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  2. 2. THE PROBLEMS OF PUBLIC DISTRIBUTION SYSTEM • At least 17,546 tonnes of food grains was damaged between 2009-10 and July 2012 in Food Corporation of India (FCI) godowns (RTI Query) • Only 22.7% FPSs are viable in terms of earning a return of 12% on capital • In Bihar and Punjab, the total leakage exceeds 75% while in Haryana and UP, it is between 50 and 75% • High supply chain costs - Rs 2579 crore did not reach any consumer but was shared by agencies involved in the supply chain • Upto 80% of kerosene distributed through PDS does not reach the intended beneficiaries as per the pilot run of direct benefit transfer scheme in Alwar, Rajasthan Over allotment 38% Distribution Leakage 39% Active suspect loss 17% Transportatio n cost 2% Stolen subsidy 4% Components of PDS Losses
  3. 3. IDENTIFICATION OF BENEFICIARIES • Use the data from the socio economic caste census once it is available • Share SECC data with all local self governments • Make Aadhar cards mandatory for all identified beneficiaries • Automatic inclusion of widows, differently abled and old aged Socio Economic Caste Census • The beneficiaries identified by SECC need to be approved and validated by the Gram Sabhas and Gram Panchayats • Approved beneficiaries will be eligible for entitlements for one year • Re-approval of beneficiaries every year Validation by Panchayats • Grievance redressal mechanism at every taluka level for errors of exclusion • Anonymity and whistle-blower protection for complainants who report errors of inclusion Grievance redressal Social Audit • Gram Sabha will be authorised to appoint 3 eminent citizens as local auditors of the FPS • Social audit only meant to analyse the effectiveness of PDS • Social audit findings to be submitted to the Zilla Parishad which will consolidate the findings and submit it to the state’s PDS monitoring body • Feedback mechanism to be available at every gram panchayat which will be forwarded to the computerised central feedback system to enhance the quality of PDS
  4. 4. SPREADING AWARENESS • Printed messages on electricity bills • Exhaustive coverage of all the households • Minimal additional expenditure for the government ELECTRICITY BILLS • Every village in India celebrates an annual event like a mela or celebrates festivals where the entire village population comes together • Such mass gatherings can be made use of by government to spread messages on PDS • Trained government officials can be sent to address such gatherings FESTIVALS & MELAS • UG Curriculum to include mandatory course on challenges faced by the government • Field visits to be made compulsory which should include spreading awareness to rural population • Students can work along with village heads/sarpanch to conduct awareness programs in villages • Sample statistics – In Karnataka alone there are 1056 UG colleges, of which at least 500 students graduate per college. More than 5 lakh students graduate every year. Such an activity can cover up to 3000 villages every year. ENGAGE STUDENTS • Advertisements on PDS awareness to be telecasted on National television on a regular basis • Awareness messages on popular newspapers TELEVISION & PRINT MEDIA • Radio is still an effective broadcasting medium in India. Awareness messages to be conveyed during peak hours • IVR system can be used to send recorded awareness voice messages RADIO & IVR
  5. 5. PACKAGING AND DISTRIBUTION Plastic coated, government sealed jute bags carrying a barcode print. Bundle the food grains in the packages of sizes of 2kgs, 5kgs and 10kgs. These sealed packages will be distributed directly to the consumers. Advantages Protect food from rain/moisture and other environmental pollution. Extend shelf-life, and maintain the quality and safety of food. Barcode will help us improve supply management, facilitate trace-back for food safety and quality purposes. This will allow us to track the food throughout the distribution process. Passing on the sealed packaged grains directly to consumers will ensure that the end consumers are getting the same quality grains that the government is providing. Cost incurred Barcode sticker/print for every bag will cost approximately ₹10 for 1000 bags. With the current allocation of 34 lakh tons of food grains by the FCI and considering that we divide these into packages of 2kgs, 5kgs and 10kgs with a percentage distribution of 20%, 40% and 40% each, we would need – 340 lakh bags of 2kg 272 lakh bags of 5kg 136 lakh bags of 10kg A total of 748 lakh bags. This will cost ₹ 7.48 lakh. DIVISION GODOWNS STATE GODOWNS FCI WAREHOUSE DISTRICT GODOWNS TALUKA GODOWNS FAIR PRICE SHOP CONSUMER UN-PACKED GRAINS PACKAGED GRAINS
  6. 6. PLUGGING THE LEAKAGES • Storage, distribution and packaging to be outsourced to private players for both FCI and State food corporations. • FCI to concentrate in procurement only and maintaining buffer stocks for food security and price stabilization. Storage • Complete computerization of inventory management at FCI and private players. • Electronic Data Capture on EDS along with finger print scanner in each FPS. • Usage of Aadhar card with annual life certificate, needs to be swiped for each purchase. Ghost and Duplicate cards • Social Audits by PRI • Awareness of beneficiaries about their entitlement • Citizen charter FPS Level To measure the effectiveness of PDS PDS item utilization ratio = (Total units sold as per Aadhar card transactions for a particular commodity over a period) / (Total units issued of that commodity over a period of time) Decentralize procurements For food security a buffer stock of 10mt–4mt of wheat and 6mt of rice – would be adequate and if there is any temporary shortage, foodgrains should be procured from open market. Excessive food grains should be exported. Maintain the optimal level of buffer stocks Procurement should be made decentralized throughout all the states, i.e. FCI supplies from its pool of food grains only when the state falls short of the requirements
  7. 7. FCI STATE FOOD CORPORATION DISTRICT GODOWNS TALUKA GODOWNS FPS BIOMETRIC MACHINE CONSUMER DIVISION GODOWNS BANK - FPS dealer will give the procurement price to the State food corporation for obtaining food grains, he may take bank loans under priority sector lending from banks. - PDS items will be only issued once the amount is received and will be delivered to the FPS by private players through the distribution - Once the food grains are sold through the FPS shops by Aadhar cards (after validation through the centralized server) for the issue prices, we will return him the difference between the issue price and the procurement price along with his commissions directly to his bank account. - As under this scheme, the FPS owner has already paid upfront the procurement price, there will be very less incentive to divert the food grains and as we have barcoded food grain packages, we can track them. CASH FLOW VALIDATION
  8. 8. VIABILITY OF FPS Reasons What can be done Low off-take of foodgrains Improve awareness and quality. Focus on APL as well. Low commission Higher Commission based on type of beneficiaries. More for targeted population. Delay in supply of PDS items PDS distribution, storage outsourced to private players. Lack of working capital Provide priority sector lending to FPS owners. Lower utilization of resources LFPS licenses to be given to women SHG, will also sell other non competing items. Use of FPS shops for other programs involving foodgrains such as food for work, Mid Day meals, ICDS, other welfare schemes. To make FPS more accountable in rural areas SHG reporting to Gram panchayat FPS run by local women SHG Gram panchayat reporting to Taluka panchayat Taluka level panchayat to report to District panchayat India total population is around 1.24 billion and we have around 5 lacs FPS. It translates to around 2500 people per FPS shop But not everyone buys at FPS and as per the latest NSSO report on PDS, round 66, PDS purchase percentage are as follows: Monthly revenues thus calculated comes to be around Rs 1,16,338 per month on an average for each FPS. A 15 to 20% margin on this amount will give a reasonable profits of Rs 17450 to Rs 23,268 Rice consumption 23.5 % - rural , 18 % urban Wheat consumption 14.6% - rural, 9% urban Assuming the percentage of population in rural areas to be 70% and in urban areas to be 30%. Also the estimated consumption of wheat across India in 2013 to be 83 million tonnes and that of rice to be 97 million tonnes. The economic price of wheat to be Rs 19 and that of rice be Rs 24.
  9. 9. INFRASTRUCTURAL COST • Number of FPS – 515996 • Each FPS will incur a fixed cost of approximately 25 thousand. This includes- – Desktop – Barcode and Fingerprint scanner – Internet connection Thus, the total fixed cost required will be ₹ 1290 crore. • IT infrastructure cost (servers, GPS tracking devices) will be approximately ₹35 crore. • Variable cost of development and maintenance of the related software will be approximately ₹2000 crore for 10 years. • For smaller states, this funding can be provided by the central gov. Total additional fixed cost incurred = ₹3325 crore including 10 years software maintenance cost. Total additional variable cost per month = ₹7.48 lakh + Maintenance cost (10% of IT infrastructure cost) = ₹ 11 lakh
  10. 10. ROLE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) •Biometric cards •Check against ineligible beneficiaries BIOMETRICS •closed-circuit TV monitoring •prevent diversion of subsidized food grains CCTV •SMS alerts about availability of stocks •IVR call in local languages giving information about used/remaining quota for food grains SMS/IVR •Accurate weighing of loaded food grains •Guards against over-weight trucks COMPUTERIZED WEIGH BRIDGE GPS SATELLITE GSM TOWER TRUCK WITH GPS ANTENNA CENTRAL SERVERCENTRALIZED LOCATION (GPS MONITORING) GPS system shall help in: • tracking the movement of trucks • provide route information • provides alerts like stoppage, diversion, speed etc. GPS TRACKING
  11. 11. GRIEVANCE REDRESSAL SYSTEM Consumer State level GRO Division level GRO District level GRO Taluk level GRO •Records complaints from consumers •Issues to be addressed/escalated within 15 days •Accountable to Panchayath Samithi •Conducts audits and surprise visits of fair price shops •Suggests changes or new implementations in the system to state level GRO •Addresses escalated issues within 30 days •Accountable to Zilla Parishad •Powers to recommend blacklist of FPS/vendors •Transport related complaints received from Taluk level and District level GRO’s to be addressed •Powers to modify PDS system •Coordinates with Central Government Officials •Reports to the Chief Minister Grievance Redressal Body Independent body 4 levels of Grievance Redressal Officers Monitors PDS and has the powers to dismiss officials/vendors in the system
  12. 12. REFERENCES • Statement regarding implementation of TPDS: • Targeted public distribution system: • Tamil Nadu Civil Supplies Corporation: • The Programme Evaluation Organization’s (PEO’s) Study (2005) • GAIN – Global Agricultural Information Network Report • Eleventh Five Year Plan Report • Food Packaging—Roles, Materials, and Environmental Issues: Kennethmarsh, Ph.D., and Betty Bugusu, Ph.D. • Graduate Colleges in Karnataka: category/15 • 26/india/41454640_1_damaged-foodgrains-storage-capacity-tonnes • direct-subsidy-transfer-pilot-successful-in-alwar/article3294089.ece