Kerala ration card

Chapter /I TPDS in Kerala- Structure & Policies
CHAPTER-II
FUNCTIONING OF THE TARGETED PUBLIC DISTRIBUTION SYSTEM IN
KERALA - STRUCTURE & POLICIES
2.1 Introduction
The PDS in Kerala operates through a wide network of 14,195 authorized retail
outlets for the distribution of ration commodities. Out of the total retail outlets in
the State, 13600 are owned by licensed private agencies and 595 by
cooperatives.
The retail shops are served by 333 wholesale shops, of which 298 are owned
by licensed private agencies and 35 by co-operatives. These wholesale shops,
in turn receive the ration supplies from 22 sub depots of the Fel located across
the State. On an average, one retail outlet caters to the needs of the 500
cardholders. A macro profile of the PDS in Kerala from the early 1990s is given
in Table 2.1.
Table 2.1: PDS in Kerala: A macro profile
Period Number Ration FCI Whole Whole Retail- Retail RCs
of ration Permits Depots Sale Sale Co-op Others per
cards Coop Others retail
shop
1990-91 5052606 9016 39 50 246 1193 11814 428
1991-92 5037688 9041 39 49 249 1174 11876 424
1992-93 5336816 9882 39 49 249 1161 11996 445
1993-94 5474997 11229 39 49 249 1134 12191 449
1994-95 5570533 11950 39 49 259 1095 12780 436
1995-96 5654075 13173 39 51 263 1080 13099 432
1996-97 5718379 13552 39 51 263 1080 1085 436
1997-98 5944701 15015 20 42 317 1053 13202 450
1998-99 6110822 17250 20 41 315 1051 13212 463
1999-00 6162484 17663 20 41 370 1037 13250 465
2000-01 6262074 17528 23 42 303 966 13266 472
2001-02 6389241 17338 23 38 297 958 13212 484
2002-03 6260966 16183 23 42 259 828 13249 473
2003-04 6446957 15878 22 38 269 697 13441 480
2004-05 6611296 15215 22 37 288 634 13513 489
2005-06 6777075 14187 21 35 298 595 13600 498
Source: Economic Review; Government of Kerala, vanous Issues
56
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2.2 Acts and rules governing the TPDS in Kerala
Statutory rationing was brought into force in the whole of Kerala State in the
year 1965. The operation of the Rationing System in the State was then
brought under the Statutory Order called "Kerala Rationing Order (KRO),
1966" promulgated by the State Government under the provisions of the
Essential Commodities Act (ECA), read with the order of the GOI, contained
in GSR, 906 dated 9
th
June, 1966, of the Ministry of Food, Agriculture,
Community Development & Co-operation (Department of Food).
The procedural aspects of the working of the PDS in Kerala has been dealt
with in the KRO, 1966 and the subsequent amendments made in the same
from time to time. The important provisions of the Order dealing with issue
of Ration Cards to families, appointment of Authorized Wholesale Dealers
(AWDs) & Authorized Retail Dealers (ARDs), imposing of punishment for
irregularities committed by the dealers, etc streamlined in the KRO, 196.6
are given in Appendix 2.1 .
GOI notified the new Public Distribution (Control) Order-2001 (Order No.GSR
630 dated 31.08.2001) which is applicable to all States and union territories
w.e.f. 1st September 2001. The PDS Control Order has been issued by using
the powers conferred by Section 3 of the ECA *. The PDS contains provisions
for identification of families BPL; issue of ration cards; making it binding on the
Central Government to make available foodgrains to State governments for
distribution under PDS at specified scales and prices; ensuring proper
distribution of foodgrains through FPS; regulating the sale and distribution of
essential commodities and strict monitoring by State governments of the
distribution process and furnishing of the utilisation certificate within a period
of two months. The Order also provides for
punishment for violation of its provisions under ECA ,19551
. The
Guidelines which have been modified from time to time has provided a
broad framework on the following issues:
1 The Essential Commodities Act was passed in 1955 with a view to give power to the Central
Government to ensure the supply of essential commodities in fair prices. Thp.-Order allows the
government to intervene in the field of production, supply and distribution of essential commodities
57

Chapter /I TPDS in Kera/a- Structure & Policies
Identification of BPL & Antyodaya families: The task of identifying the BPL and
Antyodaya families rests with the respective State Governments with the
further responsibility to review the list of these families. The Gram Sabha has
the power to finalize the list of beneficiaries belonging to BPL and Antyodaya
categories. Where there are no Gram Sabhas, the local representative bodies
are to finalize the list of beneficiaries belonging to BPL and Antyodaya
categories within their respective jurisdiction.
Ration Cards: State Governments are to ensure that no eligible applicant is
denied a ration card under the PDS. The ration card holders are entitled to
draw essential commodities from a fair price shop on weekly basis. State
Governments are to issue distinctive ration cards to APL, BPL and Antyodaya
families. The deSignated authority has to issue a ration card within one month
of the date of receipt of the application after necessary checks and
verification. State Governments are to specify a timeframe for making
additions or alterations in the ration card. In case this time limit cannot be
adhered to, the reasons thereof are to be intimated to the applicant in writing.
State Governments are required to conduct periodical checking of ration cards
to weed out ineligible and bogus ration cards and bogus units in ration cards.
A ration card is to remain valid for a period of five years2 from the date of its
issue unless it is suspended or cancelled earlier. A ration card is to be issued
afresh or renewed after fresh verification of antecedents and such other
checks as may be prescribed by the State Governments in this regard. The
elimination of bogus ration cards as well as bogus units in the ration cards
should be a continuous exercise by the State Governments to check diversion
of essential commodities.
Scale of Issue and Issue Price: The Central Government has to make
available to the State Governments, foodgrains for distribution under the PDS
to various categories of beneficiaries at such scales and prices, as may be
specified from time to time. The State Governments are required to ensure
that the allocations made by the Central Government for distribution under the
Public Distribution System are not diverted.
~ Substituted for" a specific period" by GSA 392 (E), dated 29.06.2004
58

Chapter /I TPDS in Kera/a- Structure & Policies
Distribution of foodgrains: The FCI or any other agency designated for the
purpose by the Central Government has to ensure physical delivery of
foodgrains of fair average quality to State Governments for distribution under
the PDS, as per the allocations made by the Central Government. State
Governments are to make arrangements for taking delivery of essential
commodities issued by the Central Government by their deSignated agencies
or nominees from the FCI depots/ godowns and ensure further delivery to the
fair price shop within the first week of the month for which allocation is made.
The State Governments should also ensure that stocks of essential
commodities under the PDS, as issued from the FCI godowns, are not
replaced by stocks of inferior quality during storage, transit or any other stage
till delivery to the ration card holder. On getting allocation of foodgrains from
the Central Government, the State Government are required to issue district-
wise allocation orders authorizing their agencies to draw foodgrains from the
FCI within 10 days or any other body nominated for monitoring the functioning
of the FPSs.
3
Licensing: The licenses to the fair price shop owners are to be issued under
the said order by the ' deSignated authority' appointed by the State
Government and the authority should lay down the duties and responsibilities
of the fair price shop owner. The responsibilities and duties of fair price shop
owners include, sale of essential commodities as per the entitlement of ration
card holders at the retail issiJe prices fixed by the concerned State
Government under the PDS; display of information on a notice at a prominent
place in the shop on daily basis regarding (a) list of BPL and Antodaya
benefiCiaries, (b) entitlement of essential commodities, (c) scale of issue, (d)
retail issue prices, (e) timings of opening and closing of the fair price shop, (f)
stock of essential commodities received during the month, (g) opening and
closing stock of essential commodities and (h) the authority for redressal of
grievances/ lodging complaints with respect to quality and quantity of essential
commodities under the PDS;
3 Inserted by GSR 392 (E) dated 29.06.2004
59

The ration shops are to maintain the records of ration card holders (APL, BPL and
Antyodaya), stock register, issue or sale register; furnish copies of specified
documents, namely, ration card register, stock register, sale register to the office
of the Gram Panchayat or Nagar Palika or Vigilance Committee or any other body
authorized by State Governments for the purpose, display samples of foodgrains
being supplied through the fair price shop; accounts of the actual distribution of
essential commodities and the balance stock at the end of the month to the
designated authority of the concerned State Government with a copy to the Gram
Panchayat; opening and closing of the fair price shop as per the prescribed
timings displayed on the notice board.
Monitoring: State Governments are to ensure a proper system of monitoring of
FPS and ensure regular inspections of fair price shops. Meetings of the Vigilance
Committees on the PDS at the State, District, Block and FPS level are to be held
on a regular basis~·State Governm_ents ?re required to ensure a periodic system of
reporting and the complete information in the prescribed form. The future
allocation of foodgrains to States shall be linked to the receipt of regular reports
from the respective States and furnishing of utilization certificates by them within
a period of two months from the month for which allocation is made.
Appellate Authority: The State Governments have to appoint an officer not below
the rank of Additional District Magistrate of a District as "Appellate Authority,,4 for
exercising the powers conferred upon and discharging the functions aSSigned to
him under this Order.
2.3 Organization structure of TPDS in Kerala.
The Organizational set-up of the PDS is a mixture of Union and State tasks and
responsibilities. The GOI through FCI ensures the physical delivery of the
foodgrains to the State Governments as per the allocations made by the Central
Government. State Governments in turn has to make arrangements
4 4 Inserted by GSR 392 (E) dated 29.06.2004
60

for taking delivery of essential commodities issued by the Central Government by
their designated agencies or nominees from the FCI depots/ godowns and ensure
further delivery to the fair price shops.
The procurement of the foodgrains is decided by the GOI in consultation with the
States as to how much foodgrains should be procured in each State. It also
decides on the procurement prices, based on the advice from the Commission for
Agricultural Costs and Prices (CACP), which calculates the cost of production and
estimates a reasonable, remunerative price for the farmers. While in principle,
these prices are the same for each State, there are different prices for different
qualities. In contrast to the Centrally administered prices, the mode of
procurement is decided by the State Governments. Procurement may take place
through the open market purchases, by market purchases in which the
government exercises the right of preemption, by a levy on producers, traders or
millers, by agents under a system of monopoly procurement etc.
The FCI has many large warehouses in different parts of the country where
foodgrains are stored after procurement. The food is transported from one FCI
ware house to another on the basis of the distribution decisions made by the GOI
as per the allocation decisions based on the number of households along with the
total number of households. Apart from allocation to the States, the GOI also fixes
the issue price. As far as the distribution within the State is concerned, the State
Government decides how the allocated food is to be distributed to the States. Not
all foodgrains procured is made available for distribution as the government also
maintains a buffer stock of foodgrains that is drawn upon only in times of severe
scarcity. Apart from the TPDS, there are also several other distribution
programmes like "Food for Work" Programme, Rural Employment Programmes
etc.
The diagram indicating the actual allocation and lifting of foodgrains in Kerala
under the TPDS is also shown in Figure 2.1. Under the rationing system, the GOI
allocates rice, wheat, sugar and kerosene to the State Government every
61

Chapter II TPDS in Kerala- Structure & Policies
FCIDEPOTS
AWD
AWD LIFTING
ALLOC- PROCESS
ATION
PROCESS
AUTHORISED
WHOLESALE DEALER
ARD
ALLOC-
ATION
PROCESS
T ALUK SUPPLY OFFICE
DISTRICT SUPPLY
OFFICE
DIRECTORATE OF CIVIL
SUPPLIES
GOVT. OF INDIA
ARD
LIFTING
PROCESSS
AUTHORISED
RETAIL DEALER
RATION CARD
HOLDERS - APL,
BPL,AAY &
ANNAPURNA
Fig 2.1 Working of the PDS in Kerala - allocation, lifting and distribution process
62

month. The rice and wheat so allocated by the GOI are stored in the various
FCI godowns in the state. The FCI has 21 sub-depots in 13 districts and they
distribute rice and wheat directly to the wholesale distributors who supplies
the stock lifted to retail depot in accordance with the authority list issued by
the Taluk/ City Rationing Officers. The directions regarding the quantum of
grains to be allotted from the central pool and the issue prices are given by
GOL The State Government (through Kerala State Civil Supplies Department)
bring these orders into effect by passing the necessary directions which is
then carried through its administrative offices at the district level (District
Supply Office) and Taluk level (Taluk Supply Office). The flow of directions
and orders is shown by the arrow from the GOI to the State, district and taluk
offices and further to the AWDs and the ARDs. The actual distribution process
in accordance with the above directions is shown by the arrow from the FCI
depots to AWDS, ARDs and to the ultimate cardholders.
The Authorized Wholesale Dealers (AWDs) and Authorized Retail
Dealers (ARDs)
The Authorized Wholesale Dealers (AWDs) are appointed by the District
Collectors while the Authorised Retail Dealers (ARDs) are appointed by the
District Supply Officers. The ARDs distribute the rationed articles to the
cardholders on production of the ration cards issued by the Taluk Supply
officers/ City Rationing Officers (TSOs/ CROs) at the scale and price fixed by
the Government from time to time. The number of ARDs, AWDs belonging to
different categories are shown in Table 2.2.
63

Table 2.2 District-wise distribution of FCI Depots, AWDs and ARDs
Authorised Wholesale Dealers Authorised Retail Dealers
FCI
KSCSC
Co-op.
Private Total
Co-op.
Private TotalDist Depots Societies Societies
TVM 2 1 1 30 32 52 1823 1875
KLM 3 3 2 30 35 30 1393 1423
PTA 0 0 2 23 25 23 801 824
ALP 2 1 0 32 33 69 1173 1242
KTM 1 0 0 34 34 8 982 990
10K 1 1 0 16 17 6 679 685
EKM 2 2 1 33 36 32 1314 1346
TSR 2 1 0 23 24 30 1174 1204
PKO 1 0 13 6 19 2 895 897
MLP 1 0 7 18 25 101 1105 1206
KKO 2 1 2 14 17 28 940 968
WYO 1 0 0 6 6 2 293 295
KNR 2 0 1 21 22 47 818 865
KZO 1 0 5 6 11 78 313 391
TOTAL 21 10 34 292 336 508 13703 14211
Source: Economic Review, Government of Kerala
2.4 Organizational structure of the Civil Supplies Department.
The Civil Supplies Department, Government of Kerala discharges the important
responsibilities of public distribution, enforcement of market disCipline and
promotion of consumer awareness and protection of their interest. The PDS
came into existence in the State with effect from 01.07.1965 with the
implementation of KRO, 1966.
The PDS in Kerala is enforced by the Department of Civil Supplies which is
under the exclusive charge of the Commissioner of Civil Supplies, the Principal
Head of the Department and Secretary to Government, Food, Civil Supplies and
Consumer Affairs Department. He exercises the statutory functions entrusted
with him under the Kerala Rationing Order 1966, PDS (Control) Order, 2001 and
other Control Orders issued by the Government of Kerala under the Essential
Commodities Act. The organization structure of the Civil Supplies Department is
depicted in Figure 2.2.
64

Under the Commissioner of Civil Supplies, there is the Director of Civil
Supplies who is the Chief Executive Head of the Department. The Director of
Civil Supplies is the functional head of the Department. He is assisted by the
Controller of Rationing, Chief Accounts Officer, Finance Officer, Law Officer,
Vigilance Officer and three Assistant Secretaries. The Controller of Rationing
has state-wide jurisdiction on matters of rationing and a Controller of
Rationing (Enforcement) has the same status to implement the rules and
policies. The Assistant Secretaries and staff assist the Director on
administrative matters.· The Chief Accounts Officer is placed at the
Headquarters to look after the accounts. Besides the above, there are four
Deputy Controllers of Rationing with zonal jurisdictions whose functions
mainly include the inspection of subordinate offices and to conduct enquiries
on complaints against the dealers and members of the staff etc. At the head
Quarters, under the supervision of a Statistical Officer, statistical data required
for the effective functioning of the Department is collected and maintained.
In each district, there is a District Supply Officer who is the head of the Civil
Supplies administration of each Revenue District. The concerned District
Collector also supervises the work of the District Supply Officer (DSO). Under
the District Supply Officer, there is a Taluk Supply Officer (TSO) in each taluk,
who is assisted by Rationing Inspectors (Rls). The three city Corporations of
Thiruvananthapuram, Ernakulam and Kozhikode are further divided into two
zones each, and a City Rationing Officer (CRO) is put in charge of each zone.
A Rationing Inspector has jurisdiction over a Firka where 30 to 40 retail FPSs
are functioning. His duties are mainly to sanction rationed articles indented by
the ration dealers and to check and supervise the functioning of each outlet.
All the ration shops are being inspected by the Officers frequently to guard
against malpractice. A Vigilance Officer having state-wide jurisdiction also
works under the direct supervision of the Director of Civil Supplies.
65

COMMISSIOlj""ER OF CIVIL SUPPLIES
DIRECTOR OF CIVIL SUPPLIES
+
1
CAO LO CONTROLLER ASI AS III
OF RATIONING
CONTROLLER SO AS II DEPUTY
OF RATIONING
.-
CONTROLLER
.. OF RATIONING
1"'"""'- 1"'"""'- 1"'"""'- r-'- 1"'"""'- 1"'"""'- 1"'""" ...... r- ...... r-'- , ...... 1"'"""'- r-~ r- .....
DSO- K A P K I E T P M K W K K
TVM L L T T D K S K P K Y N S
M P
-
A
-
M
-
K M
-
R
-
D M
-
D
-
D R
-
D
' -- ' -- '--- '--- L...-
1 1 1 1 111 11· 1 1 11
EJrnrnrnrnrnEJ i rnrnrnrnrnrn
Fig 2.2: Organisation structure of the Kerala Civil Supplies Department
66

Chapter II TPDS in Keraia- Structure & Policies
2.5 Functional divisions of the Civil Supply Department
The Directorate of Civil Supplies is mainly entrusted with the monitoring of
PDS in the State. The major activities at the Directorate include the allocation
of commodities to the districts, issuance of all the rules and orders related to
the allocation and lifting of the commodities, fixatJon of parameters related to
the PDS transactions i.e. fixation of commodity prices, allotment of ration
commodities for each ration card etc, regular monitoring of inspections on the
wholesale and retail depots, monitoring of the revision appeals filed by the
AWDs and the ARDs and the consolidation of data received from the districts
and the generation of State level Report. The specific functions carried out by
the concerned departments in the distribution of the foodgrains under the
TPDS is given in Appendix 2.2.
2.6 The Post-TPDS changes in Kerala
The introduction of the TPDS in the State brought about some major policy
changes in the functioning of the PDS. The present section is an in-depth
study of the changes introduced after the introduction of TPDS in the State.
The background of operationalisation of the Scheme in the State in terms of
identification of the targeted beneficiaries and the procedure adopted thereof
is explained and critically evaluated. The two major changes under the new
system are the revised price fixation and entitlements under the PDS. The
inter-temporal changes in this regard are studied along with its effect on the
additional subsidy incurred by the State Government.
The PDS has been one of the key elements of the food security system in
Kerala. The shift to the TPDS, a major policy shift by Government of India was
necessitated by a number of reasons - the improvement in the overall
availability of food grains and cereals, the existing PDS seen to be biased in
favour of certain States and urban areas, the PDS in its present form seen not
to be particularly effective in providing subsidized food grains to the poorer
groups, the need for control of food subsidy by targeting it to the poor
consumers etc. The Wor:king Group on National Policy on the PDS (June
67

1996), finally took a decision to target the benefits of the PDS towards the
poor and the TPDS was introduced throughout the country in June 1997.
Thus, with a view to streamlining the PDS with its focus on the poor,
Government of India decided to issue 10 Kgs of rice per month per family for
all the BPL families at 50 percent of the Economic Cost. The subsidized food
grains were to be allotted to the States in accordance with the estimated poor
in each State as per the estimates prepared by the Planning Commission. The
identification of the beneficiary families were to be done by the respective
state governments. The Planning Commission estimated the total number of
poor families in the State as 15.54 lakh households covering 25.43 percent of
the population. However, the State Government feeling that a large number of
BPL families would be excluded from the benefits of the Scheme, decided to
extend the benefits of the Scheme to 42 percent of the total households
5
• The
subsidy of Rs. 11 - that was provided to all the cardholders prior to the
introduction of the TPDS was continued for the APL cardholders. The TPDS
was introduced in the State from 1
st
June 1997.
2.6.1 Identification of targeted beneficiaries
The strategy of the TPDS was to direct the food subsidies through the
identified poor households, termed as BPL households and to wean away the
remaining households from the ambit of subsidy. The Kerala Government
continued its universal coverage of the PDS, but with a dual price system.
Under the new System, 20.19 lakh households were identified as below
poverty line and provided BPL ration cards. A detailed Guidelines was issued
by the Food and Civil Supplies Department, Government of Kerala for the
identification of the targeted households and the implementation of the TPDS
in the State. The actual methodology adopted for the identification of BPL
households in the rural and urban areas along with the involved agency and
indicators considered are given in Appendix 2.3
5 Government of Kerala vide its G.O.M.S.No. 12f97/F &CS dated 25
th
April 1997
6 Circular No 5709/D2/96/F.C.S.S dated 25
th
April 1997 issued by the Food and Civil Supplies
Department, Kerala
68

For the identification of the BPL households, the State Government collected
the existing BPL household list as identified by the Integrated Rural
Development Survey (lRDP) for the rural households and the Urban Poverty
Eradication Scheme (UPES) for the urban areas of the State. As per the
estimates of Government of Kerala based on IRDP estimates, around 40
percent of the households in the State were below poverty line and hence
needed to be provided the benefits of the subsidized Scheme.
Given that there were complaints against the exclusion of many poor
households and inclusion of many non-poor households in the existing lists,
the lists were entrusted to the Grama Panchayats and Municipalities/
Municipal Corporations in the rural and urban areas respectively for the
purpose of validation and removing the existing irregularities with regard to
the above. The TSOs and the CTOs were entrusted with the responsibilities
of collecting the updated lists of the BPL households from these bodies and
submitting the same to the Civil Supplies Department.
The rural and the urban local bodies were given a month's time, beginning from
3
rd
to 9
th
May 1997 to identify the final list of beneficiaries under the Scheme.
The lists were to be modified by the local bodies by including genuinely poor
households and excluding the non-poor households. However each of the Grama
Panchayatl Municipality/ Municipal Corporation was to confine the number of
BPL households to a maximum of 40 percent of the total number of household in
the area under their jurisdiction. All the households who were a part of the BPL
surveys prior to 1991, the earlier SCI ST beneficiaries of the IRDP/ UPES and
hence excluded in the present list, the eligible fisherman etc were also to be
included subject to the maximum ceiling of 40 percent. The local bodies were
however directed to finalize the lists as per the actual situation which meant that
even if the identified BPL households in any of these areas were below 40
percent of total households, the same was to be finalized. The Rls were directed
to supply the declaration forms to all the households in the area of their
jurisdiction which then had to be duly filled by the households and then submitted
to -the TSO/ CRO. A list of the ration card holders were also to be submitted by
the retail ration dealers.
69

The beneficiary lists along with the requirement of rice were to be submitted
to the District Collectors. The District Collector by the TSO/ CROs who in turn
was entrusted to provide the total number of identified poor households in the
whole district along with the requirement of rice to the Civil Supplies
Department.
2.6.2 An evaluation of the procedure adopted for the identification of
beneficiaries under TPDS.
The transition from the universal system of rationing to one where the benefits
were to be distributed to only the targeted segment of the population
necessitated the transparent identification of beneficiaries. This in turn
required an elaborate framework, objective criteria of identification of targeted
beneficiaries and an agency which could execute the same in a just manner.
The following conclu?ipns emerge after the evaluation of the procedure
adopted by the State Government to identify the targeted beneficiaries:
7
First, there were already large scale complaints of exclusion of poor and
inclusion of non-poor in the existing Iists
8
. For a proper identification of the
genuine beneficiaries and to remove the anomalies that were existing, an
extensive survey was required The local bodies were given a month's time for
the finalization of the lists, which was certainly not adequate for objective
evaluation of the economic conditions of the households in any given area.
Second, given that no objective criteria was given to include a given
household under the BPL category, the local bodies could exercise
considerable discretion in the selection of beneficiaries which eventually
resulted in considerable personal bias/ prejudices governing the final
outcome. As a result, the local officials in most areas were free to include
people paying scant regard to their economic conditions.
7 The discussions with the officials of the local government, panchayats and municipal
members, have helped get a clearer picture about the actual identification of the targeted
beneficiaries.
-
8 IRDP Survey Lists for the rural areas and list compiled by the Urban Poverty Alleviation Cell
for the urban areas.
70

Third, with no objective criteria of identifying the poor households and the
autonomy of inclusion of BPL households subject to a ceiling of 40 percent
(proportion of BPL households to total households in each area), many non-
poor households seems to have been included in the final lists submitted by
the local bodies.
Finally, the IRDP Survey was conducted in 1990-91 and the criterion made
use of for the inclusion of households in the poor category was solely based
on income. The surveys that revolve around the concept of income is very
difficult to determine particul~Hly in a relatively educated society where people
know that lower the income, better would be their chance of getting assistance
from the government. The officials may fix the incomes in such a manner so
as to favour/ disfavour people in response to local pressures.
2.6.3 Entitlements under TPDS.
Under the Centrally fixed entitlement norms of TPDS, each BPL household
was entitled to 10 Kg of cereals per month at the subsidized BPL prices. The
allocation was increased to 20 Kg per family with effect from April 2000 and
further raised to 25Kg. Since April 2002, this amount was raised to 35 Kgs per
family for all the BPL, APL and AA Y households.
In Kerala, the entitlements were slightly different. Though the State
Government continued to provide 10 Kg per BPL household at the time of
inception of TPDS, it aliso gave the BPL households the option of purchasing
the rest of their entitlements (fixed as per the consumer units prior to
introduction of the TPDS) at the higher APL prices (which itself was
subsidized by one rupee). Thus the existing entitlement was ensured initially
to these households albeit at higher prices. This continued till the entitlement
was increased by the Central Government in the later years. As regards the
APL households, the entitlement 'per consumer unit' system remained till
2002, after which the APL households were distributed the centrally fixed
entitlement of 35 Kg per month.
9
9 The APL rice was distributed as APL (Normal) and APL (Subsidy) during the initial years. A
given household was provided a certain quantum of rice at the subsidized price and the rest
at the normal price. The details of the exact quantum of rice allowed as APL (Normal) and
APL (Subsidy) were however not made available from the State Civil Supplies Department.
71

The Centrally fixed norms on entitlement for the BPL households were also
applicable in Kerala till mid 2001, i.e. till additional subsidy was provided by the
State Government. The withdrawal of additional subsidy and allotment of the
given rice from the Centre to all the BPL households identified by the State meant
a further reduction in the entitlement for a given BPL household. From April 2002,
while the Centrally fixed entitlement per BPL household is at 35 Kgs per month,
the entitlement for a BPL household in Kerala is just around 25 Kgs.
2.6.4 Price fixation and subsidy by State Government post-TPDS
The principle governing the determination of prices at the time of introduction of
TPDS was to keep the BPL CIP at a low level and the APL CIP at a higher level
and to gradually eliminate the subsidy on APL households by raising the APL
price to the level of EC.
Given that 20.19 lakh households were identified as BPL households by the State
Government, the subsidized food grains were to be allotted to the additional 4.85
households also at the subsidized BPL price, which necessitated additional
subsidy by the State Government. This was because the allotment of foodgrains
from the Centre was to be solely based on the poverty estimates by the Planning
Commission and the subsidy for all the households identified by the State
Government in excess of the GOI's estimates were to be borne by the State
Government themselves.
At the inception of TPDS in 1997, each BPL cardholder in the State was provided
10 Kg of rice per family (as per the Central Government norm) at a subsidized
price of Rs. 3.90/ Kg. These households also could meet their additional
requirements of rice at a price of Rs. 8.60 which was inclusive of 'one rupee
subsidy' by the State Government.
The addition a! subsidy was incurred by the State Government under the
following two heads.
72

1. In extending the benefits of the TPDS to the additional BPL households
identified by the State Government.
2. In making rice available to the APL households at a reduced price.
The food grains, rice and wheat are issued by the central government at
uniform CIPs to states and union territories for distribution under TPDS. The
CIP for PDS are fixed taking into account the minimum support prices,
statutory charges, taxes payable on the support prices and the interest
charges. On the other hand, the retail issue prices are fixed by the State
Government taking into account the margins for wholesalers/ retailers,
transportation charges, levies, local taxes etc.
Infact, the additional subsidy of Rs. 1/ Kg existed from earlier times i.e. prior to
the introduction of the TPDS. Infact, when the issue prices were raised in
1992-93, the State Government provided an additional subsidy of Rs 4/Kg,
which was reduced to Rs. 2Ikg from 1994-95 and further to Rs. 1/Kg from
1996-970nwards
1O
• Following the introduction of TPDS in the State, the 'one
rupee subsidy' was continued for the APL households and the BPL
households, in excess of the allotted 10 Kgs. The extent of subsidization of the
APL and the BPL households by the State Government after the introduction
of TPDS is given in Table 2.3.
10 Revealed from the records of Civil Supplies Department and discussions with the Officials·
73

Table 2.3 Per unit Subsidy by State Government to APL households and
the Additional BPL households identified by the State Government.
Period APL BPL
households households·
1s June 1997 to April 1998 Rs.1/Kg NA
April 1998 to March 1999 Rs.1/Kg Rs.3.50/Kg
April 1999 to March 2000 Rs.1/Kg Rs.5.60/Kg
April 2000 to 11 m June 2000 Rs.1/Kg Rs.5.95/Kg
12
m
June 2000 to 26
m
July 2000 Rs.2IKg Rs.5.95/Kg
27
m
July 2000 to 131n
July 2001 Rs.1.90/Kg Rs .. 5.70/Kg
February 2006 till date (all BPL cardholders) NIL Rs.3.20/Kg
. .
Source: CIvil Supplies Department, Government of Kerala .
Note: The subsidy from June 1997 to July 2001 implies the expenditure incurred to provide the
subsidized grains to the additional number of BPL households identified by the State
Government. However, from 2006 onwards, all the identified BPL households are provided a
subsidy of Rs. 3.20/Kgs.
Table 2.4 Price fixation for APL Households
Heads 29.01.99 1.04 00 to 12.06.00 to 27.07.00 13.07.01
to 12.06.00 26.07.00 to onwards
01.04.00 13.07.01
CIP 905.00 1180.00 1180.00 1130.00 830.00
Sales Tax @ 1 % 9.05 11.80 11.80 11.30 8.30
Addl ST on ST 1.24
Subsidy by
-State Government 100.00' 100.00 200.00 190.00
Ex FCI Depot price 814.05 1091.80 991.80 951.30 839.54
Wholesale Margin 14.65 16.15 16.15 16.58 16.58
Administrative Cost 1.00 1.00 1.00 1.00 1.00
P.D.Account of CCS 4.00 1.00 1.00 1.00 1.00
Price Equalisation
Charge 7.18 7.92 7.92 7.99 9.75
Ex. Wholesale Price 840.88 1117.87 1017.87 977.87 867.87
Retail Margin 19.12 22.13 22.13 22.13 22.13
Retail Issue Price (01) 860 1140.00 1040 1000 890.00
Retail Issue Price (Kg) 8.60 11.40 10.40 10.00 8.90
. .
Source: CIvil Supplies Department, Government of Kerala .
74

Table 2.5 Price fixation for Additional BPL households (Jan-1999 to July
2001) and all BPL households (Feb 2006 onwards)
Heads 29.1.99 1.11.99 6.2.99 1.4.00 27.7.00 13ni01 1.2.06
to to to to to to till
31.10.99 5.2.99 31.3.00 26.7.00 13.7.01 1.2.06 date
CIP 1180.0 1130.0
905.00 905.00 700.00 0 0 565.00 565.00
Sales Tax @ 1 % 9.05 9.05 7.00 11.80 11.30 5.65 5.65
Addl STon ST - - - - - 0.85 0.85
Subsidy by State Govt.
for additional identified
- 3.20BPL households 457.53 560.55 353.50 595.90 570.65
Ex FCI Depot price 456.52 353.50 353.50 595.90 570.65 571.50 251.5
Wholesale Margin 11.71 15.04 12.14 16.01 16.44 16.44 16.44
Administrative Cost 1.00 1.00 1.00 1.00 1.00 1.00 1
P.D.Account of CCS - 1.00 - 1.00 1.00 1.00 1
Price Equalization
7.47 8.32 4.10 8.17 8.07Charge 15.73 8.07
Ex. Wholesale Price 484.96 378.01 374.96 618.01 597.26 598.01 278.01
Retail Margin 15.04 21.99 15.04 21.99 22.74 21.99 21.99
Retail Issue Price (QI) 500 400.00 390 640.00 620.00 620.00 300
Retail Issue Price (Kg) 5.00 4.00 3.90 6.40 6.20 6.20 3.00
. .
Source: CIVIl Supplies Department, Government of Kerala .
*From this period onwards, the given BPL allotment from the Centre is distributed to all the BPL
households. .
When the issue prices of rice allotted to the APL households were increased
from 9.0SI Kg in April 2000 to 11.80 in June 2000, the State Government
increased the quantum of State subsidy to the APL households from Rs. IIKg
to Rs. 21Kg. This was reduced to 1.90/Kg from July 2000. The subsidy to the
APL households was provided till July 2001. The price fixation of rice for the
APL and the BPL households by the State Government post the introduction
of TPDS at different time periods is shown in Tables 2.4 and 2.S
The quantum of food subsidy for the BPL households too varied with the issue
price of common grade variety of rice issued to the APL households. To bring
down the price of the APL 'common grade' rice to the levels at which BPL
households were issued the subsidized rice, the quantum of food subsidy
varied in the range of Rs 3.S3/Kg to Rs. S.71/Kg during the period January
1999 to July 2001.
From July 2001 onwards
11
, the State Government discontinued with the
provision of subsidy to the identified additional BPL households and from this
11 As per the price fixation register of the Civil Supplies Department, the additional subsidy of the
State Government was discontinued from 13
ttl
July 2001 and the final retail prices from then
onwards were seen to be fixed after fixing the necessary margins to the C!P. The Administrative
Reports of the Civil Supplies Department however mentions that the State
75

period onwards, the allotment received from the Centre is being distributed to all
the identified BPL households in the State. The discontinuation of subsidy in
2001 could be the result of the worsening of State Government finances and one
among the steps considered to prune up its high expenditure.
12
The State Government however started providing additional subsidy for all the
identified BPL households from February 2006 onwards. From this period
onwards, each BPL household in the State is distributed ration rice at the rate of
Rs. 3/Kg (prevalent CIP being Rs. 5.65/Kg i.e. an additional subsidy of Rs.
3.20/Kg). The month wise lifting of BPL and APL rice from the FCI by the AWDs
along with the monthly subsidy incurred by the State Government (and
transferred to FCI) is given in Appendix Tables 3.1 to 3.3. The annual subsidy
incurred by the State Government during the period 1998-99 till July 2001 and
further from Feb 2006 till December 2007 is given in Table 2.6. The quantum of
subsidy incurred by the State Government is based on the monthly lifting of the
grains by the wholesale dealers.
Table 2.6 Quantum of additional subsidy provided by the State
Government post introduction of TPDS.
Period Quantity lifted Total subsidy
(MT) Amount in Rs. Lakhs
APL BPL APL BPL TOTAL
1998-99 790413 40874 7904.13 1774.12 9678.25
1999-00 705710 47705 7057.10 2674.10 9731.20
2000-01 36232 56520 587.68 3295.89 3883.57
2001 April to June) - NA - 615.53 615.53
2005-06 (Feb 06 to March 06) - 37504 - 1200.13 1200.13
2006-07 - 275350 - 8811.18 8811.18
2007-08 (April to Dec 07) - 215594 - 6899.00 6899.00
..
Source: CIVil Supplies Department, Government of Kerala, FCI,
Thiruvananthapuram Regional Office
Note 1. The subsidy for BPL households from 1998-99 to 2001 is only for the additional
BPL households identified by the State Government.
2.The Subsidy to BPL households from 2005-06 onwards is for all the BPL
rationcardholders in the State.
subsidy for rice was discontinued from December 2001. However given the unavailability of
subsidy figures from July 2001 onwards, the former statement appears to be correct
12 Nair (2003). points out that the growth rate of total debt is the highest in the year 1999-2000,
when it increased by 28.5 percent. The White Paper on State Finances (2001) stated that if Kerala
government does not put a stop to the growth of the total debt, a stage would soon come when
Kerala would be unable to fulfili its debt servicing obligations and further that unless the State
Government arrests its excessive dependence on debt to finance its budgetary operations, the
question mark over the sustainability of its high social expenditure remains.
76

Chapter II TPDS in Kerala- Structure & Policies
With the rise in issue prices, the State Government also had to increase the
quantum of subsidy. Table 2.7 shows the actual subsidy incurred by the State
Government during the period 1998-99 till 2001-02
13
after which it was
discontinued. The additional subsidy for the BPL households increased from
Rs. 17.74 crores in 1998-99 to Rs. 26.74 crores in 1999-2000 to 32.95 crores
in 2000-01. The total quantum of subsidy for the BPL and the APL
households increased from Rs. 96.78 crores in 1998-99 to Rs. 97.31 crores in
1999-2000. However the total subsidy fell to Rs. 38.83 crores in 2000-01
owing to fall in the lifting of APL foodgrains.
The wide variation in the estimated figures 14 and the actual subsidy incurred
by the State Government is on account of the AWDs' (Authorised Wholesale
Dealers) not lifting as per the allotments. Given that the subsidy was incurred
to make rice available to the ultimate consumers at a reduced price, the
difference between the actual cost and the lower price at which it was made
available to the wholesale dealers, was transferred to the Fel, the subsidy
incurred thus being in direct relation with the amount of rice actually lifted by
the AWDs. The quantum of subsidy incurred for the BPL households
increased by 9 crores in 1998-99 and more than 6 crores in 2000-01, from
the immediate previous years. On the other hand, the subsidy on the APL
households decreased from 79 crores in 1998-99 to 70.5 crores in 1999-2000
and further drastically declined to 5.8 crores in 2000-01.The fall in the APL
subsidy was a result of drastic reduction in the lifting of the APL rice by the
wholesale dealers, which in turn was a direct consequence of the withdrawal
of the APL households from the PDS.
13 The figures for 1997-98 was not available in the Directorate of Civil Supplies & the State FCI
Office. However given that the issue prices were the same and the entitlement per BPL household
continued to be 10 Kgs per month as in the subsequent year, broadly the subsidy incurred should
also have been in the same range as in 1998-99
14 For e.g., Kannan (2000) estimates the additional State Government subsidy to the tune of Rs.
188 crores per annum. Suryananarayana (2001) estimates the additional subsidy for the poor
households at Rs. 48 crores at the time of inception of the TPDS.
77

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