by respective state governments. As of date, there are about 4.99 lakh Fair Price Shops (FPS) across India.

% of population below poverty line in India The Social Transformers

Reports suggest that more than 57% of the grains do not reach the BPL households
Some states face errors of exclusion and some, inclusion. Some states have issued more cards than the number of households, while others have unidentified households. The problems of targeting errors and ghost cards has lead to high scale leakages. (36.38%) Diversion of subsidized grains to unintended beneficiaries. (21.45%) Long time taken in delivery of stock from the godowns to the Fair Price Shops (FPS).

Ghost Cards

Leakages

Time Delay

No measures taken to save crop from getting spoilt. The godowns as well as FPS have poor resistance to rain, wind, insects and rodents. Poor maintenance of storage facilities.

Not all families of the BPL have access to the fair price shops (FPS). PDS benefits do not reach remote locations.

Stocks withheld for greater profits in the open markets by the corrupt in some cases.

Storage Problems

Reach

Malpractices

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Our solution to the current problem in the PDS system

Packaging reforms aiming at reducing the loss of the grains due to the previously-mentioned problems existing in status quo.

Introducing Smart Ration Cards (SRCs) and linking them with the UIDAI (Aadhar) database in order to eliminate the growing problem of ghost cards.

SOLUTION
Linking the central and state governments more efficiently for better outputs. Reducing dependability on the FPS agents by the use of technology, like the introduction of smart ration cards (SRCs), barcode scanners , etc. .

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The working needs to start in the level of the central government in order to avail maximum benefits of the policy.
The sealed packs (Smart Packs) will be available in convenient weight variants ( For example rice can have 1 kg, 5kg and 15kg) This ensures that the customers buy as per their requirement, improving flexibility and reducing wastage.

The packs will be measured accurately at the source and then sealed with tamper-proof packaging, thus preventing pilferage and damage during transportation and handling.

A dual-layer packaging, with the inner layer made of polypropylene-woven bags and the outer layer made of reinforced cardboard cartons. Kerosene will be packed in jerry cans and sealed.

Next, these packages are barcoded, and this barcode provides information on date of packing & date of expiration, weight and content, among other things.

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The good work needs to be carried on by the officials at the level of the State Govt. and further by the agents in the Fair Price Shops (FPS).

At the state level, we integrate the UIDAI database with the states BPL, APL and AAY database.

People will be given Smart Ration Cards (SRC) which will be used at the FPS to buy the rations. This card will have a password, similar to an ATM pin to ensure that only the card holder uses it. This user will have the option to set the password in the language of his/her choice, thus ensuring that he/she is comfortable with his/her password, at the same time, preventing misuse of the card by someone else. The Smart Ration Card(SRC) will work on a prepaid system, ensuring that the government gets money directly and not through multiple middlemen. Every time the customer buys the ration, the card is swiped and the money is debited from the smart card.

Distribution of cards and setting up of recharge outlets will be the responsibility of the PRIs (Panchayati Raj Institutions) and ward officials, under the supervision of the Deputy Collector.

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Most of the problems of the current scenario can be attributed to STORAGE.

Ideal conditions include low running costs, low labor requirements, rapid handling, low wastage through spillage and rodents, and control of aeration. The best way to achieve the above conditions is to: 1. Build metal silos instead of concrete ones, which are at least 1000% cheaper. 2. Importance must be given to maintenance of the facilities. This can be done by training employees on this matter and setting up diligent maintenance programs. 3. Frequent checks and audits by an external agency will be made compulsory to ensure that these conditions are met.

Central Storage

The FPS shops must be waterproofed. Importance again should be given to maintenance of the facilities. Frequent checks and audits by the state officials will be made compulsory to ensure that these conditions are met.

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FPS Storage
7

FARMERS

Procurement

Flow chart of improved PDS

DATABASE

FCI

CENTRAL GOVERNMENT Storage SMART PACKS Transportation STATE GOVERNMENT Transportation FAIR PRICE SHOP Smart Card

CONSUMER The Social Transformers 8

A cost-benefit analysis
Losses in the current system Estimated cost of the improved system
Smart Packaging: 600 crores (300 crores increment from current scenario) Barcode system(Generator): 1 crore PDS corruption loss: 20,747 crores Food Grain Loss: 2050 crores in the last 3 years Smart Ration Cards(SRC):15 crores Infrastructure(metal silos): 7 crores Barcode scanner: 50 crores Magnetic strip reader: 250 crores Total additional cost: 923 crores

All values are in INR(Indian Rupees)

The total current losses outweigh the cost of the improved system !
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The policy being recommended helps improve the existing system

Improving quality of FPS: Once weighted, smart packaged and barcoded, the boxes cant be opened unless sold to the customer. This ensures quality and quantity of the ration and prevents customers from being cheated out of their fair share. Also, use of better storage facilities and regular maintenance reduces wastage of food.
Auditing mechanisms provide the check and balance required to curb corruption to a large extent. Employees, if found corrupt, will be terminated. Since the new packaging and processing system will require more human resources, this provides an employment opportunity to people. We can use the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), JRY (Jawahar Rozgar Yojana), and other related employment schemes. Introduction of smart ration cards (SRCs) eradicates ghost cards and ensures that the right BPL and APL families obtain the benefits with less opportunity for corrupt practices. Timely dispatch of goods to the FPS due to efficient record-keeping, smart packaging and inventorykeeping. The database system keeps a track of the stock available in the FPS, and the expiry date of rations among other things. The universal recharge system (URS) ensures that the money paid by the consumer directly reaches government accounts, without travelling through middlemen. The system empowers consumers and increases the dignity of the poor. It takes away the powers of the FPS agents who dictate terms to these poor people by keeping the FPS open at their whims, make them stand outside in rain and sun, and not providing the ration for not bringing the exact change. The Social Transformers 10

Expected challenges in the implementation

Distribution of Smart Ration Cards(SRC): New cards are being issued and have to be distributed to every household. Verification of the UID with the existing ration card is a slow process.

Setting up of the infrastructure for printing of cards , smart packaging and storage facilities.

Training the authorities and educating the public about the modified system and getting them accustomed to it.

We propose this improvement in the implementation of the present system to ensure that the right needy people get their fair share of quality food at a fair price with dignity The Social Transformers 11

References
1) Indian Economy by Datt & Sundharam. Page no. 552-564 ,67th edition, S.CHAND publications 2) Press Information Bureau English Release(www.pib.nic.in) 3) Research and development issues in grain post-harvest problem in Asia by FAO Corporate Document Repository 4) Performance evaluation of TPDS by Planning Commission of India,Year-2005 5) Food Subsidy in India: Trends, Causes and Policy Reform Options, Vijay Paul Sharma, W.P. No.2012-08-02,August 2012 6) Bhalla, Surjit S. (2012, Jan 7). Enhancing Corruption the NAC Way. Oxus Investments. 7)As Grain Piles Up, Indias Poor Still Go Hungry a THE NEW YORK TIMES report by Vikas Bajaj dated June 7,2005. 8) THE NATIONAL FOOD SECURITY BILL,2013 from THE HINDU archives.
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