1. MANTHAN TOPIC: Plugging the Leaks:
Improving reach and efficiency of the
Public Distribution System
Ration Card cum debit card : A solution to all the
problems of PDS
Team Members
SIBTAIN DEHLI WALA, GAURANG AGRAWAL,
SAKSHAM SINGH TOMAR, ASHISH PANDEY,
MRINAL BHARADWAJ
MINDS PUNCHPresented by:
2. What is PDS?
India’s Public Distribution System (PDS) with a network of 4.78 Lakh Fair
Price Shops (FPS) is perhaps the largest retail system of its type in the
world. Since 1951 public distribution of food grains has been retained as
deliberate social policy by India with the objectives of:
(i) Providing food grains and other essential items to vulnerable sections of
the society at reasonable (subsidized) prices
(ii) To put an indirect check on the open market prices of various items and
(iii) To attempt socialization in the matter of distribution of essential
commodities
PDS is an important constituent of the strategy for poverty eradication
and is intended to serve as a safety net for the poor whose number is
more than 33 Crores and are nutritionally at risk. PDS is operated under
the joint responsibility of the Central and the State Governments. The
Central Government has taken the responsibility for procurement,
storage, transportation and bulk allocation of food grains, etc.
3. What ails PDS?
The Planning Commission had the following to say on the PDS system in its 2005 report.
“For every Rs 4 spent on the PDS, only Rs 1 reaches the poor”
“57% of the PDS foodgrain does not reach the intended people ”
1. Availability
Users often do not get their rightful entitlement in terms of quantity. What's meant for them is diverted to the open
market. This happens at the beginning of the chain itself.
2. Timing
Ration shops do not open every day. Nor do they keep regular hours. The objective would appear to be to limit
access to people and divert grain and other produce to the open market.
3. Overcharge and Undersupply
This is a common practice adopted by most people that run ration shops. They charge people more than the
mandated rates, and they often under-weigh the commodities.
4. Bribes
People have to pay bribes for small things, such as getting a ration card in the first place, adding or deleting the
name of a family member, or changing the address mentioned in it.
5. Indifference
The staff at ration shops doesn't know the meaning of the term customer service in most cases. People are
harassed and have to make multiple visits.
6. Role of middleman
The supply offices are lorded over by middlemen and touts. Procedures are made to appear so complicated that
people usually end up using middlemen for small tasks too.
5. The solution to the problems of PDS is the use of
ration card cum debit card
Government should issue each family
with a ration card cum debit card.
1. The card will have general information
about the family like-
• Annual income of the family , which in turn will help
in dividing them in above poverty line or below poverty
line.
• Number of members in the family and basic details
of the family like address, educational qualification
,etc.
2. As a debit card the card will serve following purpose-
• It will eliminate the use of cash to buy materials from ration shop.
• People will be able to buy commodities from any ration shop.
• Government will be able to moniter the amount of ration going to the
people.
• Government will also be able to moniter the rates at which “ration” is going
to the
people.
6. Detailed working and advantages of the card
1. Issue of card
• Government will issue ration card cum debit card to each family in
India .
2. Installation of debit card machine at each ration shop and its
working:
• Debit card machines will be installed at all ration shops.
• The machine will be customised to transfer information to central
government.
• Database regarding the total purchase of each family , rate at which
food grain is being provided etc.
• As their will be a central database maintaining information
regarding purchase, families will be able to buy food grains from
any ration shop in India.
• The amount of food grains allocated to each families will also not
exceed.
7. Continued
3. Deposit of money for the use of card:
• Each card will have a unique card number, which will empower
the people to deposit money in their debit card from any
nationalised bank.
4. Reduction of corruption:
• As their will be a central database maintaining the amount of
grain sold , person running ration shop will not be able to black
market the goods.
• People running ration shops will also not be able to sell goods at
a higher price to the families as the rate will be fixed by
government through a software centrally and the machine
installed at each shop will be updated automatically, person
maintaining the shop will just have to enter the amount of each
commodity and the bill will be printed .
8. Cost of the
total
operation
Cost of issuing
ration card cum
debit cards to
families
Cost of making a
debit card =15
rupees
Total number of
families in
India=192,671,808
Cost of manufacture
of cards=2891 crore
rupees
Cost of installation
of machines in
each shop
Cost of making one
machine=3000
rupees
Total number of
ration shops=505879
Total cost of
installation=152
crore rupees
Other miscellane
ous costs
Other costs include transporting of machines,
hiring of workers to install machines, hiring
people to train common people on how to use
the machine and the card etc will be 50-60
crores.
9. Challenges and Risks
• 1st challenge will be that
government do not see this
model viable due to such
high cost
• People will not be able to
adapt to such a technology.
• Failure and technical
problems arising in the
machines installed and the
cards issued.
Mitigation factors
• Every year Indian pay more than
15000crores in bribes and
implementation of this scheme
will require about 3000crores
and it will reduce corruption so
approval from the government
should be easy.
• If volunteers are trained
efficiently then common people
can be effectively trained.
• Company manufacturing cards
and machines should be asked
to give warranty on their
manufactured machines and
cards.
