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  2. 2. “58% of the targeted subsidized food grains does not reach targeted beneficiaries.” “The PDS is said to distribute commodities worth 15000 crore to about 9.6 crore families each year.” 0 5 10 15 20 % FPS % BPL The above chart illustrates the current scenario of presence of operation FPS in the states and the percentage of Below Poverty Line(BPL) people inhabiting these states. The motive is to highlight the insufficiency of FPS in states having a significant population, except Maharashtra, where condition is marginally better. STATE NO. OF PEOPLE CATERED BY 1 FPS UP 808 MP 1207 Bihar 829 Maharashtra 627 INDIA 731 The afore-mentioned data is about the number of people catered by each Fair Price Shop(FPS), and are expected to visit every month to collect their share. However, regional population density should also be considered, as huge variations may exist in no. of people catered by each FPS due to varying regional population density. “You cannot distribute what is leaked.” “Centre releases 46000 crore as food subsidy so far.”
  3. 3. LEAKS: A BROAD CLASSIFICATION 75+ % Bihar, Punjab 50- 75% MP, UP 25- 50% Maharashtra, Rajasthan 0- 25% AP, WB, Kerala 50+ % Bihar, Punjab 25- 50% Rajasthan, UP 10- 25% Maharashtra, AP 0- 10% MP, WB 30+ % MP 10- 30% Bihar, Maharashtra, UP, WB 0- 10% AP, Rajasthan Ghost cards comprises of two broad categories- excess ration cards over the number of households (DE) and the BPL cards that are not with their owners (SE). These are referred to as “Double Counting Error (DE)” and “Shadow Ownership Error (SE). Leakage through Ghost Cards Leakage at FPS level Leakage at FPS level is due to inefficient delivery system, absence of Central Control and poor maintenance of records, low operational days and time of FPS and inaccessible locations of FPS. Overall Leakage This includes discrepancies like Inclusion (proportion of subsidized grains received by APL Households), Exclusion (exclusion of poor in the issue of BPL cards), Diversion of food grains to unidentified beneficiaries and Improper delivery mechanism. “Over 10 lac tonnes of foodgrains was damaged with which 1 crore people could have fed for a year.”
  4. 4. LEAKS IN THE DISTRIBUTION AND DELIVERY SYSTEM 0 200 400 600 Allocation from central pool(in kg/household per annum) Foodgrains not reaching the poor households This discrepancy in the amount of foodgrains reaching the poor can be briefly accounted to: 1.Improper and inefficient inspection of quantity and quality at the godowns leading to birth of malpractices like diversion of foodgrains by the shop owners, local mafia etc. 2.Lack of communication between the FPS owners and the Centre resulting in unavailability (SHORTAGE) or excess availability( WASTAGE) of foodgrains in the godowns. 3.Improper storage and preservation conditions leading to wastage of large amount of foodgrains 4.Inaccesible locations of FPS as well as constraint in the time for which foodgrains are available during a month. 5.Hoarding of foodgrains meant for BPL families by the shop owners.
  5. 5. GODOWN A 1. Quantity of commodity 2.Time and detail of subsequent godowns 3.Details of vehicle and driver GODOWN B 1. Quantity received 2. Time and date of receiving 3. Confirmation of receiving CENTRAL SERVER INSPECTOR A INSPECTOR B INFORMATION CONVEYED VIA SMS • Valid for any transportation from one storage place to other • Valid for all godowns between the State godowns to the FPSs. ADVANTAGES 1. Use of a central system and technology brings transparency in supply of . 2. Reasons for delay in arrival/departure of goods can be monitored and examined and controlled 3. Theft of products during transportation can be eradicated. 4. A central control by the food department of the respective states enables proper control on the delivery system 5. Penalties for any delay in transportation would enable timely distribution and availability. DISADVANTAGE 1. Implementation of this system will incur an additional cost to the government. PROPOSED DELIVERY SYSTEM CONSIGNMENT TRACKING BY GPS A PDS for a PDS !!! Foodgrains unfit for further delivery must be reported and removed from the bulk
  6. 6. VIGILANCE AND MONITORING OF PDS Three principal instruments built in to ensure transparency in the distribution of food grains and other items, mostly sugar and kerosene oil under TPDS include; a) norms prescribed for the display of important FPS-specific details visibly in the FPSs; b) directions for involving Panchayati Raj Institutions in the delivery and monitoring of PDS items; and c) instruction to adopt measures for giving wide publicity to the Citizen’s Charter which lays down the rights and privileges of the consumer. Guidelines state that the monitoring system should build in inspection schedules for District and Taluka level officials, provision of check lists for pointed inspections and room for immediate remedial actions. It is envisaged that the ground level monitoring of PDS could be effected through. a) inspections of FPSs by district and taluka level officials; b) involvement of PRIs in the identification of poor and in the functioning of FPS and other transparency measures to be taken by authorities. c) Vigilance squad should be strengthened to detect corruption, which is an added expenditure for tax payers. d) Personnel-incharge of the department should be chosen locally VIGILANCE MONITORING 0 5 10 15 20 25 MP UP Bihar Maha No. of selected FPS Avg No. of Inspections per FPS per year “Proper vigilance is mandatory for efficient functioning.”
  7. 7. • Leakages and diversions raised the delivery cost in the sense that for every kg of food grains delivered to the poor, the GOI had to issue 2.4 kg of subsidized grains from the Central Pool. In addition to minimizing leakages and diversions of subsidized grains through reform measures suggested above, there is need for bringing down the Economic Cost of grains through rationalization of the cost structure of handling food grains (procurement, storage, transport, etc.) through public agencies. DIVERSION OF FOODGRAINS 0 200400600 UP MP Bihar Maharashtra Off take by genuine poor Off take by APL holding BPL cards In Kg per household per annum • Though at the all-India level, this diversion constitutes around 21.45% of the subsidized grains distribution, some States like, TamilNadu, Karnataka, Punjab, Orissa, Andhra Pradesh, Himachal Pradesh and Kerala distribute a large proportion of subsidized grains to APL households. • Some States have deliberately included a larger proportion of the households, while the smaller values of IE (and hence small levels of diversion through this mode) could be identification errors due to imperfect information and improper methodology of BPL Census. 0 5 10 15 20 25 30 35 Exclusion error Inclusion error % of households “Reduce diversion by proper classification.”
  8. 8. All figures in lacs 0 20 40 60 80 100 BPL Households BPL ration cards issued Fictitious ration cards 0 20 40 60 80 100 UP MP BIHAR MAHA Total leakage leakage through ghost card The discrepancy in the above graphs can be attributed to the following reasons 1. False classification of BLP households leading to exclusion of BPL families and wrong inclusion of APL families in the offtake of foodgrains under the PDS scheme 2. Issue of ghost ration cards which includes the proportion of BPL cards behind held by persons or agencies other than original owners(shadow ownership) Orissa incurred 45 crores of loss due to 1 lakh ghost BPL cards each card having an investment of Rs.4500 annually detected in year 2011 A recent scam of 40 lakh bogus ration cards in Karnataka state. Maharashtra had approximately 1.24 lakhs of total bogus BPL ration cards amounting to a sum of Rs.55 crores according to an expenditure of 4500 per ration card in the year 2011 LEAKAGES THROUGH GHOST RATION CARDS Some facts-
  9. 9. BPL person A Local Fair Price Shop 1.Swipes card 2.Fingerprint verification Display of quantity available on a monitor Entry and submission of quantity to be purchased Central Server Two receipts printed for the FPS records and aonee for the consumer Computerized Ration cards issued Equipped with credit card type machines and active GPRS system The mechanism proposed above will bring forth the following changes and benefits: CHANGES BENEFITS 1.A central control at district level Vigilance over distribution 2.Scanning of fingerprints and digitized ration cards Eradicate ghost BPL card and shadow ownership problems 3.Annual updation of ration cards Eradicate inclusion and exclusion errors 4.Conveyance of information from district to state and state to Centre Great help while preparing budget PROPOSED DISTRIBUTION SYSTEM MECHANISM
  10. 10. OTHER MEASURES Increase in number of storage warehouses to ease transportation of consignments and improving storage conditions to combat rottening of foodgrains For better transportation, government can join hands with private sector to share the load. This would ensure delivery in stipulated time Removal of private shopkeepers and handing over the responsibility of managing the FPS to women’s self help group organisation this would lead to empowerment of women Ensuring strict law and order against the ones found corrupt. As of today out of the corrupts only few have been punished and not many stringent actions have been taken besides cancellation of license. Policies can be reformed where foodgrains are provided per person basis and not per family basis. This would ensure proper distribution according to family size 0 1 2 3 4 5 6 7 8 9 Avg no. of persons per family Kgs of foodgrain per person
  11. 11. BRINGING IN INNOVATION AND TECHNOLOGY CALLS FOR ADDITIONAL INVESTMENT 1.Implementation of a central system at the district level would call for additional investment in terms of provision of computers and other systems. 2.Issuing of digitized ration cards would incur an additional cost to the government. 3.Provision of proper storage and preservation of food grains would require an additional investment on the construction of warehouses. 1.Private involvement in the mechanisms would help to reduce the cost to the government and give better and more efficient results. PROBLEMS EVERY PROBLEM HAS A SOLUTION 2.This is a one time investment with very less recurring cost to the government and it will yield benefits in terms of lesser wastage , lesser diversion of commodities as well as proper distribution of food grains under the PDS .
  12. 12. REFERENCES • Report on “Trends in diversion on PDS “ by Reetika Khera • “Performance Evaluation Report” -Planning Commission 2005 • Data collected from the website of Department of Food and Public Distribution - • “Targeting and Efficiency in the Public Distribution System” – a report by Bhaskar Dutta • The National Food Security Bill • Standing committee on Food Consumer affairs and public distribution-8th lok sabha report • Times of India and Indian Express articles on the leaks in PDS • Chattisgarh and Kerala model of PDS system • Kurukshetra –A journal on rural development Volume 60 March 2012