Context: The article brings into picture the inefficiencies in India’s Public Distribution System (PDS), with 28% of food allocations failing to reach beneficiaries, despite improvements from point-of-sale machines. It also highlights PDS’s narrow focus on rice and wheat, overlooking comprehensive nutritional security.

• Highlighting the persistence of leakages in the PDS grains, the study suggests ways to rationalize the system to ensure food and nutritional security.

Key Findings

• PDS Leakage: 28% of allocated grains supplied by Food Corporation of India (FCI) and State Governments fail to reach the intended beneficiaries. 

• This amounts to a financial loss of about Rs. 69,108 crores.

• Efficacy of recent reforms: Linking ration cards with Aadhaar and installation of PoS machines in 95% of Fair Price Shops (FPS) has increased efficacy of distribution but has not eliminated leakages.  

• Regional variations: States like Bihar and West Bengal have made significant improvements in plugging PDS leakage, however, high leakages persist in North-eastern states of Arunachal Pradesh, Nagaland and Gujarat.

• One factor for higher leakages, particularly in North-eastern states, is lack of digitalisation of PDS system.

About Public Distribution System (PDS)

• By coverage, it is the world’s largest food distribution program.

• Operated under joint responsibility of Centre and States: 

• The Central Government, through the Food Corporation of India (FCI), is responsible for procurement, storage, transportation, and bulk allocation of foodgrains to states, while State Governments oversee local distribution, identification of eligible households, issuance of ration cards, and supervision of Fair Price Shops (FPSs).  
  Currently, PDS distributes wheat, rice, sugar, and kerosene, with some states also providing additional items like pulses, edible oils, and salt. 

• Centre (through FCI): Procurement, storage, transportation and bulk allocation of food grains.

• States: Operational  responsibility including allocation within State, identification  of eligible families, issuing of Ration Cards and supervision of FPSs. 

• Evolution of PDS: Revamped PDS (1992), Targeted PDS (TPDS) (1997), Antyodaya Anna Yojana (AAY) (2000), National Food Security Act (2013), Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) (2020).

Why Public Distribution System is Required in India? 

• Food Security & Poverty Alleviation: Almost 129 million Indians are living in extreme poverty in 2024, on less than $2.15 (about Rs 181) a day (World Bank), making food access a critical challenge.  

• The PDS ensures basic food security by providing subsidized staples to vulnerable populations, acting as a crucial safety net during economic shocks and natural disasters.  

• This was particularly evident during the Covid-19 pandemic when Pradhan Mantri Garib Kalyan Anna Yojana supported 800 million people with free foodgrains.  

• Price Stabilization & Market Regulation: PDS functions as a vital price stabilization mechanism by maintaining buffer stocks and controlling market volatility in essential commodities.  

• This system helps prevent artificial price spikes during shortages and protects consumers from market manipulation and inflation.  

• In 2022-23, the Food Corporation of India (FCI) released 34.82 lakh tonnes of wheat to boost market supplies, helping regulate market prices. 

• Agricultural Support & Farm Income: The PDS, through its procurement mechanism, provides assured markets and minimum support prices (MSP) to farmers, supporting agricultural livelihoods and food production.  

• The 2023-24 agricultural marketing year (October-September) ended with the government procuring 52.544 million tonnes (mt) of rice. 

• This systematic procurement helped maintain farm incomes during market uncertainties. 

• Nutritional Security & Health Outcomes: Beyond basic food security, PDS plays a crucial role in addressing India's nutritional challenges, particularly among vulnerable populations.  

• The system's evolution in some states to include pulses, fortified rice (like Tamil Nadu), and other nutritious items has helped combat malnutrition.  

• Recent data from the National Family Health Survey-5 shows improvements in child nutrition indicators, with stunting reducing from 38.4% to 35.5%.  

• Social Equity & Regional Balance: PDS promotes social equity by ensuring food access across geographical and social barriers, particularly benefiting marginalized communities and remote regions.  

• The system's targeted approach helps reduce regional disparities and supports vulnerable populations including SC/ST communities.  

• Implementation of One Nation One Ration Card has enabled portability transactions, supporting migrant workers.

Major Issues Related to India’s Public Distribution System in India

• Leakages and Diversion: The most critical issue plaguing PDS is the massive leakage of foodgrains into the open market through illegal diversion.  

• Ghost Beneficiaries and Identity Fraud: Despite Aadhaar linkage efforts, the system continues to struggle with ghost beneficiaries and duplicate ration cards.  

• Quality Degradation and Storage Losses: Poor storage infrastructure leads to significant quality deterioration and quantity losses of foodgrains.  

• Targeting Errors and Inclusion-Exclusion Issues: Both inclusion of non-poor and exclusion of genuine beneficiaries remain significant challenges.  

• Corruption in Fair Price Shops: Fair Price Shops operators often engage in malpractices like under-weighing, overcharging, and maintaining irregular operating hours.  

• Nutritional Inadequacy: Current PDS focus on cereals fails to address comprehensive nutritional needs.  

• Budget Constraints and Economic Burden: Rising food subsidy bills strain government finances while efficiency remains low.  

Recommendations

• Effective targeting of beneficiaries: Reducing the coverage of population covered under PDS (from present 57%) to the bottom 15% for free food distribution, while the rest could be given grains at 50% of MSP.

• Shift towards Direct Benefit Transfer (DBT): DBT minimizes leakage, reduces administrative costs, and empower citizens with flexibility in dietary choices.

• Transforming FPS into Nutrition Hubs: A Food Coupon Approach can be implemented in select FPSs to tackle the issue of siphoning off of grains.

• End-to-End Digitalization & Real-Time Monitoring: Implement comprehensive digital tracking from procurement to distribution using blockchain technology and IoT sensors. 

• Smart FPS Transformation: Convert fair price shops into digital-first "smart shops" with dispensing units, biometric authentication, and electronic weighing scales. 

• Portable Benefits & Migration Support: Strengthen One Nation One Ration Card (ONORC) implementation through improved interstate coordination and standardized protocols.  

• Crisis Response Enhancement: Develop automated disaster response protocols with prepositioned stocks.  

• Storage Infrastructure Modernization: Upgrade traditional storage to modern silos with temperature and humidity control systems.  

Conclusion

• India's Public Distribution System (PDS) is a vital tool for achieving several Sustainable Development Goals (SDGs): No Poverty (SDG 1), Zero Hunger (SDG 2), Good Health and Well-being (SDG 3), and Responsible Consumption and Production (SDG 12). By addressing the issues of leakage, inefficiency, and nutritional inadequacy, and implementing reforms such as digitization, improved infrastructure, and a focus on nutritional diversity, India can create a more efficient and effective PDS.