Professional Documents
Culture Documents
Food is one of the basic requirements of life. A person has to earn his bread in
order to survive in this cruel and ruthless world. But what if due to several reasons
like, illiteracy, unemployment, lack of opportunity etc. one is not able to earn and
therefore fulfill his needs. To rescue a person from such a situation, The Food
Corporation of India (FCI) and the Indian Government has taken the initiative of
the P.D.S. or Public Distribution System in the country. This system is a joint
backbone for the people in need, in the country who cannot afford to buy three
square meal a day and other goods which are a necessity of life. The needy get all
the necessities of life like food etc. at a subsidized rate through this programme.
This paper attempts to analyze the current Public Distribution System in the
country, and also discusses the various issues that need to be tackled and also gives
There are so many people in the world so hungry, that God cannot appear to them
Food has always been the biggest reason and the most important cause for all the
wars and conflict in the human history. Its security has been one of the biggest
To achieve this, The Government of India established what is called the Public
System (PDS) has been a total roller coaster ride with a lot of ups and downs. This
paper tries to study how the system of PDS has helped or rather tried to help the
needy in the country who still dreams of having three square meals a day without
The Genesis of the modern system of the Public Distribution was the gift from the
Britishers who during the World War II gave a structured view of publically
distributing cereals in the form of rationing firstly in Bombay (Mumbai) and then
spread it further to several other cities in India. Later after the Second World War
came to an end, this system was abolished. But it was reintroduced in around 1960-
1970 again to combat the inflationary pressures and this brought major changes in
the already once existed PDS system. This system of PDS continued till mid 90s
when the Government of India decided to take several major changes in the
existing system by changing the ways of securing food, procuring it as well and
also providing new methods of storage. From 1991 to the present, the policy of
universal PDS has been replaced by a targeted policy in line with the objectives of
economic liberalization.
Thus, over the entire period, the PDS grew from a rationing scheme in selected
targeted at the income-poor. The Essential Commodities (EC) Act, 1955 that
came into force on that very year was meant to facilitate Government regulation of
however was not the first one for imposition of controls on trade and distribution.
It was however the first one in Independent India. The British Colonial
Government under the Defense of India Rules had implemented some control
measures. Since 1946 there came legislation in the form of the Essential Supplies
(Temporary Powers) Act, 1946 which was in fact replaced by the EC Act of
1955. The number of commodities declared essential under the Act has rapidly
items to extend the EC (Special Provisions) Act, 1992 by another five years.
In 1997, following the advice given in an influential World Bank document (World
Bank, 1996) the Government of India introduced what is called the Targeted
Public Distribution System (TPDS) in order to focus on the needs of the poorer
sections of the Indian Society (GOI, 1997)1. The policy initiated targeting of
households on the basis of an income criterion that used the income poverty line to
demarcate poor and non-poor households and classified them as APL i.e.
Above Poverty Line, and, BPL i.e. Below Poverty Line families. But, the bottom
line was that the Indian PDS is plagued by various problems such as corruption,
diversion of commodities, inclusion of people above the poverty line and exclusion
December, 2000 for one crore poorest of the poor families. Since then the scheme
has been expanded thrice. The first expansion took place on 5 th June, 2003, second
expansion on 3rd August, 2004 and third expansion on 12th May 2005, increasing
the number of families by 50 lakhs at each expansion, thus raising the total
So, PDS is a huge scheme, which is operated under the joint responsibility of the
Central and State Governments, with the former responsible for procurement,
storage, transportation (Up to the district headquarters) and bulk allocation of food
grains. The state Governments are responsible for distributing these food-grains to
identification of families below poverty line (BPL), issue of BPL cards, and
supervision and monitoring of the functioning of the Fair Price Shops. States are
responsible for movement of food grains from the district headquarters to the PDS
shop, which requires storage at the sub-district level. As food was always a non-
We are going to study the objectives of the PDS that the Government of India has
promised to fulfill and whether they have really kept their promise or have just
been flaring the trumpets loud without much care to fulfill it or not. The objectives
Has PDS really been able to fulfill its real goal for which it had been
established i.e. serving the interests of the poor and being an easy access to
The impact of Corruption in the PDS, which has caused a large strain over
The need to make changes or continue with the existing system of PDS.
CHARACTERISTICS OF PUBLIC DISTRIBUTION SYSTEM
What once started as a programme of food supplies to the famine and drought
victims in 1939 by the Britishers, PDS has increased its scope of work to include a
larger sphere of operations for procurement, and distribution of food grains and
other civil supplies, pricing policies and so on. The essential features of the PDS
through the fair price shops (commonly known as ration shops or co-
operatives, which are usually owned by the Government, which are operated
throughout the period. The other important items are kerosene, edible
oil etc.
3. The working of the PDS has not caused any hindrance to the functioning of
the free market mechanism except in the limited statutory rationing areas but
where it works along with it. Hence, this way of working could be viewed as
obtains the required amounts of food grains and other items and a buffer
stock is maintained with a view to meet scarcity situation. The Government
feeds the PDS with supplies, bears the cost of subsidy, decides as to which
goods to supply, at what rates, what amount to be sold per head or per family
etc.
and also to stabilize their open market prices or at least to prevent an undue
rise in such prices under conditions of shortage. The prices charged are
usually lower than open market prices and also lower than the procurement
6. It has been primarily an urban oriented system. Its genesis as well as growth
has been in those sensitive urban areas where a shortage of food grains and
Government.
and Public Distribution is again divided into two parts for the purchase and storage
of food grain.
FOOD CORPORATION OF INDIA (FCI)
Food Corporation of India of the FCI was setup on 14th January 1965 and its
headquarters is at Chennai, which is made under the Food Corporations Act 1964
Healthy and efficient price support operations for preserving the interests of
the farmers.
to ensure National Food Security even during the time of scarcity and need.
THE ORGANIZATION AND WORKING OF THE PUBLIC
DISTRIBUTION SYSTEM
introduced two major bodies which are to look and organize this system
properly. They are: Ministry of Consumer Affairs and Food and Public
Distribution. The ministry has also been divided into two important
regional offices. Each year, the Food Corporation of India purchases roughly
15-20 per cent of India's wheat output and 12-15 per cent of its rice output2.
The purchases are made from the farmers at the rates declared by the
can be procured by FCI provided the stock satisfies FAQ (Fair Average
rates affirmed by the Government of India for further distribution under the PDS
for the use of the ration cardholders. FCI itself does not directly deal out any stock
under PDS and its operation end at the way out of the stock from its depots. The
Union Government in the form of Food Subsidy reimburses the difference between
the purchase price and sale price, along with internal costs. At present the annual
subsidy is around $14 billion (Year 2013)3. FCI by itself is not a Decision making
authority; it does not decide anything about the MSP, imports or exports. It just
Agriculture.
CENTRAL WAREHOUSING CORPORATIONS (CWC)
There is a policy proposed to attain certain heights when PDS is the question that is
for:
A. Buffering and making ready stock of food grains to supply to the Public
Distribution System.
B. General Warehousing.
The attempt is to update storage ability and to decrease dependence on the capacity
under Cover and Plinth (CAP). There are three agencies in the public sector, which
Warehousing Corporations (SWCs). While the ability accessible with FCI is used
mainly for storage of food grains, but CWC and SWCs is used for storage of food
The Warehousing (Development and Regulation) Act 2007 was enacted and
notified in September 2007. The Act ensures that the farmers are able to keep their
instrument. With the full execution of this Act, farmers would find it easy to take
loans from commercial banks against negotiable warehouse receipts and not resort
to distress sales to take care of their urgent cash needs. The Act has since been
under the Act to register and regulate warehouses issuing negotiable warehouse
receipts and to implement other Provision of the Act. The Department of Food &
the North Eastern Region by FCI. Earlier, the Planning Commission had approved
an outlay of Rs.149.00 crores which included Rs.125 crores as equity to FCI for
construction of godowns in the North Eastern States as well as some other deficit
godowns to create a total additional storage space of 5.4 lakh tonne in the NE
States by the FCI with an allocation of Rs.568.17 crores, which has since been
approved by the Planning Commission / Ministry of Finance. For the areas other
than NE Region for the 12th Five Year Plan, an Rs.20.00 crores has been proposed
for creation of storage godowns. BE for 2012-13 for this scheme is Rs.60.00
crores.
THE ORGANISATIONAL DESIGN OF PUBLIC DISTRIBUTION
SYSTEM ININDIA
is given below:
PUBLIC DISTRIBUTION SYSTEM & CORRUPTION
Public Distribution system has been one of the biggest and the most controversial
projects that it had ever introduced. Corruption in India is one of the biggest
problems that has crept into our society and this is to be dealt with. But the chain
of Corruption in the public Distribution System begins at the sourcing stage itself.
Some of the produce that is sourced by the Government for public distribution
finds its way into the open market. Then, there are issues related to obtaining a
The Government allocates funds for the Public Distribution scheme. The scheme
aims to provide food grains and commodities to poor people at affordable prices.
The Government sources produce for the system from farmers; it sets a minimum
support price to do so. The MSP is usually governed by factors such as the
Sometimes, the support price is so low that it can only attract low-quality produce;
the rest goes to the open market. The Government tries to avoid this by upping the
support price if it looks like it cannot procure the amount of grain it needs. Still, a
portion of the procured grain sometimes finds its way into the open market. The
study says that in Nagaland, 100% of the grain procured ends up in the open
Ration cards are supposed to be issued to people living below or on the verge of
the poverty line. The process of issuing cards is, again, rife with corruption. Money
and influence are the usual determinants of who gets ration cards, and who doesn't.
Worse, bogus cards are often used to divert supplies to the open market. And it
People have difficulty in getting whatever little reaches ration shops. Shop-owners
usually get Licenses to run shops on the basis of political patronage or outright
bribes. The only way they can earn profits is by diverting produce to the open
market. Result: people get less than they are entitled to, or are charged more for
All these stages lead to the loss of the public at large and this is not correct as all
have their right to get what they deserve. An instance of corruption was printed in
the Times of India, which is one of the leading news papers in the country which
said.
On one hand, the Union government is thinking of enacting the Food Security Act.
On the other hand, a committee appointed by the Supreme Court (SC) to suggest
ways to revamp the public distribution system (PDS) feels that it is next to
This statement comes even before the committee completes public hearings and
The central vigilance committee under retired SC judge DP Wadhwa is touring the
entire country to take suggestions from consumers to improve PDS. It held a public
hearing at Deshpande Hall on Wednesday. Many ration shop owners admitted
during the hearing that they resorted to corrupt practices because of low
Justice Wadhwa, however, told the media after the hearing that due to huge
difference in PDS and market rates it was difficult to put an end to corruption. "It is
human nature. Why do people buy pirated DVDs when original ones are available?
The shopkeepers cannot earn much if they run their shops honestly, so they resort
to malpractices. A Punjab minister told me that nobody could run a PDS shop
Replying to a query, Wadhwa said that increasing commission would not stop
gives 50 paise per kg. This has not made any difference in corruption."
Commenting on the district-level PDS vigilance committees, the ex-SC judge said
that they had proved to be parasites in Tamil Nadu. "In Bihar, the non-official
members did not bother to attend meetings until the government started paying
Gujarat and Chhattisgarh's PDS were the best. "The case of Tamil Nadu is
was the biggest complaint. People were not getting rations on time and in some
areas it was not available at all. "In many places only 50% of allotted quantity
reaches the end users. Diversion takes place during transport as well as at shops.
Longer the transport distance, higher is the quantum of diversion of PDS items," he
said.
The judge feels that use of information technology is the only way to reduce
Corruption in PDS is almost impossible to eliminate, as per this article. This means
we need to chalk out other mechanisms for PDS. As rightly pointed out by the ex
SC-judge, used of IT in this system may be useful. There are certain other ways to
protect the masses from corrupt officials which could be used or experimented in
order to see whether the rights of the individuals especially living in below poverty
line is not ignored and they are given full benefits of this system.
METHODS TO CONTROL CORRUPTION IN PUBLIC
DISTRIBUTION SYSTEM
1. Food vouchers:
The current system makes ration cardholders captive customers of specified ration
shops. The government could consider issuing food vouchers to cardholders. These
vouchers can be exchanged for food from any shop. The owners of these shops can
trade these vouchers in for cash. The quality of the produce, its price, and the way
shop-owners (private shop owners) procure their supplies will all be market-
procurement to distribution.
2. Local procurement and distribution:
One reason for the inefficiencies and corruption that plague the current system is
the long distribution chain. Food supplies go waste or are diverted at each step of
the process. It also takes a long time for food produce to reach ends of the chain
(this also increases the cost of managing the public distribution system). If the
local administration takes charge of procurement (unless certain foods are not
available locally), it can collect food produce locally. This can then be distributed
The problems can also be addressed by involving local people in the process. Thus,
procurement and storage of grain is done at the local level, and could be managed
participatory wealth ranking process. This addresses issues related to exclusion and
inclusion, a major problem in the current public distribution system. The fund can
also lend money to farmers to cultivate crops and take a part of the produce as
This paper tries to bring forward the areas of utter concern with respect to the
policy reforms in the context of PDS and securitization of food in India. The areas
of concern which we found out were the unorganized supply chain performance,
corruption and identification and the level of IT intervention in the current system.
One thing has been concluded that a well functioning PDS is still needed in the
nation and can be the only means to ensure adequate physical access to food at the
local and household levels. There are a number of states who are already trying to
innovate a lot of new ideas in PDS execution, and improved performance can be
seen in some cases. Lastly what we can figure about this system in India is that it
Books:
Tyagi& V.S Vyas, 1990, Increasing Access to Food: The Asian Experience,
Journals:
(iFirst)
Reports:
(TPDS)
Websites:
http://www.livemint.com/r/LiveMint/Period1/oldpdf/a348945b-1ec7-4808-
Newspaper Articles:
Roy, A., 2011, Corruption in PDS cant be stopped, The Times of India,
http://articles.timesofindia.indiatimes.com/2011-02-
17/nagpur/28554198_1_pds-shop-food-security-act-public-distribution-