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A Project / Dissertation as a Course requirement for
Master of Business Administration
Harshavardhan Reddy
14459
Department of Management and Commerce
Prasanthi Nilayam Campus
December 2015
A
A
A Study of problems faced by PDS in Karnataka
A humble garland
For
My Sweet Lord
DEPARTMENT OF MANAGEMENT AND COMMERCE
SRI SATHYA SAI INSTITUTE OF HIGHER LEARNING
(Deemed to be University)
Vidyagiri, Prasanthi Nilayam – 515134, Anantapur District,
Andhra Pradesh, India
December, 2015
CERTIFICATE
This is to certify that this Project / Dissertation titled “A Study of Problems faced
by PDS system in Karnataka” submitted by Harshavardhan Reddy, 14459,
Department of management and commerce, Prasanthi Nilayam Campus is a
bonafide record of the original work done under my/our supervision as a Course
requirement for the Degree of master of business administration.
………………………………..
Prof. Shiv R Pandit
Project / Dissertation Supervisor
Place: Prasanthi Nilayam
B. Sai Giridhar
Date: 20th December 2015 Head of the Department
DECLARATION
The Project / Dissertation titled “A Study on problems faced by PDS in Karnataka”
was carried out by me under the supervision of Prof. Shiv R Pandit, Department of
management and commerce, Prasanthi Nilayam Campus as a Course requirement
for the Degree of Master of business administration and has not formed the basis for
the award of any degree, diploma or any other such title by this or any other
University.
…………………………..
Place: Prasanthi Nilayam Harshavardhan Reddy
14459
Date: 20th December 2015 II MBA (General)
Prasanthi Nilayam Campus
i
ACKNOWLEDGEMENT
I express my deep sense of gratitude to my most beloved Bhagawan, whose divine grace made this
work possible.
I thank my guide Prof. Shiv R Pandit who gave me the support, confidence and guidance at all
stages of this study.
I would like to extend my gratefulness to Sai Manohar brother for his guidance, invaluable inputs
and feedback while structuring the project.
I thank Sri Renju Raghuveeran, Sri Piyush Srivastsava, Sri Sanjay Mahalingam and the team of
teachers and research scholars who spared their valuable time for making the computer lab and
internet facilities available whenever possible.
I thank Ramesh brother who was responsible in opening computer center every day and he was on
time on all sessions.
I thankful to the Art Gallery, Hostel Computer Centre and College Library for their services
rendered to me at all times.
I thank all my classmates and roommates for their help and cooperation.
My sincere thanks are also due to all those who have been directly or indirectly responsible for the
successful completion of this study.
Last, but not the least, I am immensely grateful to my family for their immense love and blessings.
ii
ABSTRACT
Achieving food security is a prime importance for India where more than a third of
population living in poor. PDS is a major economic policy of the Indian government
to ensure food security to the poor. PDS is the largest food distribution network in
the world. It was one of the successful policies started by the government. Though
policy has been started with good intention, but over the years it is losing its
effectiveness. This study tries to understand the challenges the Public distribution
system in Karnataka is facing and also discusses the possible recommendations
towards the growth of PDS system.
iii
TABLE OF CONTENTS
Contents
ACKNOWLEDGEMENT ........................................................................................................................... i
ABSTRACT ................................................................................................................................................. ii
TABLE OF CONTENTS .......................................................................................................................... iii
LIST OF FIGURES ................................................................................................................................... vi
LIST OF TABLES .................................................................................................................................... vii
CHAPTER I: INTRODUCTION ......................................................................................................................... 2
1.1 Introduction ......................................................................................................................................... 2
1.2 Statement of the Problem: .................................................................................................................... 2
1.3 Need and Importance of the Study ...................................................................................................... 3
1.4 Objectives of the Study ....................................................................................................................... 3
1.5 Scope of the study ............................................................................................................................... 4
1.6 Scheme of Chapterisation ............................................................................................................. 4
CHAPTER II THEORETICAL FRAMEWORK FOR THE PROPOSED STUDY ........................... 8
2.1 Introduction ......................................................................................................................................... 8
2.2 Overview ............................................................................................................................................. 9
2.3 ROLE OF PUBLIC DISTRIBUTION SYSTEM IN INDIA ............................................................ 12
How the public distribution system works ..................................................................................... 14
2.4 Analysis of Distribution System ....................................................................................................... 14
2.5 Various schemes under PDS ............................................................................................................. 15
Mid-day meal scheme ....................................................................................................................... 15
Annapurna Scheme ........................................................................................................................... 16
2.6 PDS System Today ........................................................................................................................... 16
Huge Gap between necessary and current food grains storage capacity ..................................... 16
Procurement and PDS Sales............................................................................................................. 17
2.7 PDS in Karnataka .............................................................................................................................. 18
Above Poverty Line Category (APL): ............................................................................................. 19
Extra BPL (EBPL) ............................................................................................................................ 19
CHAPTER –III: REVIEW OF RESEARCH AND LITERATURE .................................................... 30
iv
3.1 Introduction ....................................................................................................................................... 30
3.2 Poverty and food security ................................................................................................................. 30
3.3 Leakages and corruption ................................................................................................................... 30
3.4 Influence of open market on system ................................................................................................. 32
3.5 Food subsidy ..................................................................................................................................... 34
3.6 Digitalizing (computerizing) PDS .................................................................................................... 35
3.7 Chronic hunger and food security ..................................................................................................... 36
3.8 In efficiency in system ...................................................................................................................... 37
CHAPTER –IV: METHODOLOGY AND DESIGN OF THE STUDY .............................................. 42
4.1 Introduction ....................................................................................................................................... 42
4.2 Nature of the study ............................................................................................................................ 42
4.3 Data Collection ................................................................................................................................. 42
4.3.1 Primary Data ............................................................................................................................ 42
4.3.2 Secondary Data ........................................................................................................................ 42
4.4 Treatment of the Data ....................................................................................................................... 42
4.5 Research questions ............................................................................................................................ 43
4.6 Insights from the village visits .......................................................................................................... 43
4.7 Perceptions about the PDS system in the minds of PDS users, FPS agents and the Government
officials. .................................................................................................................................................. 44
CHAPTER V: ANALYSIS AND INTERPRETATION ON DISTRIBUTION SYSTEM ................. 48
5.1 Introduction ....................................................................................................................................... 48
5.2 Analysis Part I ................................................................................................................................... 48
5.3 Analysis part II .................................................................................................................................. 50
5.4 Lack of swiftness in running; a major issue of PDS ......................................................................... 54
5.5 Dearth of information is main problem for consumers. .................................................................... 55
5.6 Shortage of supply and excess prices worries the consumers ........................................................... 56
5.7 Misuse of different PDS cards .......................................................................................................... 57
CHAPTER VI: SUMMARY CONCLUSIONS AND SUGGESTIONS............................................... 62
6.1 Introduction ....................................................................................................................................... 62
6.2 Summary ........................................................................................................................................... 62
6.3 Conclusions and Recommendations ................................................................................................. 62
v
LIST OF ABBREVATIONS
APL Above Poverty Line
AAY Antyodaya Anna Yojana
BPL Below Poverty Line
CIP Common Issue Price
FCI Food Cooperation Of India
FI Food Inspector
FPS Fair Price Shop
KFCSC Karnataka Food and Civil Supplies Corporation
MSP Minimum Support Price
PDS Public Distribution System
TPDS Targeted Public Distribution System
UIDA Unique Identification Authority
ZP Zilla Panchayat
vi
LIST OF FIGURES
Figure 2. 1 flow diagram of PDS system ...................................................................................... 14
Figure 2. 2 different levels of food grain distribution ................................................................... 15
Figure 2. 3 difference in food grains procurement and food grains offtake ................................. 17
Figure 2. 4 year wise procurement, offtake and stock of food grains ........................................... 25
Figure 5. 1 different facilities in PDS outlet ................................................................................. 48
Figure 5. 2 percentage of PDS agents using prescribed stock registers ........................................ 49
Figure 5. 3 frequency of monthly quota food grains received ...................................................... 50
Figure 5. 4 reasons for not buying food grains from PDS outlet .................................................. 51
Figure 5. 5 difference in total stocks and total storage capacity ................................................... 52
Figure 5. 6 reasons for not having a card ...................................................................................... 53
Figure 5. 7 Ratings of food grains quality .................................................................................... 54
vii
LIST OF TABLES
Figure 2. 1 flow diagram of PDS system ...................................................................................... 14
Figure 2. 2 different levels of food grain distribution ................................................................... 15
Figure 2. 3 difference in food grains procurement and food grains offtake ................................. 17
Figure 2. 4 year wise procurement, offtake and stock of food grains ........................................... 25
CHAPTER I
INTRODUCTION
2
CHAPTER I: INTRODUCTION
1.1 Introduction
Public Distribution System [PDS] programme in Republic of India has been launched
for achieving numerous objectives. Its prime objective is to create accessible subsidized
food grains and different things of daily requirements like rice, wheat, oil, sugar and
kerosene etc. to the underneath privileged sections of the population. The programme
additionally targets to steady market costs of food grains in times of rare inflationary
inclinations, to supply food security to areas which are prone to misery from drought
and similar natural tragedies and manmade disasters, to provide support costs to farmers
and to preserve buffer stock. The PDS programme is enforced in state mode with
universal recipient perspective and thus it's been underneath condemnation for being
non-specific and wasteful. It’s additionally been found to be a poor programme to totally
address the food security drawback of the poor and helpless. PDS may be a centrally
planned programme and every state in India implements the policy set by the Central
Government.
In Karnataka, the PDS system is maintained by the Department of Food, Civil supplies
and consumer Affairs.
1.2 Statement of the Problem:
The main purpose of PDS is to supply food grains to people who can’t afford at high
prices. But it failed to reach every needy poor man. This happens because of open market
trading, where food grains which are meant for subsidy are trading in open market.
3
1.3 Need and Importance of the Study
It is the major economic policy of the Indian government to ensure food security to
the poor. PDS is the largest food distribution network in the world. It has a network of
more than 4.99 lakh Fair price shops (FPS) that distribute commodities to 16 Crore
households at a cost of more than Rs.15, 000 Crore.
Karnataka’s PDS is loaded with errors of exclusion of actual BPL families from the
BPL status, inclusion of APL families into the BPL category, and the prevalence of
ghost cards (cards that exist, but whose owners cannot be verified) or excess BPL
cards.
In coverage and public expenditure, it is considered to be the most important food
security network. However, the food grains supplied by the ration shops are not enough
to meet the consumption needs of the poor or are of inferior quality. The average level
of consumption of PDS grains in India is only 1 kg per person / month. The PDS has
been criticized for its urban bias and its failure to serve the poorer sections of the
population effectively. The targeted PDS is costly and gives rise to much corruption in
the process of extricating the poor from those who are less needy. Today, India has the
largest stock of grain in the world besides China, the government spends Rs. 750 billion
($13.6 billion) per year, almost 1 percent of GDP, yet 21% remain undernourished.
Distribution of food grains to poor people throughout the country is managed by state
governments. As of date there are about 5 million Fair Price Shops (FPS) across India.
1.4 Objectives of the Study
To identify the reasons those are affecting efficiency of PDS system.
To find out measures to overcome from the problems.
To understand how to increase the efficiency of PDS.
To understand how to reduce the loopholes and malpractices in the system.
To understand how well PDS was able to reach the poor.
To do study of the distribution of food grains to cardholders in various different
Fair Price Depots.
4
1.5 Scope of the study
This project aims to study the factors affecting efficiency of PDS in Karnataka. This study
compares the policy started by central and state government with pertaining to PDS.
1.6 Scheme of Chapterisation
The main body of the study has the following chapters, which are arranged in following
manner
1. Introduction
At the beginning I have presented the subject of the study. The problem statement, need
and importance of the study, objectives of the study, scope of the study.
2. Theoretical framework for the proposed study
Brief overview about public distribution system, initiatives related to PDS started by
government. Role of PDS. How it works, analysis of PDS system, presently how PDS
system works, gap between required and existing storage capacity. Procurement and
sales and public distribution system in Karnataka in terms of roles and responsibilities.
3. Review of research and literature
Brief introduction about need of literature review, presentation of some articles related
to the study which discusses the issues like:
a. Leakages and corruption
b. Influence of open market on PDS system
c. Food subsidy
d. Digitalizing the PDS
e. Chronic hunger and food security
f. Inefficacy in the system
4. Methodology and design of the study
It deals with nature of the study, data collection methods, treatment of the data,
limitation of the study, research questions and the insights which I got during village
visits.
5
5. Analysis and interpretation on study
This chapter deals with the analysis part of the study which have been interpreted by using
the data I collected. It gives depth of understanding about the problem of the study by
analyzing through tables and graphs.
6. Summary conclusion and suggestions
6
CHAPTER II
THEORITICAL FRAMEWORK FOR
THE PROPOSED STUDY
7
8
CHAPTER II THEORETICAL FRAMEWORK FOR THE PROPOSED STUDY
2.1 Introduction
A combination of excellent monsoon years and a policy of guaranteeing comparatively
higher returns on production of rice and wheat have ensured that the country contains a
surfeit of food grains accumulated within the godowns of the Food Corporation of India
(FCI), so much on the far side the prescribed buffer stock norms. The major problem facing
the country these days isn't one among shortage of food grains however of managing the
excess. Ironically, at the same time as the godowns of the FCI were overflowing, stray
cases of starvation deaths are still being reportable. A civilized society within the twenty
first century cannot enable this to happen.
Therefore, whereas there's got to manufacture adequate food grains domestically,
supplementing with imports whenever needed, it's additionally necessary to seem at the
cereal distribution network. The general public Distribution System (PDS) within the
country facilitates the provision of food grains to the poor at a sponsored value. However,
doubts are raised regarding the effectiveness and cost-effectiveness of the PDS, particularly
within the light-weight of the growing food grant and food stocks. The PDS must be
restructured and there's a requirement to explore the likelihood of introducing innovative
concepts like sensible cards, food credit/debit cards, food stamps and localized procurable,
to eliminate hunger and build food out there to the poor where they'll be in efficient manner.
There are 2 aspects to the contradiction of overflowing godowns and vulnerable sections
of society not intense adequate food. One is that the issue of getting enough getting power
or financial gain to shop for food and therefore the alternative is that the access to food in
terms of physical accessibility of food. Although the general employment generation is
closely connected to economical economic process, there are some problems that has to be
unbroken in mind. In remote, unreachable and backward regions each job opportunities
and access to food is also affected. In such things, food-for-work and connected schemes
are necessary. These might have to be complemented by a lot of innovative schemes like
9
grain banks. Community grain banks may be discovered in such areas from wherever the
indigent will borrow grain in times of emergency and repay the grain once the crisis is
over. Natural disasters like earthquakes additionally produce conditions within which the
government should give emergency help and therefore the administration should be
attentive to such things. Finally, a lowest quantity of Social Security should be provided to
people who are previous, sick or disabled and can't strive against work even though it's out
there. Special schemes should make sure that they are doing not go hungry.
It is currently well recognized that the supply of food grains isn't an ample condition to
confirm Food security to the poor. It’s additionally necessary that the poor have ample
suggests that to buy food. The capability of the poor to buy food may be ensured in 2 ways
in which – by raising the incomes or activity food grains at sponsored costs. Whereas
employment generation programmes try the primary resolution, the PDS is that the
mechanism for the second choice.
2.2 Overview
PDS system is loaded fully errors of exclusion of actual BPL families from the BPL status.
Inclusion of APL families into the BPL category, and with presence of bogus ration cards
which means cards are prevalent but the trace of owners in unknown.
Every year central government through its annual budget keeping aside a specific amount
of money towards PDS system. The key objective of PDS is sure that, it supplies necessity
commodities to weaker sections through subsidized prices. Everything in the world in
changing, even the PDS system went so many alterations. All these modifications failed to
help the poor man. Currently PDS system have been used for political campaigning. Hence
there is need to address the issues and re-engineer the entire PDS system towards its
original shape.
The targeted Public Distribution System (PDS) is costly and offers rise to a lot of
exploitation within the method of freeing the poor from people who are less
underprivileged. Currently India is far ahead of china in terms of stocking food grains,
where it spends 1% of GDP towards it, still twenty first of people remain hungry. State
governments will manage the responsibility of distributing food grains to every corner of
10
country. As of date there are regarding 4.99 hundred thousand honest value retailers (FPS)
all over India.
The central and state governments have the joint responsibility of controlling the PDS
system. Whereas the central government is accountable for primary activities like
procuring food grains and stocking it in godowns. Later which will be distributed to the
state governments. State government will be responsible for distributing received food
grains to the needy. State governments are also responsible for functioning responsibilities
including distribution and documentation of families who are below poverty line and
issuing ration cards, administrating and monitoring the later.
A below poverty line (BPL) card holder should be given 35 kg of food grain and the card
holder above the poverty line should be given 15 kg of food grain as per the norms of PDS.
However, there are anxieties about the efficiency of the distribution process.
A PDS shop is also known as fair price shop (FPS) or Ration Shop. It is a child project of
government to supply food grains to the needy at reasonable prices. Currently there are
about 4.99 lakh fair price shops across India. Card holders call it as "ration shops" and
mainly it sell wheat, rice, kerosene and sugar at a price lesser than the market price. Other
necessary commodities are also will be sold under same shop. These are also called as fair
price shops. Ration card acts as an identity card for people to buy food grains. These shops
are ran throughout the country by joint assistance of central government and state
government. The items from these shops are low priced but are of average quality. Ration
shops are now present in most localities like villages, towns and cities. India has 4.99 lakh
shops organizing the major distribution link in the world.
The introduction of distribution food grains in India started during 1940s Bengal famine.
This rationing system was rejuvenated in the wake of acute food scarcity during the early
1960s, even before the Green Revolution has started.
It revised in 2000, two special schemes are launched:
1. Antyodaya Anna Yojana
2. Annapurna scheme with special target groups of “poorest of poor”
11
Fallouts of public distribution system
The public distribution system of India is functioning only through defects. With its vast
coverage of around 40 Crore below-poverty-line (BPL) families, an evaluation of the PDS
has revealed the following structural shortcomings and various disturbances
1. Consumers continue to receive low quality food grains from PDS outlet.
2. Greedy dealers diverting quality food grains to open market and selling degraded
quality food grains to ration card holders.
3. Bogus cards have been created by FPS dealers to sell food grains in the open
market.
4. Many FPS dealers have a choice to malpractice, illegal alterations of commodities,
holding and black marketing because they are receiving low salary.
5. Numerous malpractices make safe and nutritious food inaccessible and
unaffordable to weaker sections to undergo the problem of food insecurity.
6. Documentation of households to be symbolized status and distribution to approved
PDS services has been highly irregular and diverse in various states. The recent
development of Aadhar (UIDAI) cards has taken up the challenge of solving the problem
of identification and distribution of PDs services along with Direct Cash Transfers.
7. The core objective of price stabilization of essential commodities has not met
because of biased regional distribution of food grains.
8. There is no implied criteria to identify APL family and BPL family. This confusion
mind set gives massive scope for corruption and fallouts in PDS systems because those
who had right to entitlement are not able to taste the fruit.
12
2.3 ROLE OF PUBLIC DISTRIBUTION SYSTEM IN INDIA
Public Distribution System (PDS) means distribution of essential commodities to a large
number of people through a network of Fair Price Shops (FPS) on a recurring basis. The
commodities are Wheat, Rice, Sugar and Kerosene. PDS evolved as a main instrument of
the Government’s economic policy for ensuring accessibility and availability of food grains
to the public at reasonable and affordable prices as well as for attaining the food security
for the poor. It is an important constituent of the strategy for poverty abolition and is
planned to serve as a safety net for the poor whose number is more than 330 million and
are nutritionally at risk. PDS with a network of about 4.99 lakh Fair Price Shops (FPS) is
perhaps the largest distribution network of its type in the world. PDS is operated under the
cooperative responsibility of the Central and the State Governments.
The primary Policy objective of the Department of Food and Public Distribution is to
ensure food security for the country through timely and efficient procurement and
distribution of food grains. This involves procurement of various food grains, building up
and maintenance of food stocks, their storage, movement and delivery to the distributing
agencies and monitoring of production, stock and price levels of food grains.
The focus is on incentivizing farmers through fair value of their produce by way of
Minimum Support Price mechanism, distribution of food grains to Below Poverty Line
(BPL) families and covering poor households at the risk of hunger under Antyodaya Anna
Yojana (AAY), establishing grain banks in food scarce areas and involvement of Panchayat
Raj Institutions in Public Distribution System (PDS). The Department is also responsible
for formulation of policies concerning the sugar sector such as fixing of Fair and
Remunerative Price (FRP) of sugarcane payable by Sugar factories, development and
regulation of sugar industry (including training in sugar technology), fixation of levy price
of sugar and its supply for PDS and regulation of supply of free sale sugar. The Department
also formulates policies on export and import of food grains, sugar and edible oils. Farmers
all over the country consider ‘market’ as the most crucial aspect in the entire agricultural
operations which impact their income and welfare as also a major constraint for further
diversification and commercialization.
13
The Food Corporation of India (FCI) was setup under the Food Corporation Act 1964. The
Food Corporation of India is a prime food grain marketing agency that represents the
Government in Indian Food grain Markets. It purchases stores, transports, and distributes
food grains throughout India. In particular it distributes food grains at subsidized prices to
the poor consumers. It also manages India’s buffer stocks of food grains. Further, the
imports and exports of food grains are canalized through the Food Corporation of India.
While the share of the private sector is contributed by a large number of traders competing
with each other, the share of government agencies is concentrated in one agency, The Food
Corporation of India (FCI).
Sale is made under the Targeted Public Distribution System and under various welfare
programmes like Annapurna, Nutrition Programme, Sampoorna Grameen Rojgar Yojana,
Mid-Day Meal Scheme and Defence/CRPF issues etc. as per allotment made by the
Government of India. Open Market Sale for domestic consumption is also made in order
to stabilize the market prices and curb inflationary trends. The Corporation had a total
storage capacity of 28.84 million tons comprising of 25.86 million tons covered and 2.98
million tons CAP as on 31.03.2010. The utilization of storage capacity was 78% (Covered
84% and CAP 31%) at the close of the financial year2009-10.The Corporation continued
to move food grains mainly from surplus States i.e. Punjab, Haryana, Uttar Pradesh,
Uttarakhand , Rajasthan, Chhattisgarh and Andhra Pradesh to deficit areas and buffer stock
centers situated all over the country, by rail and road. Movement of food grains has
increased 17% as compared to the previous year 2008-09. During the year 2009-10, 31.58
million tons of food grains including sugar was transported as compared to 26.33 million
tones, during the year 2008-09. The Quality Control Wing of the Corporation ensures
preservation of food grains right from the stage of procurement to their final distribution.
Samples of food grains are subjected to physical and chemical analysis to ensure that
quality of food grains conforms to set standards. Some of the schemes of FCI are
determined in the part below.
14
How the public distribution system works
Figure 2. 1 flow diagram of PDS system
2.4 Analysis of Distribution System
Food grains procured by GOI are stored in FCI godowns and made available to state
governments at fixed by GOI for each commodity. Allocations of food grains varies to
APL and BPL categories. Distribution of sugar is made available to the state government
by procuring from sugar factories. Kerosene will be supplied through agreement with oil
companies. The Department of FCI will make arrangements for transporting of PDS
commodities from FCI godowns/sugar factories/oil companies to state godowns from there
to the Fair Price Shops (FPS). The flow diagram of the PDS commodities from the State
level to FPD is given in the figure above.
15
Figure 2. 2 different levels of food grain distribution
2.5 Various schemes under PDS
Mid-day meal scheme
The Mid-Day Meal Scheme was started by the Ministry of Human Resource Development
which came into existence from 15th of August, 1995 for the benefit of students in primary
schools to increase the nutritional levels in their health. The Scheme currently covers
students of Class I to class VIII in the Government Primary Schools and Upper Primary
Schools/ Schools supported by Government and the Schools run by local bodies. The
Department of Food & Public Distribution makes distribution of requirement in terms of
yearly basis of food grains under the mid-day meal Scheme to (DSEL) Department of
School Education and Literacy and, (MHRD) Ministry of Human Resource Development.
Additionally, State/Union Territories-wise allocation of food grains is made by the
Department Food Corporation of India (FCI) issues food grains to States/UTs at Below
16
Poverty Line (BPL) rates as per distribution made by Department of School Education &
Literacy.
Annapurna Scheme
The (MRD) Ministry of Rural Development launched the scheme in 2000-01. Poverty-
stricken senior citizens of 65 years of age or above people who are appropriate for old age
pension under the National old Age Pension Scheme but are not receiving the pension are
covered. 10 kg of food grains per person per month are delivered free of cost under the
scheme. From 2002 to 2003, it has been reassigned to State Plan beside with the National
Social Assistance Programme combining the (NOPS) National Old Age Pension Scheme
and the (NFBS) National Family Benefit Scheme.
2.6 PDS System Today
The TPDS system presently supports over 40 Crore Indians below the poverty line with
monthly stream of subsidized food grains. The system also delivers productive
employment for 4.99 Lakh Fair Price Shops Owners, their employees and engaged labor
who work at the FCI and state warehousing godowns.
PDS also has become a basis of government development policy and is tied to enactment
of most rural development plans. PDS evolved to be a key driver of public sentiment and
is a vital and very visible metric of government performance. The major problems with this
system is the inefficiency in the targeting of beneficiaries and the causing leakage of
subsidies. Numerous opportunities to influence the system exist with widespread
conspiracy across the supply chain. The Planning Commission had the following to say on
the (PDS) public distribution system in its 2005 annual report.
“For every Rs 4 spent on the PDS, only Rs 1 touches the poor”
“57% of the PDS food grains does not reach the proposed people”
Huge Gap between necessary and current food grains storage capacity
17
The Food Corporation of India (FCI) - the central government agency liable for
procurement and storage of grain for the Public Distribution System (PDS) - has a storage
capacity of 32 million tons, of which about half is hired. Hence, assuming that the FCI has
hired all the capacity that is promising then the gap between FCI’s existing capacity (32
Million Tons) and the required capacity (46 Million Tons) is about 14 million tons.
However, going by the recent capability of peak stocks surpassing 80 million tons, surplus
capacity required is nearly 50 million tons. So why are our cunnings off the mark? That's
mainly because our calculations are based on government's commitments to the PDS
system. However, what the government buys from farmers (procurement) does not equal
the PDS requirements. This can be seen from Figure which conspiracies the annual figures
for procurement and PDS sales. Since the early 1990s, procurement has steadily exceeded
PDS sales. This is why there have been recurring crises of additional foo grain stocks and
subsequently, of storage capacity.
Procurement and PDS Sales
Figure 2. 3 difference in food grains procurement and food grains offtake
18
From the figure, it is clear that the difference between procurement and distribution is too
large to be explained by the need for emergency reserves. Nor can excess procurement be
explained by intent to stabilize consumption and prices. If that was the case, distribution
ought to exceed procurement in years of low availability. Stabilization re-orders supplies
over time but does not alter the total supplies over a long enough period of time. One
implication is that the averaged difference between procurement and subsidized
distribution ought to be zero. Indeed, this is what obtained in the period prior to 1989-1990.
This has clearly not happened in the last two decades.
The explanation lies in the procurement process and the fixation of the procurement price.
While the politics around the procurement price is a proximate reason, an even more
fundamental reason is the unwillingness to tolerate even small possibilities of under-supply
to the PDS. At the higher levels of the government, there is immense paranoia about food
shortages affecting the PDS. Politicians and bureaucrats perceive the costs of insufficient
supplies but nobody is held accountable for excessive stocks and high prices. Predictably,
the errors are in one direction. High procurement prices and large government stocks
displace private trade and therefore, bumper procurement and stocks continue until the
momentum is broken by an exceptional event such as a drought or by ad-hoc dumping of
grain in the domestic (open market sales) or international market (exports).
India does not have an announced protocol for stock depletion by way of sales to the
domestic or to the international market because of the bureaucratic and political caution
that lead to excessive stocks in the first place. In addition, high procurement prices typically
mean that stocks have to be sold at a loss. As this would show up immediately as an
increase in food subsidy, the finance ministry is typically unenthusiastic. Even when the
government ultimately sees reason, the financial implications mean that the chain of
decision-making is long and subject to frequent review. Speedy response to excess stocks
is not part of the government DNA.
19
2.7 PDS in Karnataka
The sixth largest state in terms of area is Karnataka. Agriculture is the primary source of income
for the state, where 62% of income comes from it. Karnataka is the 9th largest State in terms of
population-wise and consisting of 30 districts.
It was found that the State of Karnataka has tried to implement computerization model on trial
basis in different parts of the State to make PDS effective, transparent and corruption free. The
state also started the unit system in its place of family norms for distribution of specific food grains.
The following are some of features in brief of PDS in Karnataka.
PUBLIC DISTRIBUTION SYSTEM:
The objectives of the Public Distribution System are:
• To protect the low income groups by guaranteeing them with the supply of certain
minimum quantities of food grains at affordable price.
• Ensuring equitable distribution.
• Controlling the price rise of Essential Commodities in the open market.
The Ration Distribution System under the public distribution system has been implemented
in Karnataka state with definite aim. The department strives to distribute the ration to the
sections and the families below poverty line identified by several sources under this scheme
and to deliver food security to all other families.
Above Poverty Line Category (APL):
No PDS food grains are given to the people belonging to APL category in Karnataka. As
per the Government policy food grains will be distributed to the APL ration card holders
after meeting the requirement of BPL and Extra BPL (EBPL).
Extra BPL (EBPL)
There are about 47.08 excess BPL cards in the state of Karnataka, against the limit fixed
by the Central Government i.e. 31.29 lakhs. Karnataka Government has classified these
excess cards under the new category called Extra BPL (EBPL). They are getting the same
20
benefits as BPL beneficiaries. At present, approximately there are about 78. Lakh BPL
card holders in the State.
In order to meet the needs of the increased number of families under BPL & EBPL
category, the State Govt. has taken a drastic step to stop supplying food grains to APL card
holders. By this government succeed in matching the demand from BPL and EBPL.
Food, Civil Supplies and Consumer Affairs Department
Department of Food, Civil Supplies and Consumer Affairs has the responsibility of
implementing the Essential Commodities Act, 1955 (Central Act) and the following Act
and Rules coming under it, issued by Central and State Governments.
Administrative Set Up
The Principal Secretary, Department of Food, Civil Supplies and Consumer Affairs
(FC&CA) helped by the Commissioner (FC&CA) was responsible for execution of the
scheme at the State level. The Commissioner was aided by the Deputy Commissioners,
Deputy Directors (FC&CA) and Chief Executive Officers of the Zilla Panchayats at the
district level and by the Tahsildars and Executive Officers of Taluk Panchayat at taluk
level. The appropriate roles and responsibilities of different officials of the state have been
defined in the table below:
Roles Responsibilities of officials
Table 2. 1 Roles and responsibilities of different officials of the state
Roles Responsibilities
Commissioner Responsible for distributing food grains according to the districts neccessity.
Responsible for all modifications related to the
tender issues of benchmarking rates.
Deputy Commissioner
Chief executive Officer of Zilla
Panchayat
Taluk-wise Allotment of food grains.
Fixes bench mark rates and by dealing with
the transport tenders.
21
1 Informal rationing areas
Deputy
Director
(Districts)
Range
Officers
(I.R.A.)1
Assistant
Director
(I.R.A.)
re-allotment of commodities as per allotment
made by Joint Director (PDS)/ Deputy
Commissioner
Monitoring the transportation efficiency of
PDS outlets and taking necessary action in
circumstances of poor transportation.
Quick Inspections on FPD and Wholesale
depots across districts.
Assistant Directors Gathering of several data from subordinate
Offices containing transportation and
distribution and balance of food grains and
assembling the data and submitting same to
the Deputy Commissioner.
Food
Shirestedars
Food
Inspectors Ensuring the proper distribution of food grains
to the entitled different cardholders through
Fair Price Depots.
Preventing and having a frequent check related
to the deviation of food grains issued through
the public Distribution system at all levels
Quick, Detailed and Intensive inspections as
per the schedule specified in the document.
Accounts Superintendent Inspection of transport and other tenders
22
Report on District Wise FPS Owners Enrollment
Table 2. 2 District wise FPS shops active and enrolled
Sl No District Name Active Shops Enrolled
1 Bagalkot 692 676
2 Bengaluru 545 542
3 Bangalore central 80 74
4 Bangalore east 190 149
5 Bangalore north 310 303
6 Bangalore south 261 237
7 Bangalore west 375 328
8 Bengaluru rural 383 382
9 Belagavi 1742 1723
10 Bellary 601 601
11 Bidar 743 742
12 Vijayapura 815 808
13 Chamarajanagara 482 481
14 Chikkamagaluru 536 535
15 Chitradurga 588 576
16 Chickballapur 565 565
17 Dakshina kannada 507 491
18 Davanagere 804 801
19 Dharwad 516 512
20 Gadag 367 343
21 Kalaburagi 991 988
22 Hassan 899 887
23
23 Haveri 468 462
24 Kodagu 299 285
25 Kolar 635 635
26 Koppal 441 441
27 Mandya 745 713
28 Mysore 1058 1050
29 Raichur 722 688
30 Ramnagar 567 562
31 Shimoga 603 603
32 Tumkur 1109 1091
33 Udupi 294 284
34 Uttara kannada 453 447
35 Yadgiri 398 392
36 Total 20786 20399
Report on District wise household’s having ration cards
Table 2. 3 number households having ration cards
DISTRICT_NAME Census Household’s AAY APL BPL TOTAL
BAGALKOTE 355377 30143 34900 202862 267905
BENGALURU * 2377056 3246 27328 187783 218357
BENGALURU RURAL 224745 6165 15856 158758 180779
BELAGAVI 963825 42774 188875 657796 889445
BALLARI 481704 45749 27905 216214 289868
BIDAR 313521 31851 28761 192444 253056
VIJAYAPURA 405076 32214 43125 272034 347373
CHAMARAJANAGARA 244198 17603 18582 189885 226070
CHIKKAMAGALURU 272173 11301 38006 169682 218989
CHITRADURGA 354143 25378 14952 270395 310725
24
CHIKKABALLAPURA 282311 15378 13617 221706 250701
DAKSHINA KANNADA 425291 21025 111551 149733 282309
DAVANAGERE 404840 29220 24207 257258 310685
DHARWAR 372054 15695 18558 153810 188063
GADAG 215602 18902 18850 132361 170113
KALABURAGI 465245 47030 27458 284868 359356
HASSAN 429292 10310 21305 338222 369837
HAVERI 325456 25995 27985 244401 298381
KODAGU 138303 6997 36664 81038 124699
KOLAR 330990 18080 12091 220894 251065
KOPPAL 259396 34785 15294 190032 240111
MANDYA 426578 17650 39045 358876 415571
MYSURU 688422 17573 44488 420824 482885
RAICHUR 359337 40949 28666 234596 304211
RAMANAGARA 259794 10740 16298 217564 244602
SHIVAMOGGA 402139 12629 50450 209006 272085
TUMAKURU 636394 27801 36990 445049 509840
UDUPI 246313 27091 67222 107536 201849
UTTARA KANNADA 319912 9751 61638 199373 270762
YADGIR 200424 24784 9093 149028 182905
TOTAL 13179911 678809 1119760 7134028 8932597
25
Procurement, offtake and stock of food grains in India (in million tonnes)
Figure 2. 4 year wise procurement, offtake and stock of food grains
Initial years, government used to procure more of wheat moderately than rice. But as years
passed by, the action has been completely reversed. In last 10 years procurement of rice
has been increased steadily. This is mainly because the initiatives which government have
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Procurement (rice) Procurement (wheat) Procurement (total)
Offtake (rice) Offtake (wheat) Offtake (total)
Stocks (rice) Stocks (wheat) Stocks (total)
26
taken towards PDS to deliver the food security. Currently people have become self-
sufficient in all fields. Because of sustainable food security policy people consumption
power is also increased. It clearly shows (figure 2.4) that during 70’s and 80’s the offtake
of food grains was very less. But in last offtake of food grains have been drastically
increased and even in last 2 years it have even overtook procurement. Hence it shows that
PDS system has been became important part in people’s life.
27
28
CHAPTER III
REVIEW OF RESEARCH AND
LIRERATURE
29
30
CHAPTER –III: REVIEW OF RESEARCH AND LITERATURE
3.1 Introduction
Numbers of studies have been done on PDS system in India. The past studies were required to
understanding the research problem and in carrying out the formulated work. Hence various
research studies related to the Public distribution system are as following:
3.2 Poverty and food security
Article by Amaresh dubey and nirankar srivatsav (1993-94)
In this article, they tried to assess the impact of pds on poverty and food security of the households.
This study finds that almost half the rural population and a quarter of the urban population reports
consuming fewer calories than they require as per the widely believed norms. This study also finds
that the PDS is barely touching the tip of the iceberg where helping the worse-off sections are
concerned. Finally, it is also important to note that the PDS is not strong enough and the only
instrument to ensure the food security of the poor, because it serves the purpose only to those who
have purchasing power and are ration card holders. An appropriate mixture of policies like
effective execution of poverty alleviation programs, steadying of prices, providing universal health
facilities are desirable along with higher economic growth for augmenting the food security of the
poor households.
3.3 Leakages and corruption
Deepenkar basu and debarshi das (august 2014)
In this article, they said that the public distribution system in India has fascinated lot of academic
and policy responsiveness in recent years. Criticizers have underlined the leakage and venality that
plague the system and approximately have called for the extra of the existing in-kind subsidy
system by an in-cash system. They even jagged two major facts that triggering leakage and
corruption in pds system, first, leakage (or deviation) of food grains from the PDS has secularly
deteriorated over time. Second, there is outsized disparity in leakage across Indian states, with
some states like Tamil Nadu, Himachal Pradesh and Andhra Pradesh consistently performing well
with regard to the PDS.
31
Ashok Gulati and Shweta Saini (January 2015)
This paper finds that at an all-India level, 46.7 per cent or 25.9 MMTs of the off-taken grain did
not reach the projected PDS beneficiaries. The percent share of total leakage amplified with states
where greater percent of India’s poor lived (five states: Uttar Pradesh, Bihar, Madhya Pradesh,
Maharashtra and West Bengal, which are home to near to 60% of India’s poor accounted for close
to 50% of the total grain leak in the country in the year 2011-12). This article makes a case for
shifting the backing to poor from highly subsidized price policy to pay policy of cash transferals
through Jan-Dhan Yojana period in UID of Aadhar scheme. They also debate that this is the best
comprehensive practice, can lump leakages, reach the exposed sections of population, not obstruct
with markets of food, and save more than Rs. 30,000 crores yearly to the government of India
under the most likely situation, while still benevolent a better arrangement to consumers. The
saved resources can be ploughed back as investments in water (irrigation), rural roads and agri-
R&D that might allocate food security, directly or indirectly (through increased incomes), to
people of this country in a more bearable fashion.
Dr. Ashok Kumar H, Naveena T.M. (December 2014)
This paper reveals that the various obstacles of Public Distribution System like poor quality of
goods supplied, weight cutting, leakage of Public Distribution System articles to open market, non-
availability of commodities etc., and this study also examines the extent to which the Public
Distribution System has succeeded in providing the essential commodities to all the people. They
concluded that most of the people are not purchasing anything from the FPS due to the bad quality
of commodities supplied by the fair price shop. In this era of modern technological, it is pathetic
to see public lining up in long queues wasting their precious time. It is found that in the study that
current public distribution system fails to ensure timely supply of commodities with good quality
to fair price shops and it is found that it is not reaching to the needy section of the society.
32
3.4 Influence of open market on system
Pulapre Balakrishnan Bharat Ramswami (1997)
This paper discusses that price creation in food grains markets cannot be fully presumed without
positioning to consumer shifts from the open market and the public distribution system (PDS)
encouraged by quality mismatches. This is a significant aspect of the food economy, for an
assessment of state intervention must contemplate not only the well-being of its targeted
beneficiaries but also the welfare of households without access to the PDS but who may however
be affected if the working of the PDS has an attitude of the open market.
They concluded in their study that a remarkable feature of the food economy of India is that even
with market involvement in the form of a (PDS) public distribution system, the open market
remains to be the main source of supply to many households in the economy. The network of
public grain sales does not cover all households and even for households with access to subsidized
grain there are quota constraints which would suggest that a portion of the demand must be
satisfied from outside the PDS. They concluded that the credible role of government in penalizing
private suppliers and, as a result, raising consumer welfare is now obvious. An improvement in
the quality of public intervention is the instrument to gain food security.
Bhaskar Majumder (2011)
In this article, they said that the public distribution system as a social safety net can be understood
by the fact that aggregate availability of food grains per se is not enough to ensure the ability to
acquire food grains. Production does not automatically guarantee consumption. The mere presence
of food in the economy, or in the market, does not entitle a person to consume it. Even the ability
to buy may not guarantee food security, unless there is an efficient distribution system.
The public distribution system has remained a major instrument to execute the Government of
India's economic policy to protect the income-poor.
Based on the facts that they collected for the District of Allahabad regarding the functioning of the
Public Distribution System, and based on the observations that they gathered in their conversations
with the beneficiaries, they offer their recommendations for improving the PDS in India.
33
Recommendations at a Glance
Government should ensure that it will reduce price of kerosene per liter for all weaker
section households (Antyodaya), BPL and APL, even if it costs more to the public
exchequer.
Allotment and distribution of sugar for BPL households at the prevailing price. Withdraw
allotment and distribution of sugar for APL households. Government should announce
'special' distribution of sugar during Festivals for both BPL and APL households.
Raise the rate of commission on distribution of all food grains like of rice, wheat, sugar,
and kerosene per unit for the FPS Dealers with immediate effect.
Initiate time-bound investigation for repetitive non-withdrawal of items by an FPS Dealer
instead of automatic cancellation of license/quota of the FPS Dealer.
Ensuring compulsory maintenance of records for each of various things like sale, stocks,
and Ration Card Master Register by the FPS Dealers.
Reetika Khera (March 2011)
This article approximately estimates the proportion of grain which has been "diverted" from the
Public Distribution System (PDS) to the open market for several years in the past, by matching
state off take figures published by the government, with household purchase reported by the
National Sample Survey (NSS). This paper also insights the possible reasons for the improvement
in the PDS system in the revolutionizing states in terms of food security. The act of the PDS is a
classic case of the glass being half full and half empty at the same time. This paper forms both
sides of the story, to highlight the need for further research that would help understand the
consistently poor performance in some states and reasons behind improvements in other states.
Understanding these tendencies is especially important in the context of the proposed Food
Security Act in which the PDS system plays very important role.
34
Sakshi Balani (2013)
Author explains the functioning of the existing TPDS mechanism and the role played by the center
and states. Author also explores challenges in the effective implementation of TPDS and
alternatives to reform the existing machinery.
Author pointed that PDS suffers from nearly 61% error of exclusion and 25% inclusion of
beneficiaries, i.e. the misclassification of the poor as non-poor and vice versa. Another challenge
author mentioned is the leakage of food grains during transportation to the ration shop and from
the ration shop itself into the open market.
3.5 Food subsidy
Vijay Paul Sharma (august 2012)
This paper examines the activities in capacity of food subsidy in the post-reforms period and pre
reforms period (1991-92 to 2012-13) and then inspects various mechanisms of food subsidy, which
are under the control of FCI and which are beyond the control of FCI, and relative contribution of
these modules to total subsidy during the last decade. Broad policy options for containing food
subsidy are also suggested in the paper. He concluded that India’s food subsidy system has been a
major constituent of the social security net for the poor, ensuring the accessibility of food grains
at subsidized prices, helping to decline malnutrition and ensuring price stability in the country.
Procurement incidentals have increased more than distribution costs in both rice and wheat. The
open-ended procurement policy, high food stocks and untouched central government issue prices
also led to increase in food subsidy. Yet, most of these variables are beyond the control of FCI.
On the other hand, subsidy modules that are under the control of FCI namely, administration
charges, storing losses and so on have shown some progress during the last decade. They feel that
there is strong need to further improve efficiency in operations of FCI but that May not lead to
substantial reduction in the subsidy. Steps need to be taken to reduce other costs through
appropriate procurement price policy, encouraging involvement of more states in procurement and
distribution of food grains including coarse cereals and private and public-private partnership in
35
creating scientific storage facilities to reduce losses, reduction in state-level statutory and non-
statutory charges, need-based procurement of food grains, and periodic increase in central issue
prices of food grains.
Lara Faye G. Mula (august 2014)
This article assess whether the PDS is effectively serving as a social safety measure in state of
Karnataka. It evaluated and quantified the benefits received by households through the generation
of the implicit income transfer from the PDS. The preliminary results suggest that the PDS has a
significant impact on the reduction of poverty – both on poverty incidence and depth. The PDS
transfers also contribute to the decline in income inequality. The impacts of the PDS transfer to
households are more pronounced on percentage changes in the poverty gap index than the
headcount ratio. This study also contributes to the on-going policy dialogue on cash versus in-kind
transfers. Implementing the PDS lowers the poverty gap index, which means that perfectly targeted
government transfers to the poor will be lesser than the scale of financial resources required to
eliminate poverty in the absence of the PDS. Finally author concluded that even if administrative
and transactions costs are double the amount of PDS transfers, government expenditure would still
be considerably lesser than directly transferring cash without administrative and transaction costs.
3.6 Digitalizing (computerizing) PDS
Nandan nawn (2013)
Author stresses in this article that computerizing entire supply chain i.e. from procurement to
distribution, including linking the PDS to the Aadhar scheme of the Unique Identification
Authority of India is not a solution for problems which PDS is facing in present time. He also
identified potential advantages and disadvantages towards achieving food security for the people,
especially the financially poor. Author has argued that such a computerized solution’ is not only
unnecessary for ameliorating the teething problems of the PDS, but also signifies further
withdrawal of the State from the goods sector altogether. It concludes that in future, by all
indications, the State will be just a glorified provider of a few services and subsidies to the
36
identified beneficiaries. With such a limited scope of its obligations/duties, food security with
universal coverage will certainly remain elusive forever.
Finally he concludes by saying that the Government provides subsidies, notably on fuel and food
Grains, to enable the common man to have access to these basic necessities at affordable prices. A
significant proportion of subsidized fuel does not reach the targeted beneficiaries and there is large
scale diversion of subsidized kerosene oil. He further explains that the debate now has to make
way for decision. To ensure greater efficiency, cost effectiveness and better delivery for both
kerosene and fertilizers, the Government will move towards direct transfer of cash subsidy to
people living below poverty line in a phased manner.
Shakeel-ul-rehman, DR. M. Selvaraj and DR. M. Syed Ibrahim (2012)
Authors discusses on progress and performance of Food grain distribution in India especially by
Food Corporation of India and Central Warehousing Corporation, as these corporations are
responsible for the bulk storage and distribution of food grains in the country, authors also brings
into focus the problems and prospects in the current marketing system and brings out some
challenges which these corporations face.
Authors pointed in this article that agriculture is fast becoming demand driven from the earlier
supply driven situation. Farmers will have to grow specific varieties needed for processing or add
value to their produce. Policy and legislation should be reformed to allow processors to purchase
their produce requirement directly from the farmers.
3.7 Chronic hunger and food security
Madhura Swaminathan (2008)
In this article author explains about chronic hunger and food security prevailing all over society
and which has been challenging to find a solution. This paper compacts with the major policy
intermediations that are aimed at improving food security. Author focuses on policies that deal
with financial consumers at the household and individual level and not on policies dealing with
producers. Later in the article author tells that policy making and implementation have failed
37
miserably in respect of confronting this crisis of mass under nutrition. Before liberalization (1991)
these policies have some success but after 1991 liberalization these policies failed in addressing
food security, which further impacted on consumption and nutrition.
Prakash (1998)
He observed food security has now become an important issue, which is before the international
community. Well over 800 million people are food insecure; almost 40,000 people die every day
due to malnutrition. Food security is a fundamental prerequisite for maintaining the international
order and socio-economic stability. Stable food availability at national, regional and household
level is a cornerstone of nutrition in most low-income and food-deficit countries.
Ms. Gurdeep kaur Ghumaan, Dr. Pawan Kumar Dhiman (2013)
This paper analyses status of public distribution system and its relationship with the problem of
food security and poverty incidence among the states of India. Poverty indices for all the states in
India are calculated then it appears that the PDS is widely accessible to the households in the
region. There is need for certain reforms in procurement and distribution for better functioning of
TPDS.
3.8 In efficiency in system
Shankar (2000)
He admitted that if the poor have no money to purchase food grains, the public distribution system
loses all relevance for them. It would serve the poor for better if the huge sums spent on the
government’s procurement operations and the PDS were devoted to water conservation
programmes and pension schemes.
38
Dr. B. S. Sawant, Rahul J. Jadhav (2013)
This paper investigates the effect of public distribution in the context of social security and poverty
alleviation in India. We found that the Public Distribution System (PDS) has a poor record of
reaching the poor and needy. PDS is being criticized for its ineffectiveness and inefficiency in
achieving its objectives. By keeping this in mind, the present article deals with the evolution of
PDS in India, goals of the PDS, working of fair price shops. The present study highlights the
various pitfalls of PDS like poor quality of goods supplied, weight cutting, leakage of PDS articles
to open market, non-availability of commodities etc. This paper also offers suggestions to overhaul
the present system of PDS.
39
40
CHAPTER IV
METHODOLOGY AND DESIGN OF
THE STUDY
41
42
CHAPTER –IV: METHODOLOGY AND DESIGN OF THE STUDY
4.1 Introduction
This chapter deals with different process used to identify the factors which are hindering the
efficiency of the PDS system. Different data tools have been used to identify the reasons for PDS
system failure. This chapter helps in refining analysis in further chapters of the study.
4.2 Nature of the study
This study will be in mixed method of research (quantitative and qualitative methods) but this
study will be mostly of qualitative one.
4.3 Data Collection
This study uses survey and possibly interviews with the PDS agents, some cases that can possibly
help the topic be clearly explained. Secondary data will be collected through the articles, books,
journals, Websites and various modes.
4.3.1 Primary Data
Primary data related to the study has been collected through questionnaires. Questionnaires
were rolled out to two sets of people. One set consisted of direct beneficiaries of PDS system
and other set of people were PDS agents. Beneficiars questionnaire has been rolled out to 80
card holders and 25 of FPS agents
4.3.2 Secondary Data
Secondary data has been collected to support the study in terms of changes which have taken
place after the primary data collected. The various modes used to collect secondary data were
articles, books, journals, websites and etc.
4.4 Treatment of the Data
The following section consolidates the result obtained from 80 respondents across Bagepalli taluk,
Chickballapur district of Karnataka. Present study is done using primary data. Convenience
43
sampling method has been used to select the sample of beneficiaries from the selected villages of
Bagepalli taluk. Data was collected using questionnaire schedules for different respondents and
also by conducting interviews to some people who were uncomfortable with the questionnaire.
4.5 Research questions
What are the factors that affect the efficiency of PDS?
What can be done to increase the efficiency of PDS?
What role does the government play in building sustainable policy?
4.6 Insights from the village visits
The purpose of the village visit is to gain an understanding of the functioning of the program from
the perceptions and experiences of the stakeholders, especially from FPS dealers and PDS
beneficiaries. To be accredited as an FPS dealer, the state government requires minimum
educational attainment of 10th class and applicants must be residents of the village.
The household beneficiaries interviewed come from different landholding classes. They have been
participating in the program for more than 20 years. All respondents affirmed that they personally
consume the PDS commodities, and do not re-sell their benefits. Even large holder farming
households utilize their benefits despite the low quality of goods. They use these items for other
purposes, such as creating snacks out of the PDS rice or using PDS sugar for tea when entertaining
guests.
One of the common issues encountered by beneficiaries relate to the FPS. Beneficiaries are not
able to obtain their monthly entitlements since FPS dealers do not keep regular hours. The quality
of commodities is not consistent throughout the year, with the PDS providing low quality in some
months. The monthly entitlements are said to be insufficient. For instance, 4kgs of rice can be
consumed in 10-15 days. Thus, households still have to purchase additional quantities from the
market to augment the benefits they receive from the PDS.
44
4.7 Perceptions about the PDS system in the minds of PDS users, FPS agents and the
Government officials.
View point of Beneficiaries
“The quantity we get is always less than required, they do not weigh properly, and there is
shortage of at least 1-2 kgs” says Mr. Bairappa, BPL card holder.
An old man belonging to a village in Bagepalli taluk town says that “Sir, it’s common, we
do not bother about that, we get it, which is more than sufficient” Whether it is rice, wheat
or kerosene oil, nothing is weighed or measured properly.
“Most of the time we get rice that is nothing but pieces of rice” says Raghavendra, an
Antyodaya card holder.
View point of FPS Agents
“Several organizations and local politicians approach us to make arrange for the rice and
other commodities for their organizational or some social or religious celebration. It is
difficult to say no to them, since they have ‘power’. We are bound to adjust the loss by
some other means” says one Fair Price Shop Owner.
“To avoid weighing food grains, let government change all the traditional weighing
mechanisms with the electronic one, but should not ask us FPSs owners to get their own,
we are not capable of that” grieves of FPS from Bagepalli.
View point of Government Official
“We are very much specific about that, concerned authorities frequently hold the inspection, and
there is no meaning in the allegations.”
“But, who is right and who is not, it is sure that balance is lost”
45
46
CHAPTER V
ANALYSIS AND INTERPREATATION
ON DISTRIBUTION SYSTEM
47
48
CHAPTER V: ANALYSIS AND INTERPRETATION ON DISTRIBUTION
SYSTEM
5.1 Introduction
The purpose of the chapter analysis and interpretation phase is to transform the data collected into
reliable suggestion about the development of the interference and its performance.
This process usually includes the following steps:
Organizing the data for analysis
Describing the data
Interpreting the data
Analysis of the study have been discussed in two parts:
First part of analysis is done through the data which I collected from PDS agents and the second
part of analysis is through the data which I collected from beneficiars of the PDS System
5.2 Analysis Part I
A. Stated facilities provided by pds system to outlet
Figure 5. 1 different facilities in PDS outlet
2125
1925 23 25
0 0
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No pds outlets have computer, and some of the pds outlets does not have even electricity
facility. Though they said that outlet has standard weights but when I observed the
distribution process of food grains, they were weighing through stones which agents have
estimated the weights of stones according to their insights.
“I don’t have the electricity connection in the shop, I can’t keep it open after evening, so I
keep open it in day time itself” one shop owner says. “Even if I keep the shop open in early
morning hour, nobody turns up” he adds.
B. Following the prescribed format of stock register
Figure 5. 2 percentage of PDS agents using prescribed stock registers
Agents need to follow the format prescribed by the state government, but 32% of them are
following their own format. The reason which respondents have gave was government stock
register has unwanted fields which are not required and format is difficult to understand, hence
they follow their own format to their convince. Because of this there are chances of people getting
cheated in terms of price and quantity they receive.
GOVERNMENT68%
AGENT32%
GOVERNMENT
AGENT
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5.3 Analysis part II
C. Frequency of receiving correct quotas of food grains over last one year
Table 5.1 no of respondent’s ratings towards monthly quota of food grains
RICE WHEAT SUGAR KEROSENE PALM
OIL
44 18 19 4 25
9 23 30 5 27
0 12 4 37 1
0 0 0 0 0
0 0 0 0 0
Figure 5. 3 frequency of monthly quota food grains received
From the responses given by people in terms of food grains they received last one year has been
plotted in both table and graph. It clearly shows that kerosene have been a major item which people
have not received frequently in last one year. This happens mainly because of the private party
who is responsible for suppling the kerosene to the PDS outlet every month. After interviewing
the PDS agents about this issue they said that they never received the full quota of kerosene which
has been allotted by the state government to the outlet, because of which they were not able to
distribute equally to every ration card holder. Power cuts are frequent in villages, kerosene is
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
RICE
WHEAT
SUGAR
KEROSENE
PALM OIL
MONTHLY QUOTA OF FOOD GRAINS RECIEVED
ALWAYS ALMOST MOST OF THE TIME SOMETIMES RARELY NEVER
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essential at night time but people are not getting it. People can’t buy outside shops because of high
prices.
D. Different reasons for not buying food grains from PDS outlet
Figure 5. 4 reasons for not buying food grains from PDS outlet
Poor quality has been a major issue for people for not purchasing food grains, especially rice and
wheat frequently. This issue has adverse effects on so many things and each thing can effect on
other things. E.g.: poor quality food grains can effect on people’s health in terms of nutrition and
vitamins intake. This lack nutrition and vitamins intake can increase their expenditure on medical
aspects, by which there savings decrease, it can lead to poverty and because of money their children
can be deprived of quality education. Though government is buying food grains for fair price shops
from farmers which are good in quality, by the time food grains reaches fair price shops it’s
becoming inconsumable. The major reason for this is lack warehouse facilities to store food grains.
0
5
10
15
20
25
30
35
RAN OUT POOR QUALITY LACK OF CASH
52
Figure 5. 5 difference in total stocks and total storage capacity
The above clearly shows that there is a gap in matching total storage capacity and total stocks.
Because of inadequacy infrastructural facilities food grains are diverting to open market. Above
figure shows that every year total stock in increasing double fold compare to the total storage
capacity. There is a need to bridge gap between to increase efficiency in the PDS system.
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E. Ration card holders responses for not having a card
Figure 5. 6 reasons for not having a card
Out of 80 people from whom I have collected data through questionnaires, 14 people have lost
their ration card and 13 people have applied but not received. Losing a card is not the problem of
government but applied for new card but not received is a serious problem which needs to be
catered. Buying food grains from open market is quite expensive where people face difficulty in
purchasing.
12.4
12.6
12.8
13
13.2
13.4
13.6
13.8
14
14.2
1
LOST CARD APPLIED BUT NOT RECEIVED
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F. Ration card holders description about the quality of the food grains
Figure 5. 7 Ratings of food grains quality
Reasons for lack of effectiveness and inefficiency in the pds
5.4 Lack of swiftness in running; a major issue of PDS
Duties and Responsibilities of a Fair Price Shop Licensee:
Most PDS do not follow the following things which lead to PDS system fail.
The roles and responsibilities of FPS owner have been mentioned in PDS control order.
The basic commodities are required to sell as per the price fixed by the government.
Every Fair Price Shop (FPS) should display the following information on a notice board
which should be visible to every one
List of BPL, APL and Antyodaya card holders
Claim of necessary food grains ,
Issue of scale,
Retail issue rates,
Timings related to opening and closing of the fair price shop,
Stock register entry of necessary commodities received during the month,
0
5
10
15
20
25
30
35
40
45
RICE WHEAT SUGAR KEROSENE PALM OIL
EXCELLENT GOOD FAIR AVERAGE BAD
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Opening and closing stock of necessary commodities.
The FPS owner must display samples of different types of food grains which are supplied
to FPS.
Fair price shop owner should not deny to supply the necessary commodities, surplus in
quantity, to the ration card holders, as per their entitlement which they should have claimed
otherwise.
“Sir, at least ministers, will change one day, however not these individuals of society” says
Shabbier, a resident of Chakavelu, voicing his sorrow over the running of local Fair Price Shop.
Yes, there is never ending list of complaints starts coming out from the consumers of the state
of Karnataka, especially BPL card holders. Grievances of the people start from the timing of
the FPS to the Open Market sales. It includes weighing of the products entitled, excess rates,
quality of product, attitude of the employees, service of the shop, transparency in transaction
and so on.
5.5 Dearth of information is main problem for consumers.
Display Boards:
No Fair Price Shop in this region has comprehensive set of display boards, which is obligatory as
per Government recommendations.
Only the Fair Price Shops run by TAPMC2 have equipped themselves with the display boards for
that purpose, but only for the name sake. Neither there is well-run information nor the daily
maintenance.
2 Taluka Agricultural Produce Marketing Committee
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5.6 Shortage of supply and excess prices worries the consumers
Short Supply:
There is short supply of food grains from the government to the FPS shops. To satisfy everyone’s
hunger FPS agent distributing food grains short.
‘Many a times we get only 800 gms of sugar, on asking the reason, he says the supply from the
governments itself is short” says Shivananda raicheruvu of Bagepalli Taluk.
Excess price:
In Karnataka, the government selling rice and wheat free of cost. But every 2 months government
is hiking kerosene price. Most of the BPL card holders are poor and illiterate; they cannot calculate
the rates properly. And those who are Rich-BPL card holders, they do not bother about the ‘little’
excess fair. Since the FPS owners generally belong to influential category of the society, nobody
can dare to speak.
Samples:
It is obligatory for FPS owners to display the samples of produce at the shop. Very few owners
practice this especially FPSs owned by TAPMC. According to many customers samples are only
for ‘show’ cause. In sample it looks good but in real it doesn’t, they opine.
But, FPS owners have different version, “ Generally, the produce say rice will be good while
opening the bag, but at the bottom it will be not same; customers insists for the same what is being
displayed, how can we serve the same for everybody”
Quality of Service:
As mentioned earlier, the customers are at receiving end. They are bound to accept what has been
given from the FPS owners. Neither they can question nor can argue. Most of the FPSs belong to
the people who are politically affiliated, or who has the inherited power and status in the society.
There is arrogance, rudeness and lack of sense of service among them, and they do discriminate
the customers on the basis of caste, economy and status.
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5.7 Misuse of different PDS cards
The different types of ration cards are Below Poverty Line (BPL), Above Poverty Line (APL) and
Antyodaya card.
People’s attitude:
There is other part of the whole story. Customers too are not clean by their practices. They possess
unauthorized BPL cards even if they do not deserve. Considerable families do have more than one
card which is against the law. Well off customers sell the rice/ wheat/oil to the open market for
higher rate after purchasing from FPS. According to some concerned people, availability of rice
for free has made many people more lethargic towards hard working. There are several complaints
from the FPS owners of being harassed by the people for allegations of caste biasness.
Temporary ration cards:
This scheme was introduced by the Government of Karnataka to cover up the blunders done during
the computerization process. This scheme has led to more chaos in the issuance of ration card.
Disparity between Urban and Rural FPSs:
Unlike the fair price shops (FPS) of rural area, the FPS owners of urban regions have to bear the
costs of carriage from godowns to their shops as they have to make their own arrangements in
transporting food grains to their PDS outlets. Thus the transportation cost is to be endured by
them.
All the urban FPS owners feel that such discrimination and injustice should not be there between
rural and urban FPSs owners. They too demand the transportation to be free from charges from
the state government. This is in conformity with the PDS Control Order that the appropriate State
Government will guarantee door step supply of food grains to the beneficiaries.
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Density of FPSs:
As per existing system the license of the retail shop that they can be given with minimum of 300
ration cards in rural areas and minimum of 500 ration cards in urban areas. But there is no upper
limit for the ration cards. As a result, some shops have up to 800-1000 cards. There is also the need
to have the FPSs on the distance basis; as the people of rural area have to travel for the long
distances to collect their share of food grains.
Transportation Issues:
According to the observant citizens and the activists engaged for betterment of PDS, existing
transportation system is one of the prime phases of corruption in PDS system and is generally
controlled by mafia. There is no such effective system to monitor the movements of the vehicles
which transport the food grains; where do they go, where do they unload the materials; it is very
difficult to supervise. Mere few officials from the department of Food & Civil Supplies can’t
monitor it. Tamil Nadu Government has set good example of GPS controlled transportation system
where the each and every movement of every vehicle transporting food grains are being monitored.
Identification of BPL card holders
The identification process of BPL has created the chaos in social order. Those who are rich have
got the BPL cards, deserved poor people have got APL card and some people like Thayavva who
has not seen the gas cylinder regulator ever in her life, has got Akshaya Anila Rahita card. As the
result justified poor people do not get the food grains and kerosene oil under the PDS scheme.
There are rich people who by mistakenly and deliberately have got BPL cards do enjoy the
privilege of BPL card schemes. There are several households in each FPS jurisdiction, who have
more than one ration card.
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CHAPTER VI
SUMMARY CONCLUSIONS AND
SUGGESTIONS
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CHAPTER VI: SUMMARY CONCLUSIONS AND SUGGESTIONS
6.1 Introduction
This chapter gives a condensed version of entire report. The chapter starts with the summary of
previous chapters, later the findings of the study are spelt out and finally chapter ends with future
scope for study.
6.2 Summary
The first chapter states the problem statement, the need and importance of the study, objectives of
the study and scope of the study. The second chapter gives Brief overview about public distribution
system, initiatives related to PDS started by government. Role of PDS. How it works, analysis of
PDS system, presently how PDS system works, gap between required and existing storage
capacity. Procurement and sales and public distribution system in Karnataka in terms of roles and
responsibilities. The third chapter gives detailed description of works done in PDS leakages and
corruption, influence of open market on PDS system, food subsidy, digitalizing the system, chronic
hunger and food security and inefficacy in the system.
The fourth chapter gives the road map for the study includes data collection and refinement,
treatment of the data, limitations of the study, research questions and insights which I got by
interacting with villagers. The fifth chapter describes the complete details of analysis carried out.
Analysis has been explained through tables and graphs which are plotted using the primary data I
have collected.
6.3 Conclusions and Recommendations
From study of problems faced by PDS system in Karnataka conclusions are as follows:
it is important to note that the PDS is not strong enough and the only mechanism to ensure
the food security of the poor, because it serves the purpose only to those who have
purchasing power and are ration card holders. A suitable combination of policies like
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effective implementation of poverty alleviation programs, stabilization of prices, providing
universal health facilities are needed along with higher economic growth for enhancing the
food security of the poor households.
The intention behind launching polices is main reason for PDS systems inefficiency, the
problem is not with the people who are maintaining and benefitting.
Entire PDS system should be monitored by a special body jointly appointed by state
government and central government.
Rajasthan state government have partnered with future group to manage the PDS system,
hence even Karnataka government also check its efficiency by running pilot study.
While interviewing I found some villages very unusually thing where socially upper caste
people still continue to misuse the PDS system by taking advantage over the items much
more than what is fixed per card.
Karnataka’s public distribution system is going digital in next three months, implementing
is an easy process, sustaining for years to come is challenging but it is possible.
It is the fundamental obligation of government to provide every individual the
opportunities to lead a healthy life. The government needs to develop a dynamic agriculture
sector keeping in view the food security needs of growing population, besides making its
public distribution system efficient and public-oriented so as to achieve the target of
eradicating poverty-induced malnutrition.
India has not suffered a serious famine after Independence and the credit for this should go
to its pluralistic politics and a free press, but there is “endemic undernutrition and
deprivation,” but after all political parties know that the way to the voter’s heart is through
his stomach.
Presently, major challenge before the Public Distribution System is reaching of the food
grains to the genuine recipients without leakages and diversion on the route to grass-root
level. For this a huge modernization drive is required. There is also a need of digitizing the
data base of beneficiaries and computerization of the entire food supply chain so that
government can make the public distribution system more successful. These efforts would
make the schemes clear, help eradicate leakages and dishonesty and authorize the
beneficiaries to get products as per their right and requirement.
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BPL cards will be issued based on family income level, instead take even other categories
like two wheeler, any government employee in the family, tax payer, number of acres of
land etc. It can be a better criteria for issuing BPL cards to families.
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