Public Distribution System

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This project report is about pattern of allocation & offtakes of foodgrains in Chhattisgarh under Public Distribution System..

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Public Distribution System

  1. 1. AProjectOn―Pattern of Allocation & Off takes of Food grains Under PublicDistribution System in Chhattisgarh with special reference toRaipur city‖Submitted inPartial fulfillment of the requirement for the award of the degree ofMaster of ArtsSession 2012 – 2013Guided ByDr. VENU GOPALGovt. D.B.Girls‘ P.G. (Autonomous) CollegeSubmitted ByDIVYA JAINAtAFFILIATED TO:Pt. RAVISHANKAR SHUKLA UNIVERSITY, RAIPUR
  2. 2. CERTIFICATE OF APPROVALThis is to certify that the project work entitled ―Pattern of Allocation & Offtakes of Food grains Under Public Distribution System in Chhattisgarh withspecial reference to Raipur city” Submitted by “Divya Jain” in the partialfulfillment of the requirements for the award of the degree of Master of Arts,Session 2011 -13 at Govt.D.B.Girls P.G College affiliated to Pt. RavishankarShukla University, Raipur is a record of the students own work. This work has notbeen submitted to any other University or institute for the award of any degree ordiploma to the best of my knowledge.
  3. 3. CERTIFICATE OF EVALUATIONThis is to certify that the project work entitled‖ “Pattern of Allocation & Offtakes of Food grains Under Public Distribution System in Chhattisgarhwithspecial reference to Raipur city” Submitted by “Divya Jain” in the partialfulfillment of the requirements for the award of the degree of Master of Arts,Session 2011 -13 at Govt. D.B. Girls P.G College affiliated to Pt. RavishankarShukla University, Raipur is a record of the students own work. This work has notbeen submitted to any other University or institute for the award of any degree ordiploma to the best of my knowledge.Internal Examiner
  4. 4. DECLRATIONThis is certify that the project report entitled, “Pattern of Allocation &Off takes of Food grains Under Public Distribution System inChhattisgarh with reference to Raipur city” is done by me is anauthentic work carried out for the partial fulfillment of the requirementsfor the award of the degree of Master of Arts under the guidance ofDr Venu Gopal.Divya Jain
  5. 5. PREFACEQuiet frequently these days people talk of research, both in academic institution &outside, several studies are undertaken & accomplished every year, but in mostcases very little attention is paid to an important dimension related to research i.e.its practical importance. It may be noted in the context of planning & developmentthat the significance of research lays in its quality & not quantity.As far as this project report is concerned, the report consist of four chapters alongwith webliography, Bibliography & appendix well arranged in coherent manner.Chapter-1 consists of Introduction of PDS in context of India. Chapter-2 consistsof Chhattisgarh TPDS details. Chapter-3 contain Research Methodology, Chapter-4 Procurement, Allocation& off takes of food grains, Chapter-5 contain Dataanalysis & Interpretation.Chapter-6 contain Main conclusion & recommendationsI shall amply reward, if this project proves helpful in the development ofknowledge of the readers as well as improves the working of PDS.DIVYA JAINM.A. (4thSem)Govt. D.B. Girls P.G. College,Raipur
  6. 6. ACKNOWLEDEGEMENTThe exclusivity of this project cannot be claimed as a singular effort. I am offeringprofound gratitude, as without their generous assistance this work would neverhave completed. As it is impossible to include all the names, some of theprominent names are recognized at appropriate places.My project on ―Pattern of Allocation & off takes of Food grains Under PublicDistribution System in Chhattisgarh particularly in Raipur city‖ would be mydream for ever if I would not have got inspiration, encouragement & the blessingof parents, teachers & friends. How can it be possible to start up my report withoutsaying a word of thanks to all of them?By the grace of almighty it was very favorable on my part to work under theguidance of Dr. Venu Gopal in Govt. D.B.Girls‘ P.G.College.He guided me full ofmagnanimity on every difficult step to my work & thus I completed my report in avery efficient way & over come the hurdles.I would also like to pay my regards & thanks to my parents & my family members& my friends who supported me & gave their full cooperation & assistance in mystudy.Last but not least, I pay my sincere thanks to almighty God for enabling me to domy work with his abounding grace.
  7. 7. INDEXCHAPTER TITLE PG. NO.CHAPTER-1 INTRODUCTION OF PDS :INDIA 1-25CHAPTER-2 CHHATTISGARH PDS SYSTEM 26-50CHAPTER-3 RESEARCH METHODOLOGY 51-59CHAPTER-4 PROCUREMENT,ALLOCATION & OFFTAKES OFFOODGRAINS60-71CHAPTER-5 DATA ANALYSIS & INTERPRETATION 72-84CHAPTER-6 FINDINGS,LIMITATIONS,SUGGESTIONS &CONCLUSION85-87
  8. 8. TABLE OF CONTENTChpater Title Pg. No.Chapter 1 Public Distribution System : India 11.1 PDS : Introduction 21.2 Features of PDS 31.3 Main Constituents of PDS 31.4 PDS : Procurement 51.5 Administration & Organisation of PDS 101.6 Food Subsidy in India 20Chapter 2 Public Distribution System : Chhattisgarh 262.1 Introduction 292.2 Economic Profile of the Chhattisgarh 302.3 Fair Price Shop 352.4 Ration Card 362.5 PDS Beneficiaries Register 382.6 Eligibility for ration card material 392.7 Supply System of Ration Material 402.8 Consumer Price 412.9 Departmental Schemes 422.10 Core Public Distribution System 472.11 Achievements 51Chapter 3 Research Methodology 573.1 Problem Statement 583.2 Objective of Study 583.3 Purpose of Study 583.4 Methodology of Study 583.5 Research Methodology 583.6 Literature Survey 593.7 Collection of Data 593.8 Execution of Project 593.9 Limitation of Streamlining Results 59Chapter 4 Allocation & Off takes 604.1 Regular allocation of food grains in Chhattisgarh under PDS 644.2 Adhoc allocation of food grains in Chhattisgarh under PDS 664.3 Procurement of food grains 70Chapter 5 Data Analysis & Interpretation 72Chapter 6 Findings, Recommendations & Conclusion 85
  9. 9. List of Tables & ChartsChapter:-1 Public Distribution System : India Page No.Table 1.1 Price Situation from 1968 onwards 6Table 1.1 Price Situation from 1975 onwards 6Chart 1.3 Organizational Design of the PDS in India 12Chart 1.4 The Public Distribution System: A simple Model 13Table 1.5 Administrative Functional Framework 14Table 1.6 Important Decision at Various Level 15Table 1.7 Major Subsidies in India 1990-91 to 2012-13 22Table 1.8 Trends in Consumer Subsidy on Rice & Wheat & share ofconsumer & Buffer Subsidy in Total Subsidy in India : 2002-03 to2011-12.23Table 1.9 Trends in Minimum Support Price, Procurement incidentals, DistributionCosts & Economic Costs & Economic Cost of Rice & Wheat : 2001-02 to2012-1325Chapter:-2 Public Distribution System : Chhattisgarh 26Table 2.1 Chhattisgarh at Glance 27Chart 2.2 Public Distribution System of Chhattisgarh 32Chart 2.3 Food,Civil Supplies & Consumer Protection, Directorate 34Table 2.4 Number of Fair Price Shops in State 35Table 2.5 Ration Cards Holders 36Table 2.6 Public Distribution System 39Table 2.7 Mukhyamantri Khadaya Sahayata Yojana 39Table 2.8 State supply Center Governed by Chhattisgarh State civil SuppliesCorporation40Table 2.9 Consumer Rates of Ration Material 41Table 2.10 Monthly allocation of Ration Material by Indian GovernmentUnder Public Distribution System41Table 2.11 Schemes by Central Government Under TPDS 44Chapter 3 Research MethodologyChapter 4 Procurement ,Allocation & Off takes of food grainsFigure 4.1 Allocation & Off take 61Table 4.2 Monthly allocation of Rice &wheat for APL,BPL,AAY underTPDS for the Year 2010-1164Table 4.3 Monthly allocation of Rice &wheat for APL,BPL,AAY underTPDS for the Year 2011-1265Table 4.4 Monthly allocation of Rice &wheat for APL,BPL,AAY underTPDS for the Year 2012-1365Table 4.5 Additional Allocation of Food grains under TPDS during 2011-12 66Table 4.6 Additional Allocation of Food grains under TPDS during 2012-13 66Table 4.7 C.G. Allocation & Off take under TPDS scheme for the year 2008 67Table 4.8 C.G. Allocation & Off take under TPDS scheme for the year 2009 67Table 4.9 C.G. Allocation & Off take under TPDS scheme for the year 2010 68
  10. 10. Table 4.10 C.G. Allocation & Off take under TPDS scheme for the year 2011 68Table 4.11 C.G. Allocation & Off take under TPDS scheme for the year 2012 69Table 4.12 C.G. Allocation & Off take under TPDS scheme for the year 2013 69Table 4.13 Procurement of wheat & rice from the Central Pool 70Table 4.14 Procurement of rice during KMS 2011-12 by FCI & State Agencies 70Table 4.15 Procurement of rice during KMS 2012-13 by FCI & State Agencies 71Chapter:-5 Data Analysis & InterpretationTable 5.1 Percentage Change in Allocation of Wheat in different years 73Table 5.2 Percentage Change in Off takes of Wheat in different years 74Chart 5.3 Monthly off takes of wheat under TPDS Scheme,2005-06 75Chart 5.4 Monthly off takes of rice under TPDS Scheme,2006-07 76Chart 5.5 Monthly off takes of wheat under TPDS Scheme,2006-07 77Chart 5.6 Monthly off takes of wheat under TPDS Scheme,2007-08 78Chart 5.7 Monthly off takes of wheat under TPDS Scheme,2008-09 79Chart 5.8 Monthly off takes of wheat under TPDS Scheme,2009-10 80Chart 5.9 Monthly off takes of wheat under TPDS Scheme,2010-11 81Chart 5.10 Monthly off takes of wheat under TPDS Scheme,2011-12 82Chart 5.11 Monthly off takes of wheat under TPDS Scheme,2011-12 83Chart 5.12 Monthly off takes of wheat under TPDS Scheme,2012-13 84
  11. 11. CHAPTER-1PUBLIC DISTRIBUTION SYSTEM:INDIA1
  12. 12. 1.2 Features of Public Distribution System1. Essential consumer goods are provided to the people of country.2. These goods are provided at fixed prices, fixed by government.3. Government agencies & shops are established or licenses are granted to private shops forthe purpose of such distribution.4. These agencies of licenses have to work under strict government supervision, regulation& control.5. The commodities to be distributed, quantity of distribution, period & price of distribution,all are determined by government.1.3 Main constituents of Public Distribution System1) Fair price shops (FPS’s) or Ration Shops: -Public Distribution system ensures supply of essentialcommodities through network of fair price shops. At present there are about 4.62 lakh fairprice shops in India out of which about 3.70 lakh shops are operating in urban areas. Eachshop is envisaged to serve a population of about 2,200.2) Shops of Controlled cloth: -These shops sell contributed clothes to consumers on the basis oftheir ration cards. More than 66,000 shops are selling such cloth throughout the country.3) Soft coke depots: -These depots sell soft coke to consumers on the basis of their rationcards. About 2.5lakh such depot are working in the country.4) Super Bazaars’:-Super Bazaars are the bazaars which provide all the goods of dailyneeds at controlled prices. These markets enable the consumers to complete theirpurchasing from one place. These bazaars are working in almost all the major cities ofIndia. About 100 Super bazaars are working in the country out of which top 15 superbazaars are in co-operative sector.5) Kerosene Retailers: -In some states, Kerosene oil is distributes through fair price shopswhile in other states; specific retailers have been licensed for the purpose. These retailerssell kerosene oil to the consumers at fixed price.3
  13. 13. 6) Commodities of Distribution: -Six key essential commodities viz. Wheat, rice, sugar, importededible oils, kerosene & soft coke are distributed to consumers through public distributionsystem. Besides, state governments are empowered to include other essential goods in thesystem on the basis of their particular needs & Circumstances. Accordingly, cloth, toiletsoaps, tyre-tubes, copies, cells, match-box etc, have been included by different stategovernments at different times.7) Allocation & Distribution: -Central Government procures, allocates & supplies these goodsto states & union territories which, in turn, are responsible for their allocation &distribution within the concerned state or territory. Government is emphasizing tostreamliner the system to improve its reach to the consumers living in the areas of relativeeconomic disadvantage.8) Responsibility of Supply of Commodities :-Different institutions have been assigned the responsibilityof procurement, allocation & distribution of different goods as under- (i) FoodCorporation of India for Wheat, rice & other food grains, (ii) Indian Oil Corporation &Ministry of Petroleum for kerosene, (iii) Coal India Limited for soft coke, (iv)NationalTextile Corporation & National Federation of Consumer Co-operatives for controlledcloth, (v) State Trading Corporation for imported edible oils.9) Review & Improvement: -Working of Public Distribution system is periodicallyreviewed in consultation with state governments & necessary corrective measures aretaken. At the centre , an advisor council functions to review its working from time totime. In the states & union territories, Consumer Advisory Committees perform this duty.At the district, block & village levels also, consumer advisory committees oversee theworking of fair price shops.10) Consumers Co-operative Stores: -Consumer Co-operatives play an important role in thesupply of quality goods at reasonable rates to common people. Government has beenemphasing the need for strengthening co-operative so as to enable these organizations toplay a dominant role in public distribution system. There is a 3-tier structure of consumerco-operative societies in India.4
  14. 14. 1.4 PUBLIC DISTRIBUTION SYSTEM: PROCUREMENTThe PDS in India forms an important part of state strategy for intervening in the distribution offood grains & other essential commodities. However, the nature of the policy of state‘sintervention is largely determined by the causes & conditions which are responsible for itsemergence & growth. Therefore, the major causes of the origin of this policy are as follows:-Drought, famine & war conditionsInflationMarket ImperfectionsPovertyLack of distributive justice.Explanation:-1. Drought, famine & war conditions:-The Primary impetus for the growth of public distribution system in India has beenshortage of essential commodities from time to time. These shortages were caused due to war,famine, drought & other natural calamities. Thus the emergence of PDS in India has been morein response to some specific critical situation rather than to the conscious public policy. The PDSthrough Fair Price Scheme (FPS) was first introduced in India in the wake of the Second WorldWar in 1939. In 1942, when Bengal suffered from famine, this system of fair price shops wasturned into the rationing system. The partition of the country in 1947 & separation of Burmafurther weakened India on the food-front; there were controls & decontrols in the countrydepending upon the climatic conditions. In 1966 & in 1959, there were reports of food crisis incertain parts of Rajasthan, Bombay, and Bihar, Orissa & Tamil Nadu mainly caused by drought,floods & cyclone. The Indo- Chinese hostility of 1962 was also an important reason for thegrowth of the fair price shop system in the country. Thus it is found that PDS in India started &gained momentum during the periods of shortages of commodities which were the result ofeither natural or man-made calamities.2. Inflation:-Secondly, it is the inflation which renders PDS necessary. The term inflation is associatedwith an economic state in which too much money chases too few goods. Inflation is consideredas a monetary, political, social & a structural problem. Therefore, it is a state of imbalancebetween the market stock of the basic goods or basic commodities & the active stock of money.A State of inflation exists, when there prevails not only an imbalance between the stock ofmoney & the stock of basic goods but also the increasing disparities in the economic levelsamong the different social classes putting the poorest segment of the poorer strata to a greatdisadvantage. In other words, Inflation in a pro country like India is a class phenomenon. Itaugments the difficulties of poorer classes & distorts the distribution process. Even persons withfixed income are hit hard. The distribution process is most severely jolted by persistent inflation.The gap between equilibrium economics & reality grows wider.The rate if inflation in India, Whether measured by the movements of the Wholesale price indexor by the movements of the cost of living index, was much higher in the decade 1961-71 than in1951-61. The inflationary situation can be perceived from the following Tables of WholesalePrice Indexes.5
  15. 15. Table 1.1Price Situation from 1968 onwardsIndex Numbers of Wholesale Prices of all Commodities(1961-1962=100)Year1968-1969 1651969-1970 1721970-1971 1811971-1972 1881972-1973 2071973-1974 254Source: Economic Survey, Government of India, 1975-1976Table 1.2Price situation from 1975 onwards(1970-71=100)Year All commoditiesJuly, 1975 176July,1976 178March,1977 183January, 1978 184January,1979 185January,1980 224September,1980 263Source: Economic Survey, 1978-1979 & Reserve Bank of India Bulletin, various issuesThe Table 1 & 2 clearly indicates a ‗galloping‘ inflation in India. This inflationarytendency had been spread over a wide range of commodities including food grains & essentialcommodities. This tendency further worsens the conditions of the poor. Therefore, PDS has beenused as an important instrument for containing the tendency of price-rise & to check inflation bysupplying the food grains & essential commodities at fair & reasonable prices to public ingeneral & to the poor & vulnerable sections of the society in particular.3. Market Imperfection:-Thirdly, widespread market imperfections warrant the intervention of the State in themarket mechanism. In India, the agricultural sectors play a predominant role. The agriculturaldevelopment is an essential condition of the economic growth in India as it contributes about50percent to India‘s national income & provides livelihood to 70 percent of the population.Further, it not only supplies the bulk of wage goods to the non-agricultural sector, but alsoproduces raw material for a large number of industries & accounts for 50 percent of the country‘sexports. In a country like India, the agricultural prices determine the nature of the distributivemechanism for the majority of population spends the major part of their income on food grains6
  16. 16. which also forms the major part of the total consumption expenditure of the poor & vulnerablesections. The expenditure of lower strata of the society on the consumer goods ranges from 60 to80 percent of their income. A study reveals that in rural sector food accounts for about two-thirdof the total expenditure. Abrupt fluctuations in the food grain prices adversely affect the wholepopulation of the country in general & the poorer sections of the society in particular. Stability ofprices is vital for the economic growth & it is the agricultural sector which holds the key to theprice stability. Rise in the agricultural prices will have several serious repercussions as it touchesthe economic life of the community at many points.Stability in the food grains prices depends upon the market mechanism. In a perfectmarket, prices are determined on the basis of demand & supply.But markets are hardly perfect indeveloping countries. In India, the imperfections in the market are further accentuated in therecent past partly due to the entry of various unscrupulous persons into the market with theblessings of political elite. The traders include not only the licensed wholesalers & retailers, butalso the speculators & hoarders who make huge purchases with their unaccounted money tomake quick profits. All these & many other factors rendered the food markets. Further, only richlandlords have large marketable surpluses. Hence, they indulge in speculative hoarding of foodgrains by withholding larger supplies from the market causing deleterious effect on the economy.Some rises in prices are inevitable in a developing economy. In fact, it is the to be paid fordevelopment. But if it generates speculative tendencies resulting in withholding of stocks fromthe market, it will tend to aggravate the inflationary pressure. In India, it appears that, themajority of traders & producers turn into hoarders. The traders, profiteers & other anti socialelements are concerning off the stocks, thus creating artificial scarcity with a view to earnabnormal profits. This tendency of producers & traders hits hard the poor & makes it impossiblefor them to purchase the food grains required for their bare subsistence.4. Poverty:-Fourthly, the cause of removal of ubiquitous poverty calls for continuous intervention ofthe state in the market mechanism. In fact, it is the cause of many problems in the society. Theterm poverty is closely associated with hunger & low standard of living. Poverty is a problem oflow income & its unequal distribution, of slow pace of development & inequitable distribution ofthe grains of development.It can be described as social phenomenon in which a section of the society is unable tofulfill even the basic necessities of life. Its manifestations are clearly visible in under-nourishment, under-employment & unemployment, insecurity & world wide unrest. The roots ofpoverty are identified by Marx in the sphere of economic structure. He considers poverty as anoutcome of a defective pattern of distribution of the means of consumption i.e.incomes,&,therefore,lays the primary emphasis on restructuring the pattern on incomedistirbution.Hence, in any sincere effort to eliminate poverty, elimination of concentration ofwealth & property would be indispensable. In the absence of such structural changes the gains ofdevelopment get monopolized by the upper middle & richer sections of the society leaving thelower middle & poorer sections untouched by the process of development resulting in thedeterioration of their living conditions. In their pioneering study, Poverty in India, Dandekar &Rath showed that in 1960-61 about one-third of the rural people & half of the urban populationlived on diet of inadequate even in respect of calories. They further forecast that this percentageof household will continue to grow in future. This led them to conclude that it would take 357
  17. 17. years after 1980-81 for the per capita consumption to reach the national desirable minimum levelof consumption. In regard to per capita income/consumption, a study reveals that, in 1960-61, 52percent of the rural population lived below the poverty line. There has been the increasing trendin this regard and in 1967-1968, 70 percent of the rural population was found below the povertyline. According to the planning minister, there are 249 millions of the rural poor people who areliving below the poverty line. Further, it is now officially acknowledged that nearly 50 percent ofour population has been living below the poverty line. Further, it is now officially acknowledgedthat nearly 50 percent of our population has been living below the poverty line continuously overa long period.All these studies denote that in India the poverty remained constantly high orincreasing. Large number of the poor is deprived of their basic necessities & is even denied ofadequate food to maintain their body indicates the degree of dehumanization the system issubjected to. However, in modern times, it is widely accepted that ―it is no longer inevitable ordesirable & its abolition of poverty has been increasingly merged with, & has often become thefoundation for the social & political policy of the government. The policy of PDS falls in thiscategory as it attempts to reduce the misery.Since Independence, the government of India has been emphasizing on the removal of poverty.All the Five Year Plan documents elaborately discussed the problem of poverty & suggestedmeasure to eradicate it. The PDS has been developed as an important instrument in this regardthrough which the foodgrains & essential commodities are distributed to the poor & vulnerablesections of the society at fair prices. Thus it emerged as an important welfare programme.5. Problem of distributive justiceFinally, there is the problem of distributive justice which is a corollary of poverty &economic inequalities In fact; poverty & economic inequality are closely related. The studiesconducted by Ojha Bhat (1960-1962), Ranade(1961-1962), Ahmed Bhattacharya(1963-1964),&NACER (1964-1965) indicate that the degree of inequality in the distribution of disposableincome was quite serious in India. There is substantial evidence to state that in India the gapbetween the poor & rich is getting wider. According to a study, the bottom 20 percent of thepopulation had over 7 percent of the total disposable personal income while the top 20 percent ofthe population had a share of 48 percent in it. Another study glaringly distinguishes the rich &the poor because the private consumption expenditure of the bottom 5 percent people was Rs. 78at 1966-67 prices while it was Rs 1350 for top 5 percent of the population. A study in 1973-74denotes that the average per capita expenditure of 5 percent at the bottom comes to be Rs.68 at1960-61 prices & for the 3 percent at the top it is Rs 932.The urban-rural inequalities are also glaring. In 1967-68, the per capita consumption expenditurein villages was Rs 269 at 1960-61 prices whereas in the urban areas it was about Rs 365. InUrban areas the distance between the rich & the poor is much wider, An idea about this can beformed from the fact that, in 1967-1968, annual per capita consumption expenditure for thepoorest in the rural sector was Rs 75 at 1960-1961 prices while it was Rs 909 in the case of rich.In the urban areas, the figures were Rs 78 & Rs 1330 respectively. Further, in 1974-75, therewere wide differences in the per capita income in different states, ranging from Rs 493 to Rs1482, indicating large inequalities among the different states.Besides inequalities in income, there are inequalities in the distribution of poverty &wealth. According to the agriculture census for 1970-71, 15 percent of the operational holdings(medium & large) controls 61percent of the total land whereas 85 of the holdings (marginal,8
  18. 18. small & semi-medium) and have 39 percent of the total land. The Urban areas are no exceptionto this phenomenon. According to the National Council of Applied Economic Research, 57percent of the built up property is in the possession of the top 10 percent of property ownerswhereas the bottom 10 percent of such households own only 1 percent of the property. Largeinequalities are also seen in the ownership pattern of share-wealth. According to an expertcommittee, more than half of the wealth in the form of shares is concentrated in the hands ofone-tenth of the top one percent of the households receiving profit income.In India, these inequalities in income, wealth, pattern of consumption combined with themarket imperfection have adverse effects on investment, production & consumption. People withvery low incomes are unable to meet the basic needs of physical existence resulting in miserableconditions. This affects the productivity of labor which ultimately reduces production. The fewwho get larger income are able to enjoy the luxury goods. This type of resource distribution isbound to cause social tensions & unrest. Under these circumstances, it has become theresponsibility of the state to intervene in the market mechanism as the State has ―to achieve theobjective of a socialist society & shoulder the total responsibility for the socio-economic welfareof the people.‖Several policy measures are initiated to bring about social justice. The fiscal & pricingpolicies seek to achieve this objective. These measures attempt to improve the lot of the poor byproviding them with subsidized food & the other basic necessities of life. In India, Income Tax,Estate Duty & Wealth Tax have been sought to be used for reducing the inequalities in income &wealth. It is reported that considerable portion of the Tax on capital gain either goes unrealizedor unreported. The Estate Duty, Gift Tax & Wealth Tax have been little help in containing theaccentuation of the inequalities resulting from the concentration of wealth, much less levelingthem down.To bring a change in the existing distribution of assets within rural & urban sectors, theGovernment of India has enacted laws relating to agricultural land holding & ceiling on urbanproperty. Huge Investment in public sector has been made since the inception of planning inorder to build up a socialistic pattern of society. To avoid concentration of economic power inthe hands of the private corporate sector the government adopted anti-monopoly policy &,consequently, the Monopolistic & Restrictive Trade Practices Act (1969) was enacted.Institutions have been established to directly assist the small farmers, small industrial units &tribal. The Twenty-Point Economic Programme, & the Anti- Poverty Programme in the wake of―Garibi Hatao‖ policy, was introduced to ensure distributive justice.Institutional reforms in this country, even though legislated in right earnest by the StateAssemblies, have not proved to be successful in ameliorating the condition of the poor & inremoving inequalities. As the institutional changes are taking place at a very slow pace, the fiscalpolicy & other measures are expected to ensure distributive justice. Even in the case of the Fiscalpolicy, as there are many loopholes in the tax laws, taxation of income & property has also notproved to be a powerful instrument of socio-economic changes. The government, therefore,initiated some direct measures to help the poor to ensure distributive justice. The PublicDistribution of essential commodities is one such measure which is mainly intended to protectthe real wages of the poor on the one hand & to make the essential goods accessible to the peopleon the other hand.9
  19. 19. 1.5 ADMINISTRATION AND ORGANISATION OF PDSThe term ‗Organisation‘ relates to the organisational structures at central & state levelwith a special emphasis on the organisational set up of PDS at the district level & below. Theterm ‗management‘ refers largely to the managerial aspects of the fair shops which play animportant role in the retail distribution of essential commodities under PDS. Managementstructure of the PDS includes policy formulation, fixing of objectives, strategy for procurement& distribution of food grains & other essential commodities.Administration of the PDS :-The Operational detail of the PDS differs from state to state. Though the policy of settingup fair price shops owes its initiation to national food policy, its implementation remains thedirect responsibility of the state governments. The centre plays a prominent role in procurement& interstate movement of cereals. It also has a prominent hand in determining the support pricewhich is the basic factor influencing the PDS issue price in the state. The Food Corporation ofIndia (FCI) has come to acquire the role of providing supplies to states, needed for feeding thePDS channels on the basis of central allocations. In order to operate the PDS effectively, thecentral government also issues guidelines from time to time to the states regarding theoperational details of the PDS.In case of states, it is the food & civil supplies department which looks after the PDS.Each state has gone about it in its own way to make organisational, administrative & operationalarrangements for instituting PDS. Of course, the central government scales guidelines are takeninto account, but the final decisions are made by the state governments. These include thecommodities to be brought under the PDS, ration scales, number, location & licensing of fairprice shops, the terms & conditions of supplies, methods of supplying, checking, remuneratingFPS dealers, etc.As a result, a great deal of diversity in the actual design of PDS has come exist. Themajor operational influence can probably be seen in two crucial matters. Firstly, the allocation ofwheat, rice, sugar, edible oil, kerosene, controlled cloth etc to the states & secondly, thedetermination of the central ex-godown price for the centrally supplied commodities. The rationscale granted by a state, their regularity & the final issue price charged from the consumerssubstantially carry the influence of these two central policy decisions. In terms of entries 33 & 34of the concurrent list of the Constitution of India, PDS falls within the preview of both thecentral and state governments but in terms of entry 26 of the state list, the state also as substantialscope in decision making. In any case, in practice, it is found that in determining the actualadministrative & organizational design of the PDS, which requires a significant level ofdecentralized decision making, it is the state government which has played an important role.It may be mentioned that setting up of an effective delivery system, granting fair &equitable access at a low administrative cost & in accordance with the needs of the localpopulation at various places, depend upon a large number of administrative & organisationaldetails & many subsidiary policy decisions. Apart from the decisions taken at the state level,those taken at the district, block, rationing circle & at FPS level, also play their part indetermining the availability, cost & benefits of access to the PDS. Table C-1 depicts the overalladministrative functional model of PDS, showing roles , responsibilities & areas of decision-making at the level of the central government, state governments, district & local agencies,10
  20. 20. exerting upon the FPS & the consumer. Table C-2 portrays the critical decision variables at eachof the levels at which policy & administrative decision governing access to the PDS are made.Some of the important aspects are as follows:-ImportantAspectsIssue of Ration CardsRation ScalesPeriodicity ofPurchasesPDS Issue PriceQuality of PDSSuppliesCommodity CoverageProcedure of IssuingRation Cards11
  21. 21. CHART 1.3Organizational Design of the PDS in IndiaGovt. of IndiaPlanning CommissionDecided by the Dept. of Food &Supplies and PlanningCommission, Govt. of IndiaState Civil Supplies Dept.&/or CorporationWarehousingCorporation FCIRegional DepotsFrom Farmers, Traders,Millers, & Imports byFCI & NAFEDMinistry of Food & CivilSupplies, Dept. of FoodDistrict SupplyOfficerBlock RevenueOfficersFair Price ShopsPDS ConsumerConsumer/AdvisoryCommitteesType of FPS Co-Operative PrivateGovernmentPolicy FormulationObjectivesImplementationProcurement MarketingFederation Pvt.Traders as AgentsCACP RecommendsPrice State Co-OperativeConsumer AdvisoryCouncilWholesalers FlourMills ExportDistributionWarehousingRetailingFEEDBACK12
  22. 22. Chart 1.4The Public Distribution System: A Simple ModelMacro Factors Related tothe size PDSFactors Related to RetailOutletsFactors Related toConsumersInvoluntary Exclusion ofConsumers (VulnerableGroups)Open Market Demand& PricesLegal Viability of RetailConsumersConsumer Confidence &demand forTurnover of OutletsStocking & AvailabilityDiversion to OpenMarketsExcess Licensing ofRetail OutletsOutletsMalnutritionInvoluntary OperationalStocks with Govt.Illegal Viability13
  23. 23. Chart 1.5The Administrative Functional FrameworkCentral Government1. Obtaining supplies, procurement & imports;2. Procurement price, issue prices to state &subsidies;3. Guidelines to states on the design of PDS;4. Allotment to states.1. Receipts of central allocations;2. Procurement in the state;3. Purchases from other states;4. Warehousing;5. Determination of :i. Consumer issue price;ii. Commodity coverage;iii. Ration scales;iv. Rules for issue of ration cards; FPSlicense;v. Profit margins to FPS;vi. Periodicity of sale;6. Allotment to district & transport arrangements.1. Lifting stocks, warehousing;2. Issue of ration cards;3. Licensing of FPS dealers;4. Arranging/ensuring lifting by Fps dealers;5. Enforcement, inspection,vigilance.District or LocalAgenciesState Government14
  24. 24. Chart 1.6Important Decisions at Various Levels1. Commodity coverage;2. Total PDS supplies, procurement by imports/ exports+inventories;3. Size of covered population: exclusions;4. Nature of PDS support- total or supplementary;5. Preferential treatment to area or population group;6. Difference between open market price by PDS issueprice;&7. Size of subsidy1. Matching of supplies with needs by intra-stateprocurement;2. Adequate & well-dispersed warehousing;3. Capacity to buy from other states;4. Inclusion of additional goods;5. Appropriation of issue price in relation to open marketprice;6. Commodity coverage;7. Periodicity;8. Ration Scale;9. Cost of ease of getting ration card;10. Location & behavior of FPS;11. Adequacy & profit margin;12. Adequacy & regularity of allotment;13. Public, private or cooperative transport of stocks toFPS;14. Transport charges, zoning for the purpose.1. Delivery to FPS of assured quality And quantity;2. Proper storage by FPS;3. Cost & case of betting;4. Variation in state government determined scale;5. Ensuring regularity in lifting of stocks by FPS foraround the year availability;6. Need for reserve stocks; rate to state deliveries toFPS;7. Govt. monitoring of stocking & sales performance ofFPS.CentralGovernmentDistrict or LocalAgenciesState Government15
  25. 25. EXPLAINATION:-1) Issue of Ration Cards :-The first major decision in the organizational administrative set up of the PDS is the issueof ration cards. This also involves a decision about whom to grant access to the PDS, on whatterms & conditions & to what extent. Notably, the process of making an application for the rationcard & the process of verification, the time taken for issuing the ration card, the conditions whichhave been satisfied for the issue of ration card, the conditions which have to be satisfied for theissue of ration card & the procedure for recommendation or verification, & the practice ofcharging a certain fee for the ration card differ from state to stateGenerally, one has to make an application by filling in a form & then a Food Inspectorvisits the household for verification & after sometime, the applicant has to go to the civilsupplies office. The collection of the ration card generally involves three visits to civil suppliesoffice. Not only does it take a lot of time, but most often poor people find it very difficult toobtain the ration card. At times, their ration cards gets issued to some one else by various kindsof manipulation or simple administrative lapses. In states, with rather irregular supply of PDSgoods, some people do not find it worth to pay the fees & taxes & spend time for obtainingaccess to the PDS supply, it can be said that the gateway is not easily accessible to the poorpeople living in rural areas & away from the administrative headquarters of the food & civilsupplies department. So also, is the case with the people in urban areas who live in the slums orwho are temporary migrant workers.2. Procedure for Issuing Ration Cards:-The Procedure for issuing ration cards generally follows different patterns for the urban& the rural areas. In the urban areas, one has to make an application to the civil suppliesauthority for obtaining a ration cards. In Rural areas, ration cards are issued by the villagepanchayat or village Patawari or some equivalent institution or agency. The Procedure in Urbanareas involves some inherent discrimination against the poor illiterate,homeless,slum dwellers &temporary migrant workers because they cannot satisfy all the formalities & requirements likethat of a permanent residential address.Similarly, those who live at a relatively longer distance from the ration card issuingauthorities, or those who live in inaccessible areas, have to incur a relatively greater realmonetary cost for applying for, & obtaining ration cards. While some people may not obtainration cards or may not succeed in doing so, some manage to obtain ration cards. One fairlycommon practice is to inflate the number the number of family members by including the nameof servants, benamis, dead family members, relatives, dogs, pets etc. In many cases, the purposeof obtaining bogus ration cards is the desire on the part of the FPS dealers to divert the PDSsupplies. For this purpose, the FPS dealer in connivance with the functionaries of civil suppliesdepartment, get bogus ration cards made.16
  26. 26. 3. Commodity Coverage:-The Utility & significance of the PDS are greatly dependent on the commodities whichare supplied under it at fixed price and in desired quantities. Partly on account of the importanceof cereals are covered in PDS by all the states. Wheat & rice, the main cereals produced &consumed in the country are supplied everywhere under the PDS. The Wheat & rice account forover 95 percent of the PDS supplies. The share of coarse grains rarely exceeds 5 percent, morefrequently remaining just around one to three percent.In the Urban pockets, predominantly inhabited by the industrial working class,construction labour & workers employed in the informal sectors, there is a distinct preference forwheat flour (atta) as compared to wheat. The preference for atta is largely because it is convientto consume specially by the working people who cannot afford the time & effort of cleaning &milling of the wheat supplied through the PDS.Apart from cereals, certain other commodities are also included under the PDS. Importantamong these are: sugar, edible oil, kerosene oil & controlled cloth. Sugar is the universal & mostregularly supplied PDS commodity. This is also the commodity sold throughout the country at auniform PDS price.4. Ration Scales:-Another important aspect of the PDS is the determination of ration scales or entitlementsfor every adult & child for the commodities supplies through the PDS channels. A large numberof considerations influence the determination of the entitlement per family or per person. Theration scales even for the commodities, which are supplied under the PDS all over the country,like wheat, rice, sugar, edible oils, differ widely among & even within various states. The rationscale for rice & wheat would differ among the states on the basis of the fact whether rice orwheat constitute the staple food of the majority of the people in a particular state. Similarly, aninformal rationing or PDS may not provide ration entitlement equal to the full demand or need ofthe people.A decision to fix ration scale will have to be based on certain assumptions about thedemand & need concerning the average consumption pattern in a particular area. In addition tothe considerations operating on the demand side, many factors regarding supply, availability,production & overall surplus or deficit position of the commodities concerned will also exercisetheir influence. It is well known that the deficit states place their demands with the centralgovernment for obtaining the PDS supplies. The Ration scales prevalent in various states may beexpected to differ from each other, depending on whether the states are ‗surpluses or ‗deficit‘ incereals.5. Periodicity of Purchases:-The PDS is not only a system of predetermined, fixed price, fixed quantity, supply ofsome selected essential goods but also a system with a certain fixed periodicity of purchases. ThePDS permits only a fixed periodicity of purchases. One can buy an one‘s ration card a givenamount of PDS goods, at a fixed price from a predetermined source of supply at an interval ofgiven periodicity. It means that the frequency of purchases & the size of each purchase from thePDS are determined by a set of rules & regulations. These rules impose certain restrictions on theconsumers, though it is also essential to fix the periodicity of purchase in order to plan suppliesfrom the supplying agency to FPS.17
  27. 27. Most states have gone in for a monthly system of periodicity, i.e. permitted one purchaseevery month, because it simplifies the task of the FPS dealers. It also helps the consumers, to theextent that he has to make only one visit to the FPS. However, it would be unrealistic to assumethat the majority of intended beneficiaries of the PDS have a regular monthly income. A largenumber of urban casual workers, landless agricultural workers and many such persons & urbaninformal sector workers & many such persons do not have a regular income flow. Their incomeflows are irregular & uncertain, having a changing periodicity.Given the income level, housing situation & availability of utensils for storage ofmonthly cereal requirements, it is unrealistic that a large number of intended beneficiaries of thePDS would be in a position to buy their monthly cereal requirements for the whole month in onesingle installment. Thus, the question of periodicity, lapsing of the entitlement & lumpingtogether of purchases of all PDS commodities, therefore, are no more routine administrativematters. These have a clearly identifiable hand in the granting or denial of the extent of access tothe PDS, particularly to the poorer sections of the society.6. PDS Issue Price:-The Central Issue Price (CIP) is related to the support price announced by the Centralgovernment. The determination of support price is a complicated task & is influenced by manyconsiderations relating to national food policy. Following from the CIP, ex-godown prices arefixed for making supplies to the state government. This includes, transport & administrativeoverhead incurred by the Food Corporation of India. On the basis of the ex-godown price &taking into account transport, handling, storage & interest charges & the margins given to theFPS dealers, the issue prices to consumers are fixed.It is significant to note that the price at the PDS outlet is kept at a level lower than theopen market prices & the difference between the price at which FCI issues to states & economiccost to FCI, is borne by the government out of the food subsidy budget. The difference betweenthe ‗Central Issue Price‘ & ‗State Retail Issue Price‘ is quite substantial among the various states.7. Quality of PDS Supplies:-The users of the PDS often complain about the poor quality of the cereals and at times, ofsugar, supplied by the FPS. In certain areas, the criticism of the quality of the PDS suppliedcommodities is very strident. However, it appears that the reasons for poor quality are rarelyproperly understood.The macro-level design of the PDS policy which makes the PDS a component of a dualmarket & its relatively small size has some identifiable consequences for the quality of wheat,rice, etc procured by the public agencies for supply through the PDS channels. Uniformprocurement prices for fair average quality of grains are announced & no premium is paid forsuperior qualities. It is quite natural that the open market bulk buyers are attracted towardssuperior qualities, while the public procurement agencies end up buying the poorer grades. Theprocured grains further deteriorate owing to poor warehousing. Thus, it is to be expected that thePDS supplies are relatively lower grades of quality, compared to the private, uncontrolledmarket, which is able to procure better qualities of the commodities.Further, the inherent difficulty of the PDS to acquire control over better qualities is madestill more difficult by the poor storage & care in transit & made still worse by the storage &handling conditions at the FPS. The possibilities of adulteration or substitution of governmentsupplied quantities by other may be added to the poor quality of grains.18
  28. 28. The quality conscious better off sections are inclined to opt out of the PDS supplies ofcereals on the ground of quality of cereals they would like to consume. However, there is littlereason to provide only inferior qualities of inflation insulated supplies of cereals to the relativelyworse-off, when bulk-cleaned, properly stored, graded & pre-packaged supplies with guaranteedcorrect weightment can be provided under the PDS in order to make it serve its objectives better.This quality factor would not only improve off-take from the PDS, but also serve its nutritionalgoals as well. It would mean improving the poor mans access to cereals, both qualitatively &quantitatively.It is seen that though formal exclusion may be limited, there are some other factorswhich may informally restrict access to the PDS. Such factors have important bearing on whobenefits from the PDS & to what extent. It is the decisions concerning them which determine theeffectiveness of the PDS, i.e. who benefits from it, at what & whose cost, to what extent & howmuch in conformity with the expressed or implicit policy goals. A large number of arrangementsconcerning FPS also contribute to the same direction. These factors bearing access to the PDShave been only to a limited extent consciously & carefully recognized in designing the PDSoperations.19
  29. 29. 1.6 Food Subsidy in IndiaFood prices play an important role in the well-being of the poor and poverty reduction indeveloping countries. Therefore, government interventions in food grains markets have existedin one form or another for several decades, starting during the Second World War. Althoughthere has been a decline in the share of expenditure on food items in last few decades in bothurban and rural areas but poor consumers still spend a large share of budget on food indeveloping countries (Pinstrup-Andersen, 1985). For example, in India the proportion ofexpenditure on food items has declined by about 10 percentage points in the rural areas and byabout 16 percentage points in the urban areas between 1987-88 and 2009-10 (NSSO, 2012) butbottom decile class of consumers (based on per monthly per capita consumer expenditure)spends about 65 per cent of total expenditure on food items in rural areas and about 62 per centin urban areas. The relative importance of individual food commodities in the food budgets alsovaries among consumers. In case of poorest among poor (bottom decile), cereals account formore than 30 per cent of the food expenditures (36.3% in rural and 30% in urban areas), while incase of rich people (top decile expenditure group), cereals account for less than 20 per cent offood expenditure (16.2% in rural and 11.50% in urban areas), while share of high value products,namely, livestock and fruits and vegetables is high, 46.6 per cent in rural areas and 44.6 per centin urban areas.Therefore, the level of food prices is important determinant of their purchasing power.Even small food price increases may adversely affect the ability of poor consumers to meet theirbasic needs, including nutritional requirements. Wage goods prices also influence wages andemployment in other sectors of the economy, and thus have impact on urban poor (Pinstrup-Andersen, 1985). Because of the high budget share spent on food among both rural and urbanpoor, negative impact of high food prices is much more severe among the poor than the richpeople. Therefore, the role of the state in providing food subsidies to poor consumers is sociallyjustifiable as food subsidies are needed to protect the welfare and nutritional status of theeconomically disadvantaged people. However, food subsidies are under increasing criticismbecause of their large impact on government budget deficits and inefficiency because it isgenerally argued that the benefits often do not reach the poor(Ali and Adams, 1996).TRENDS IN FOOD SUBSIDYSubsidies in Indian agriculture have increased significantly in the post-reforms period.Food subsidies increased from Rs. 2,850 crore in 1991-92 to about Rs. 72,823 crore in 2011-12(Revised Estimates), an increase of over 25 times in 21 years (Table 1). As a result, its share intotal central government subsidies under non-plan expenditure increased from 23.3 percent to33.7 per cent between 1991-92 and 2011-12. As a percentage of agricultural GDP,the foodsubsidy increased from 1.8 per cent to 5.8 per cent during 1991-92 and 2010-11. Food subsidy,which increased at an annual compound growth rate of about 17.8 per cent during the 1990s,remained stable between 2002-03 and 2006-07 mainly due to low off take of food grains andmarginal increases in procurement prices. However, there has been a significant increase in foodsubsidy during the last few 5-6 years. For example, food subsidy more than tripled from Rs.24,014 crore in 2006-07 to Rs. 72,823 crore in 2011-12 and is estimated to cross Rs. 75,000crore in 2012-12, at an annual compound growth rate of 21.6 per cent.20
  30. 30. The Government of India fixes the Minimum Support Price (MSP) of food grains atwhich procurement is made from the farmers. The Central Issue Price (CIP) of food grainsat which food grains are sold under different government schemes and allocations ofquantity of food grains under Targeted Public Distribution Scheme (TPDS) and other welfareschemes are also fixed by the Government of India. The difference between the EconomicCost and the Central Issue Price is reimbursed by the Government of India as consumersubsidy to the Food Corporation of India (FCI). The economic cost includes MSP,procurement costs/incidentals and distribution costs. Various components of economic cost,procurement costs/incidentals and distribution costs are shown in Figure 1. The Government ofIndia also reimburses the cost of carrying of buffer stock of food grains maintained by FCI as apart of subsidy. The trends in average consumer subsidy on rice and wheat and share of buffersubsidy during the period 2002-03 and 2011-12 are given in Table.ECONOMIC COSTProcurement/ MinimumSupport PriceProcurement Incidentals Distribution CostsStatutory Charges like market free, ruraldevelopment cess, VATNon Statutory Charges like dami/arhatiacommission, cost of gunny bags, labour &transport charges, administrative charges,charges to state governments for storage &interestHandling expenseStorage ChargesInterest chargesFreight CostTransit lossesStorage lossesAdministrative overheads21
  31. 31. The average consumer subsidy on wheat for Antyodaya Anna Yojna (AAY) householdshas increased from Rs. 684 per quintal in 2002-03 to about Rs. 1452 per quintal during 2011-12and in case of Below Poverty Line (BPL) households from Rs. 469 to about Rs. 1237 during thecorresponding period (more than 2.6 times increase). In case of Above Poverty Line (APL)households, average subsidy has more than tripled from Rs. 301 to about Rs. 1042 between2002-03 and 2011-12. Almost a similar trend was observed in case of rice, where averagesubsidy for APL households increased by more than 3.5 times from Rs. 370 in 2002-03 to Rs.1354 in 2011-12, for BPL consumers from Rs. 600 to Rs. 1619 and in case of AAY consumersubsidy more than doubled. The share of cost of carry subsidy varied from about 2 per centduring 2005-06 and 2006-07, mainly due to low stocks of food grains, to 26.3 percent in 2002-03when the stocks were very high. The share of buffer stock subsidy recorded an increasing trendsince 2007-08 due to build-up of food grains stocks with the FCI.Major Subsidies (in crores of Rupees) in India: 1990-91 to 2012-13Year Food Percentage Changeover Previous YearPercentage of GDPfrom AgriculturePercentage of totalSubsidies1991-92 2850 - 1.8 23.31992-93 2800 -1.8 1.5 23.31993-94 5537 97.8 2.6 47.71994-95 5100 -7.9 2.1 43.01995-96 5377 5.4 2.0 42.51996-97 6066 12.8 1,9 39.11997-98 7900 30.2 2.4 42.61998-99 9100 15.2 2.4 38.61999-00 9434 3.7 2.3 38.52000-01 12060 27.8 2.9 44.92001-02 17499 45.1 4.0 56.12002-03 24176 38.2 5.7 55.52003-04 25181 4.2 5.2 56.82004-05 25798 2.5 5.3 56.12005-06 23077 -10.5 4.3 48.62006-07 24014 4.1 4.0 42.02007-08 31328 30.5 4.4 44.22008-09 43751 39.7 5.4 33.72009-10 58443 33.6 6.3 41.32010-11 63844 9.2 5.8 36.82011-12 72823 14.1 33.72012-13 75000 3.0 39.5Sources: Government of India (2012)Table 1.722
  32. 32. Trends in Consumer Subsidy on Rice and Wheat (Rs./quintal) and Share ofConsumer and Buffer Subsidy in Total Subsidy in India: 2002-03 to 2011-12SOURCES: - Government of India (2012 a)Year Wheat (in quintals) Rice (in quintals) Share (%) in totalFCI subsidyAAY BPL APL AAY BPL APL Consumer Buffer2002-03 684.1 469.0 301.0 866.1 600.4 370.5 73.7 26.32003-04 718.7 503.7 308.7 936.1 671.1 408.7 85.3 14.72004-05 818.9 604.0 409.0 1003.6 738.6 475.1 93.2 6.82005-06 831.5 616.5 421.3 1050.7 785.7 520.7 98.2 1.82006-07 1014.5 799.4 604.4 1111.6 846.6 581.6 98.0 2.02007-08 1148.1 933.7 738.7 1271.4 1006.4 741.4 87.0 13.02008-09 1180.6 965.6 770.6 1440.7 1175.7 909.9 88.1 11.92009-10 1224.6 1009.6 811.5 1519.5 1254.1 939.0 86.0 14.02010-11 1326.4 1111.4 916.4 1702.4 1437.4 1172.4 85.7 14.32011-12 1451.9 1236.9 1041.9 1884.2 1619.2 1354.2 90.3 9.7Table 1.823
  33. 33. The Sources of Rising Food SubsidyFood subsidies are one of the most prominent features of the Indian economy. Because ofits socio-political importance to the economy, the food subsidies have been the subject ofdiscussions. Recent spike in subsidies in general and food subsidy in particular is a growingpolicy challenge for the government. Between 2006-07 and 2011-12 the food subsidy in Indiamore than tripled and several factors have contributed to this increase. In this section we examinevarious factors affecting food subsidy in the country.Rising Economic CostsThe economic cost of food grains to Food Corporation of India (FCI) is of strategicimportance as it has direct impact on food subsidy. Minimum support price is one of the majorcomponents of economic costs and accounts for about 70 per cent of FCI’s economic cost offood grains and share of procurement incidentals and distribution costs is about 30percent.However, FCI has no control on MSP as well as large number of cost items of procurementincidentals and distribution costs.Rising Minimum Support PricesOne of the important factors behind rising subsidy is high food prices in domestic andworld markets. Although some of the factors are structural and cyclical but in the short term, acontinuing trend of high and volatile food prices is likely in developing Asia (ADB, 2011). Theminimum support price of paddy (common) increased marginally from Rs. 530 per quintal in2001-02 to Rs. 570 per quintal in 2005-06, an increase of about 7.54 per cent. In contrast, theMSP of paddy more than doubled from Rs. 620 in 2006-07 to Rs. 1250 in 2012-13. Almost asimilar trend was observed in case of wheat, where MSP increased by less than 5 percent duringthe first half of 2000s but more than doubled (from Rs. 640 to Rs. 1285) between 2005-06 and2011-12. The average annual growth rate (y-o-y) in MSP increased from 1.2 per cent in the firsthalf of last decade to 10.6 per cent during 2006-07 to 2012-12 in case of wheat and 1.8 per centand 12.1 per cent in case of paddy (common) during the corresponding period. This massiveincrease in MSP has led to a rapid rise in food subsidy in the country.Procurement IncidentalsThe procurement incidentals include statutory charges such as market fee, ruralDevelopment/infrastructure development cess and VAT and non-statutory charges likedami/arhatia commission, mandi labour charges, cost of gunny bags, handling charges, internaltransport and interest charges. Some of these charges are under the control of FCI and in somecases FCI has no role. Therefore, it is important to examine trends in procurement costs, itscomponents and their effects on food subsidy. The procurement incidentals in case of wheatincreased from Rs. 134.7 per quintal in 2001-02 to Rs. 171.2 in 2005-05, at an average annualgrowth rate of about 7 per cent while it increased at a marginally higher growth rate (9.1%)during 2006-07 and 2012-13. In case of rice, procurement incidentals increased at an annualgrowth rate of 12.3 per cent between 2006-07 and 2012-13.24
  34. 34. Trends in Minimum Support Price, Procurement Incidentals, Distribution Costsand Economic Cost of Rice and Wheat: 2001-02 to 2012-13Year MSP ProcurementIncidentalDistribution Costs Economic CostWheat Paddy Wheat Rice Wheat Rice Wheat Rice2001-02 610 530 134.7 66.8 126.7 119.6 852.6 1098.02002-03 620 550 137.6 61.7 145.5 157.7 884.0 1165.02003-04 630 550 138.2 30.7 169.7 214.5 918.7 1236.12004-05 630 560 182.7 58.5 222.8 256.5 1019.0 1303.62005-06 640 570 171.2 39.1 234.5 272.4 1041.8 1339.72006-07 700 620 180.2 193.7 269.4 289.6 1177.8 1391.22007-08 850 745 164.0 214.9 244.4 297.8 1311.7 1549.92008-09 1000 900 179.6 226.9 245.4 280.8 1380.6 1740.42009-10 1080 1000 206.9 288.6 200.4 184.9 1424.6 1820.12010-11 1100 1000 212.4 313.1 217.7 223.5 1494.3 1983.12011-12 1170 1080 271.8 366.9 252.5 291.3 1651.9 2184.22012-13 1285 1250 305.2 383.3 296.3 397.1 1822.2 2418.7Source: - FCI (2012)Rs. / QuintalTable 1.925
  35. 35. CHAPTER-2Public Distribution System: Chhattisgarh26
  36. 36. CHHATTISGARH AT GLANCES.No Description Unit Numbers1. GeographyLatitude (North) 17.43 to 24.50Longitude (East ) 80.15 to 84.202. Total Area Sq km 135,194.5 (or 52,198.9 sq mi)3. Area Rank 10th4. Capital of Chhattisgarh Raipur5. Came into Existence November 1,20006. State Bird Pahari Myna(Hill Mana)7. State Animal Van Bhainsa (Wild Buffalo)8. State Tree Sal or Asna9. GovernmentGovernor Shekhar DuttChief Minister Dr. Raman Singh (BJP)Legislature UnicameralParliamentary Constituency 11 (year 2010)High Court Chhattisgarh10. Administrative SetupRevenue Division Nos. 03Revenue District Nos 27Tahsils Nos. 96Development Blocks/ Janpad Nos. 146Tribal Development Blocks Nos. 85Total Villages Nos 20378Total Towns Nos 97Municipal Corporation Nos 10Nagar Panchayat Nos 49District Panchayat Nos 27Janpad Panchayat Nos. 146Gram Panchayat Nos. 9139Police Station Nos. 263Lok Sabha Constitution Nos. 11Rajya Sabha Constitution Nos. 0511. Official Languages Hindi, Chhattisgarhi12. HDI 0.516 (Medium)HDI rank 23rd(2005)13. Time Zone IST (UTC + 05.30)ISO 3166 code IN-CT14. Population (2011)Total 25,540,196Rank 16Density 190 /km sq (490/sq ml)15. Website www.chhattisgarh.nic.inTable 2.127
  37. 37. Chhattisgarh DistrictMunicipal CorporationAmbikapurBhilaiBilaspurChirmiriDurgJagdalpurKorbaRaigarhRaipurRajnandgaonChhattisgarh Consist of 27 DistrictBastar Division Durg Division Raipur Division Bilaspur Division Surguja DivisionBijapur Kawardha Raipur Bilaspur KoriyaSukama Rajnandgaon Mahasamund Mugeli SurajpurDantewada Balod Dhamtari Korba SurgujaBastar Durg Baloda Bazar Raigarh BalrampurKondagaon Bemetara Gariyaband Janjgir JashpurNarayanpurKanker28
  38. 38. 2.1 ABOUT CHHATTISGARH:-Chhattisgarh is a state in Central India. The State was formed on November 1, 2000by partioning 16 Chhattisgarhi- Speaking southeastern districts of Madhya Pradesh. Raipur is theCapital of Chhattisgarh, which is the 10thlargest state in India, with an area of 135,120 sqs km(52,200 sq mi). By population, it ranks as the 16thmost-populated state of nation. It is animportant electricity & steel-producing state of India. Chhattisgarh accounts for 15% of the totalsteel produced in the country. Chhattisgarh borders the states of Madhya Pradesh in thenorthwest, Maharashtra in the West, Andhra Pradesh in the South, Odisha in the east, Jharkhandin the northeast & Uttar Pradesh in the north.Etymology:-There is a wide array of opinions on the origin of the word ―Chhattisgarh‖. Thename is not very old one & has come into popular usage only in the last few centuries. In ancienttimes, this region was called Dakshin kosala (South Kosala).The name Chhattisgarh waspopularized during the Maratha period & was first used in official document in 1795.In a popular and widely believed that, Chhattisgarh takes its name from the 36pillars of Chhatishgarhin Devi temple (chhattis means "36" and garh means "pillar"). The oldstate had 36 districts, which were: Ratanpur, Vijaypur, Kharound, Maro, Kautgarh, Nawagarh,Sondhi, Aukhar, Padarbhatta, Semriya, Champa, Lafa, Chhuri, Kenda, Matin, Aparora, Pendra,Kurkuti-kandri, Raipur, Patan, Simaga, Singarpur, Lavan, Omera, Durg, Saradha, Sirasa,Menhadi, Khallari, Sirpur, Figeswar, Rajim, Singhangarh, Suvarmar, Tenganagarh andAkaltara. However, experts do not agree with this explanation, as 36 forts cannot bearchaeologically identified in this region.British chronicler, J.B. Beglar provides a different explanation of the origins ofthe name. According to Beglar, "the real name is Chhattisghar ("chhattis" means "36," and gharmeans "houses") and not Chhattisgarh." According to him, there is "a traditional saying that agesago, about the time of Jarasandha (age of Mahabharata), 36 families of chanmars (leatherworkers) emigrated southward from Jarasandhas kingdom and established themselves in thisregion, which after them is called Chhattisgarh."Another view, more popular with experts and historians, is that Chhattisgarh is thecorrupted form of Chedisgarh which means Raj or "Empire of the Chedis" (Kalchuri Dynasty).According to Dr. Shrikant Khilari, the name Chhattisgarh comes from the time ofGuru Ghasidas. Guru Ghasidas, a saint, named Chhattisgarh and the name was officially appliedby the Marathas in 1795.One more view is that the state acquired the name Chhattisghar because it ishome for 36 tribal clans: Chhattis, which is Hindi for "36," and ghar, which is Hindi for "home."29
  39. 39. 2.2 ECONOMIC PROFILE OF THE CHHATTISGARHHuman Development Indicators (HDIs)HDI value:-As of 2011 Chhattisgarh had an HDI value of 0.358, the lowest of any Indian state. Thenational average is 0.467 according to 2011 Indian NHDR report.Standard of living:-Chhattisgarh has one of the lowest standards of living in India as per the Income Index(0.127) along with the states of Assam, Bihar, Jharkhand, Madhya Pradesh, Odisha and Rajasthan. Thesestates have incomes below the national average, with Bihar having the lowest income per capita.These poor states, despite low absolute incomes, have witnessed high Net State DomesticProduct (NSDP) growth rates especially Bihar, Chhattisgarh, Odisha and Uttarakhand which had growthrates above 10 per cent per annum during the Tenth Five Year Plan period (2002–7).Education Index:-Chhattisgarh has an Education Index of 0.526 according to 2011 NHDR which is higherthan that of states like Bihar, Jharkhand, Uttar Pradesh, Rajasthan which are below the 0.5 mark. Though,it is lower than the national average of 0.563.With respect to literacy, the state fared just below the national average. The recent estimatesfrom Census (2011) also depict a similar picture with the literacy rate of 71 per cent (81.4% Males &60.5% Females), which is close to the all India literacy rate of 74 per cent.According to NSS (2007–8), the literacy rate for STs and SCs was better than thecorresponding national average and this is a positive sign.Among the marginalized groups, STs are at the bottom of the rankings, furtheremphasizing the lack of social development in the state. Bastar and Dantewada in south Chhattisgarh arethe most illiterate districts and the drop out ratio is the highest among all the districts. The reason for thisis the extreme poverty in rural areas.Health Index:-Health Index of Chhattisgarh is less than 0.49, one of the lowest in the country. TheHealth Index is defined in terms of life expectancy at birth since a higher life expectancy at birth reflectsbetter health outcomes for an individual.Despite different health related schemes and programmes, the health indicators such aspercentage of women with BMI<18.5, Under Five Mortality Rate and underweight children are poor. Thismay be due to the difficulty in accessing the remote areas in the state. The prevalence of femalemalnutrition in Chhattisgarh is higher than the national average—half of the ST females aremalnourished. The performance of SCs is a little better than the corresponding national and state average.The Under Five Mortality Rate among STs is significantly higher than the national average. The30
  40. 40. percentage of under-weight children in Chhattisgarh is also higher than the national average, furtherunderlining the appalling health condition of the state‘s population.Net State Domestic Product (NSDP):-Chhattisgarh is one of the emerging states with relatively high growth rates of NSDP(8.2% vs. 7.1% All India over 2002-2008) and per capita NSDP (6.2% vs. 5.4% All India over2002-2008). The growth rates of the said parameters are above the national averages and thus itappears that Chhattisgarh is catching up with other states in this respect. However, Chhattisgarhstill has very low levels of per capita income as compared to the other states.Urbanization:-The demographic profile shows that about 80 per cent of the total population lived inrural areas.Sex ratio:-The sex ratio in the state is one of the best in India with 991 females per 1,000 males,as is the child sex-ratio with 964 females per 1,000 males (Census 2011)Fertility rate:-Chhattisgarh has a fairly high fertility rate (3.1) as compared to All India (2.6) and thereplacement rate (2.1). Chhattisgarh has rural fertility rate of 3.2 and urban fertility rate of 2.1.ST population:-With the exception of the hilly states of the north-east, Chhattisgarh has one ofhighest shares of Scheduled Tribe (ST) population within a state, accounting for about 10 percent of the STs in India. Scheduled Castes and STs together constitute more than 50 per cent ofthe state‘s population. The tribal of Chhattisgarh are an important part of the population andmainly inhabit the dense forests of Bastar and other districts of south Chhattisgarh.Poverty:-The incidence of poverty in Chhattisgarh is very high but is betterthan Odisha and Bihar. The estimated poverty ratio in 2004–5 based on uniform reference periodconsumption was around 50 per cent, which is approximately double the all India level. Theincidence of poverty in the rural and urban areas is almost the same.More than half of the rural STs and urban SCs are poor. In general, the proportion ofpoor SC and ST households in the state is higher than the state average and their community‘srespective national averages (except for rural SC households). Given that more than 50 per centof the state‘s population comprises STs and SCs, the high incidence of income poverty amongthem is a matter of serious concern in the state.This indicates that the good economic performance in recent years has not percolatedto this socially deprived group, which is reflected in their poor performance in humandevelopment indicators.31
  41. 41. PUBLIC DISTRIBUTION SYSTEM OF CHHATTISGARHStructure of Department of Food, Civil Supplies & Consumer ProtectionMinister InchargeDepartment of Food, CivilSupplies & ConsumerProtectionDepartment SecretaryPresident of Department Commission Office CorporationController(Measurementoffice)Chhattisgarh StateWarehousingCorporationRajya UpbhoktaVivadh PratitoshanAayogDirectorate ofFood, Civil Supplies& ConsumerProtectionChhattisgarh StateCivil SuppliesCorporationChart 2.232
  42. 42. Responsibility of Department:-Basic responsibility of department is the implementation of the Public DistributionSystem. Other responsibilities of the department are as follows:-1. To provide beneficiaries of ration cardholders food, sugar, salt, kerosene etc at appointedprice through fair price shop of Public Distribution System.2. To make arrangement for the procurement of paddy & maize at declared support price sothat farmer can get fair price for their cultivation.3. To procure levhi rice.4. Legal & Budget control related work.5. To protect the welfare & culture of consumer through Rajya upbhokta vivadh pratitoshanaayog & District consumer forum.6. Implementation of the laws & act related to measurement.7. To maintain the accuracy of equipment used in business, industries & for humanprotection.8. Implementation of right to information in the department.Effective Acts, Rules & Control orders related to Department1. Essential Goods Act,19552. Public Distribution System (control) order, 2001 by Indian Government.3. Chhattisgarh Public Distribution System (Control) order, 2004.4. Chhattisgarh Chawal Adhiprapti (udgrahan) adesh, 2007.5. Chhatishgarh Kerosene Vayapari Anugyapan Adesh,1979.6. Chhatisgarh motor spirit & high speed Diesel oil (Anugyapan tatha Niyantran )Adesh,1980.7. Chhattisgarh Chor Bazari Nivaran tatha Aavasayak Vastu Adesh.1980.8. Consumer Protection Act, 1986.9. Consumer Protection Laws, 1987.10. Chhattisgarh Aavasayak Vastu Vayapari Adesh, 2009.11. Kerosene Adesh, 1993.12. Dravikret petroleum Gas Adesh, 2000.33
  43. 43. Food, Civil Supplies & Consumer Protection, DirectorateCOMMISSIONERDirectorateSenior DirectorClerksAssociated DirectorSub- DirectorAssistant DirectorDistrict OfficeFood Controller/ FoodOfficerAssistant Food OfficerFood Inspector/SupervisorClerksChart 2.334
  44. 44. 2.3 Fair Price ShopConsumers are provided with food grains, sugar,kerosene,amrit namakevery month through Fair Price Shops (FPS).For efficient working of public distribution systemit become necessary that fair price shops are runed by those agencies which keep in view thebenefit of ration card holders & worked efficiently. In January 2012, total 10,861 fair price shopsare arunned. Following is the description of Fair Price shop district wise & agency wise:-S.No District Description of Operating AgenciesPrimaryAgricultureCreditGovernmentAgenciesGramPanchayatMahilaSwaSahayataSamuhaForestProtectionAgenciesUrbanCorporatIonOtherGovt.AgenciesTotal1 Kawardha 150 71 119 1 0 45 3862 Kanker 57 140 117 8 0 64 3863 Kondagaon 28 147 73 21 0 7 2764 Korba 22 272 69 6 1 45 4155 Koreas 4 163 88 6 0 32 2936 Gariyaband 232 25 2 0 0 50 3097 Jashpur 0 397 3 11 10 3 4248 Janjagir 207 154 225 0 0 35 6219 Dantewada 31 36 10 0 0 52 12910 Durg 18 40 221 1 1 297 57811 Dhamtari 192 31 46 0 0 27 29612 Narayanpur 11 48 12 1 0 4 7613 Bametara 146 105 73 0 0 27 35114 Balrampur 33 223 59 21 0 10 34615 Balodabazar 373 109 21 0 0 12 51516 Bastar 25 159 140 5 0 32 36117 Baloda 55 181 70 20 0 88 41418 Bilaspur 158 205 215 10 0 160 74819 Bijapur 13 72 31 1 0 40 15720 Mangeli 33 204 54 4 0 19 31421 Mahasamun 404 0 6 0 0 15 42522 Rajnandgoan 293 166 259 3 0 41 76223 Raigarh 5 451 261 12 6 36 77124 Raipur 240 102 39 0 0 214 59525 Sukama 56 38 20 4 0 21 13926 Sarguja 83 212 52 12 0 12 37127 Surajpur 69 264 54 7 1 8 403Grand Total 2938 4015 2339 154 19 1396 10861Table 2.4Number Of Fair Price Shop in State35
  45. 45. 2.4 Ration CardsRation Cards are provided to the consumers to get the essential goods to through FairPrice Shop (FPS). In rural areas Gram Panchayat has the power to issue the APL ration card & inurban areas Nagar Nigam/Nagar Palika/Nagar Panchayat has the power to issue the APL rationcard. Member authorized by the collector has the power to issue ration cards under theseschemes: - Mukhyamantri Khadyan Sahayata Yojana, BPL, Antyodaya Anna Yojana, andAnnapurna Yojana.Under Public Distribution system & Mukhyamantri Khadyan Yojana ration cards areprovided to families living below poverty line in year 2007(urban),2002(rural), year 1997-98 &1991on the basis of survey list of BPL. Along with this 10kg saffron ration card is issued to thebeneficiaries of Rastiya Virdhavastha Pension Yojana & Samajik Suraksha Pension Yojanaunder Mukhyamantri khadyan Yojana & green colour ration card is issued to Nih. Sktjin.Position of 33.54 lakh ration card issued to the BPL & poor and needy beneficiaries in January2012 is as follows:-Ration Card Of Public DistributionSystemRation Card of Mukhyamantrikhadyan YojanaBelowPovertyLine(BPL)(Yellow)BelowPovertyLine(BPL)(Grey)AntyodayaAnnaYojana(AAY)(Red)Annapurna(Violet)Saffron 10 KgSaffronGrey Nih.Sktjin(Green)615981 500381 781349 19965 597671 150292 656390 32523Table 2.536
  46. 46. Basis of eligibility of beneficiaries of different ration cards issued under Public DistributionSystem & Mukhyamantri khadyan Yojana is as follows :-1. BPL (yellow) Ration Card :-All Schedule caste & schedule tribe families which are included inBPL survey in 1997 (urban areas) & 2002-03 (rural areas).2. Antyodaya (red) Ration card :-Extremely poor family, previously issued ration card to Antyodayafamilies is maintained.3. Annapurna (violet) Ration card :-An old illiterate beneficiary, previously issued ration cards toAnnapurna beneficiaries is maintained.4. Saffron Ration Card :-Schedule caste & schedule tribe families which are included in BPLsurvey, year 1991 & 1997-98 whose name are not included in BPL survey 1997(urban) &in BPL Survey2002-03 (rural).Along with this ST & SC families which are included inBPL survey 2007(urban).5. Grey Ration Card :-Schedule caste & schedule tribe families which are included inBPL survey, year 1991 & 1997-98 & ST SC families included in BPL survey in 2007(urban) and 2002-03(rural) which are not the beneficiaries of Antyodaya & AnnapurnaYojana.Along with this family of specific backward tribes which are not included inAntyodaya Anna Yojana.6. 10 Kg Saffron Ration Card :-Beneficiaries of Samajik Suraksha Pension Yojana & Rastiya Vridhavastha PensionYojana which are not provided with ration cards of BPL Scheme, Antyodaya Yojana &Annapurna Yojana.7. Green Ration Card :-Green colour ration card are issued to Nih. Sktjin identified by State Government.37
  47. 47. 2.5Public Distribution System Beneficiaries RegisterExcel sheet book 138
  48. 48. 2.6 Eligibility for Ration Card MaterialIndian Government has decided to give 35 kg of grains to families under BPL Scheme &Antyodaya Anna Yojana . Indian Government has determined 18.76 lakh numbers of BPL families inChhattisgarh.7.19 lakh most poor antyodaya families are also included in BPL families. In this way nonantyodaya BPL families are 11.56 lakh in state & these families are provided with 35 kg grains atsubsidized rate. Central Government allocates 40.744 metric tones of food grains to State Government.For Antyodaya Anna Yojana families 25,162 metric tones rice is allocated every month.In Financial Year 2011-12 fixed allocation of 10360 tones rice & 15000 tones wheat isunderway. Eligibility of ration card material for ration card beneficiaries under BPL Scheme, AntyodayaAnna Yojana, Annapurna Yojana & Mukhyamantri Khadayan Sahayata Yojana are as follows :-A) Public Distribution SystemS. No Name ofSchemeEligibility of Food Material under Scheme1. B.P.L Food Grain Sugar Amrit Salt Kerosene35 kg permonth perration cardPer RationCard 1.30KilogramFree 02 kgAmrit salt permonth perRation Card03 litre permonth perration card2. AntyodayaAnna Yojana35 kg permonth perration card3. AnnapurnaYojana10 kg permonth perration card4. A.P.L 35 kg permonth perration cardNiranka NirankaB) Mukhyamantri Khadayan Sahayata YojanaS. No Ration Card Eligibility of Food Material Under the SchemeFood Grains Sugar Amrit namak kerosene1 Grey colourRation Card35 kg permonth perRation Card1.30 kg perRation cardFree 2 kgAmrit Namakper month perRation card3 litre permonth perRation card2 Saffron ColourRation Card35 kg permonth perRation Card3 10 Kg Saffroncolour Rationcard10 kg permonth perRation card4 Green ColourRation Card10 kg permonth perRation cardTable 2.6Table 2.739
  49. 49. 2.7 Supply System of Ration MaterialFor Implementation of Public Distribution System in Chhattisgarh 11 base depots are governing of IndianFood Corporation. State government authorized agencies, Chhattisgarh State civil supplies CorporationLimitedDescription of State Supply centre governed by Chhattisgarh State Civil Supplies Corporation are asfollows :-S.No District No. of SupplyCentrePlace of Supply Centre1 Raipur 06 Abhanpur, Aarang,Kharora,Dharsewa,Nevra,Raipur2 Dhamtari 03 Dhamtari, Kurudh,Sehawa3 Mahasamund 05 Mahasamund,Baghbahra,Basana,Saraipali,Pethora4 Durg 04 Durg, Hathkhoja,Borai,Patan5 Rajnandgaon 07 Rajnandgaon,Dogargad,Kheragad,Mohla,Maanpur,Churiya, chawki6 Kawardha 02 Kawardha, Padariya7 Bilaspur 07 Bilaspur,Kargi road, Pandra road,Bilha,Marvahi,Takhatpur,Jairamnagar8 Raigarh 07 Raigarh,Baramkela,Dharamjaigarh,Ghargoadha,Kharsia,Saranggad,Laylunga9 Jashpur 04 Jashpur, Bagicha,Kunkuri,Pathalgaon10 Sargunja 04 Ambikapur, Sitapur,Lakhanpur,Udaypur11 Korea 04 Baikunthpur, Janakpur,Chirmiri,Mahendragad12 Janjgir 06 Champa,Akaltara,Dabhara,Naela,13 Korba 03 Katghora,Korba,Pali14 Kanker 07 Aamabeda,Antagath,Bhanupratappur,Charama,Kanker,Naharpur,Pankhajur15 Dantewada 02 Dantewada,Gedama16 Bijapur 03 Bijapur,Bhopal patnam,Bohramgad17 Bastar 02 Jagdalpur,Karpavanda18 Narayanpur 02 Narayanpur,Orcha19 Kondagaon 07 Keshkal, Kondagaon,Badedongar,Mardapal,Mungapadar,Shyampur,Makadi20 Gariyabandh 04 Gariyabandh,Devbhog,Rajim,Manpur21 Balodabazar 04 Kasdol,Balodabazar,Belaigad,Bhatapara22 Bemetara 02 Bemetara, Saza23 Mungeli 02 Lormi, Mungeli24 Baloda 04 Dandelohara, Donadi,Balod,Gunderdehi25 Surajpur 03 Surajpur,Vishrampur,Pratappur26 Balrampur 04 Kusami, Ramanujaganj,Sanawal27 Sukam 02 Sukama,KotaTotal 110Table 2.840
  50. 50. 2.8 Consumer Price:-State Government receives monthly allocation of wheat/rice/sugar/kerosene oil from centralgovernment under Public Distribution system. Distribution of amrit namak under public distributionsystem is made by state own resources. Consumer rates of ration material under public distributionsystem are as follows:-S. No. Goods Rates forSaffron, 10kgSaffron ,Green& Grey,Mukhya MantriKhadayanSahayataYojana & BPL(Yellow),Annapurna(violet)Rates forAntyodaya(red) RationcardholdersRates for APL(White) Rationcard holders1 2 3 4 51 Wheat 2.00 - 8.502 Rice 2.00 1.00 11.503 Sugar 13.50 13.50 -4 Amrit Salt Free Free -5 Kerosene Minimum Rs14.42 to MaximumRs16.02Minimum Rs14.42 to MaximumRs16.02Minimum Rs14.42 to MaximumRs16.02Monthly allocation of Ration Material by Indian Government under Public Distribution SystemFood A.P.L B.P.L Antyodaya Annapurna1 2 3 4 5Wheat 15000 2610 - -Rice 10360 37864 25162 178Sugar - 4512Kerosene 15544Rupees per kg/literQuantity in tones/in KilolitreTable 2.9Table 2.1041
  51. 51. 1.1 Public Distribution System: IntroductionDISTRIBUTION is a crucial function of marketing. It provides a vital link betweenthe producers & customers by making available goods & services. The distribution systemencompasses all movements starting from the shipment of raw material to the delivery of thefinished product to the consumer. The distribution system undertaken by the government or anypublic agency is termed as ―Public Distribution System‖ (PDS). A PDS is the whole or a part ofthe distribution system in principle owned & controlled by the public authorities on behalf of thegeneral public & run by them for the good of the general public or a specific group thereof.―Public Distribution‖ is an aspect of the demand & supply management. Its aim is tomeet the basic needs of the vulnerable sections of the community who cannot afford to dependupon the market forces to obtain their supplies. Public distribution is direct ―State Intervention inpublic affairs ―. Public Distribution by its very nature encompasses generally items of massconsumption such as food grains, sugar, kerosene, controlled cloth, washing soap, tea, coffee,match boxes, soft coke, candle, exercise notebooks etc.Public distribution of essential commodities has become the main feature of thedeveloping economies. All the countries in the 3rdworld are facing the scarcity of essentialcommodities & hence it has become the responsibility of the government to provide thesecommodities to their citizens at reasonable prices in time. The whole of the distribution system inthe socialist countries assumes the role of PDS. In case of mixed economies, only that part of thedistribution system could be called PDS which is owned by the public authorities.The concept of Public Distribution System in India has some specific connotations. Itis a not a system of distribution under public ownership as in the case of many socialistcountries, nor is it an independent system of consumer cooperation of the type found in theScandinavian countries. The Public Distribution System in India is a retailing system supervised& guided by the state.The basic objective of the strategy of the Public Distribution System in India, as inmany other countries, is to supply food grains & other essential commodities to the poor &disadvantageous sections at fair prices. The Strategy has been to effect the distribution of thefood grains & other essential commodities through a system of partial rationing. This takes theform of the sale of essential commodities through a Fair Price Shops at a price lower than theruling market price. Ideally, such a policy is a directed towards providing the essentialcommodities for the weaker sections. But it implies that the government procures sufficientamount of the marketed surplus from the producers & traders through the system of compulsorylevy & other procurement policies.2
  52. 52. 2.9 Departmental Schemes1. Mukhyamantri Kanyadan Sahayata Yojana :-Under public distribution system, the central government hasaccepted the number of families living below poverty line (BPL) in Chhattisgarh as 18.75lakh families. Allocation of food grains by central government to state government isdone on basis of this statistics. In the financial year 2006-07, 23 lakh poor families areprovided with food grains at subsidized rate, in this 7.19 lakh families of AntyodayaAnna Yojana also included. State government was facing problem in allocating 35 kgfood grains to each families in the financial year 2006-07. State government had appealedcentral government to increase the quantity of food grains for allocation but it was notaccepted by the central government. State government decided to provide food grains toneedy & poor families at their own expenditure at subsidized rate & from April,7―Mokhyamantri khadann Sahayata Yojana‖ get started. Targeted Beneficiaries of thisscheme are as follows:-a) All the families included in BPL survey in year 2002(rural) & 2007(urban) exceptthe beneficiaries of Antyodaya Anna Yojana.b) All the ration card beneficiaries families which are included in 1991 & 1997 yearin BPL survey, & whose names are not included in year 2002(rural) 2007 (urban)BPL Survey.c) Beneficiaries of Rashtiya Virdhavastha Pension Yojana & Samajik SurakhsaYojana Which didn‘t get the BPL ration card, Antyodaya Anna Yojana orAnnapurna Yojana ration card.d) State Nih-saktajan identified by State government.Poor families of state get foodgrains at subsidized rates, when the MukhyamantriKhaddya Sahayata Yojana come into force in April,2007.2. B.P.L Yojana:-Indian Government have accepted the number of families under stateBPL scheme as 11.56 lakh & for this 37864 metric tone rice, 2610 metric tone wheat &total 40474 metric tone food grain is allocated per month.Details of food grains distributed till 15 February 2012 under BPLScheme in financial year is as follows:-BPL Wheat BPL RiceAllocation Off take Allocation Off take31320 28710 454368 4534683. Antyodaya Anna Yojana:-This scheme come into force from March 2001.Under this scheme verypoor families get 35 kg rice per month at the rate of Rs 1 per kg per family. StateGovernment is allocated with 25,162 metric tone rice by Central Government. AllQuantity in Metric tonetonnetotonne42
  53. 53. contingent expenditure & payable commission to shops is bear by the state government &in the year 2012-13 budget amount is of 44.80 cr. Details of food grain allocated &distributed on February 15,2012 under Antyodaya Anna Yojana is as follows:-4. Annapurna Yojana:-This scheme come into force in Oct,2001.Under this scheme oldperson who are of age 65 years or more, who are eligible for pension scheme but not gettingbenefit of it are provided with 10 kg rice per month free of cost. Total numbers ofbeneficiaries under this scheme are 19,965. All contingent expenditure & transportationexpenditure is beard by the state government. Details of food grains allocated & distributedtill February 15,2012 under Annapurna Yojana is as follows:-5. Food Supplies to welfare organizations:-Under this scheme female student living in hostels & ashram govern by ST SC developmentdepartment are provided with 15 kg food grains per month. After getting permission fromCentral government, Annapurna dal-bhat Kendra is getting rice at BPL consumer price.Central Government is allocating 3800 metric tone food grain per month under this scheme.Details of food grains allocated & distributed till February 15, 2012 is as follows:-Wheat RiceAllocation Off take Allocation Off take1157 1157 33615 272296. Distribution of Sugar:-State Government get allocation of 4512 metric tone sugar fromcentral government .State government has decided to give sugar to ration card beneficiariesat the rate of Rs 1.30 kg. Details of sugar allocated & distributed till February 15, 2012 is asfollows:-Allocation Distribution50562 505627. Distribution of Kerosene:-Under Public Distribution System State government is getting allocationof 15,544 kilolitre kerosene from Central government.Allocation Distribution301944 290535Allocation Distribution2407 2082Quantity in Metric toneQuantity in Metric toneQuantity in Metric toneQuantity in Metrictone43
  54. 54. Schemes by Central Government under Targeted PublicDistribution SystemS.No Scheme Group Scheme Name1 TPDS APL2 BPL3 AAY4 APL Additional (Allocation dated on 02/08/2010)5 BPL Additional (Allocation dated 07/09/2010 valid upto30/06/2010)6 BPL Additional (Allocation dated 06/01/2011 valid upto30/09/2011)7 BPL Additional (Allocation dated 16/05/2011 valid upto31/03/2011)8 APL Additional (Allocation dated 30/06/2011 valid upto31/03/2012)9 Allocation for 150 District (01-Aug-2011)10 Allocation for 174 District @ AAY rate (10-Oct-2011)11 Allocation for 174 District @ BPY rate (10-Oct-2011)12 APL Additional (12/03/2012)13 Additional Allocation for the Poorest Districts @ BPLrate.14 BPL Additional Allocation date 02/07/2012.15 Additional Allocation for Poorest Districts @ AAY rate.16 OMSS (Domestic) (throughFCI)Sale to State/UT Govt. (Retail Sale)- From FCI Depot17 Sale to State/UT Govt. (Retail Sale)- From StateAgencies Depots18 Bulk Sale through Open Tender – From FCI Depots19 Bulk Sale through Open Tender- From State AgenciesDepots20 Small (Private) Traders upto 9 MT/Person/Depot/Day-From FCI Depot21 Small (Private) Traders upto 9 MT/Person/Depot/Day-From State Agencies Depot22 Other Welfare Schemes Annapurna23 World Food Programme24 Wheat based Nutrition Programme25 SC/ST/OBC Hostel26 EFP27 NPAG/SABLA28 Welfare Inst. & Hostels29 Relief30 DefenceTable 2.1144
  55. 55. Source : pdsportal.nic.in/Files/IISFM_Schemes.pdfs31 Village Gramin Bank SchemeS.No Scheme Group Scheme Name32 Bhutan33 BSF/CRPF34 Mid Day Meal – Primary Standard35 Mid Day Meal – Upper Primary Standard36 Welfare Institutions Scheme – Addl. Allocation for CSR37 Export Export38 Tender Sale (Sound) excludingOMSS (Domestic)Tender Sale (Sound) excluding OMSS (Domestic)39 Adhoc Additional Allocation Special Allocation @ 8.45/11.85 per kg (Allocation date06/01/201140 Special Allocation @ 8.45/11.85 per Kg.(Allocation date06/01/201141 Additional @ Economic Cost42 Additional @ MSP Derived Rate43 Additional @ APL Rate44 Additional @ BPL Rate45 Additional @ Free of Cost45
  56. 56. Revolution in PDS in Chhattisgarh : Core PDS46
  57. 57. 2.10 INTRODUCTION:-COREPDS is FPS automation introducing mechanical authentication ofbeneficiary at the time of service delivery to check proxy issues and empowering beneficiarywith the right to chose FPS by offering portability of FPS, to improve service delivery. InCOREPDS, FPS‘ are equipped with a POS device with GPRS connectivity. Each BPLbeneficiary is provided with a Smart Ration Card (SRC). APL beneficiaries have been registeredwith their mobile numbers. PDS commodities are delivered to BPL beneficiary with Smart Cardauthentication and to APL beneficiary with OTP (One Time Pin) authentication. They can nowgo to go to any FPS to claim their entitlements. Portability introduced fear of losing customer inFPS‘ and competition among FPS‘, giving a reason to improve service delivery, in terms of notonly quality and quantity of commodities but in the behavior and treatment with the beneficiariesat FPS. COREPDS is designed for biometric authentication of the beneficiary using either theAadhaar infrastructure or Rashtriya Swasthya Beema Yojana (RSBY) biometrics. COREPDShas been operational in 151 FPS‘ of Raipur city. COREPDS is predominantly online system butallows a limited offline.Objective:1) To improve Service Delivery:- Primary purpose of the initiative is to improve servicedelivery at FPS in terms of quality of the commodities, quantity of commodities andbehavior of FPS sales person with beneficiaries.2) To reduce Diversion:- To check diversion of PDS commodities by checking proxyissues. Diversion in PDS Supply chain at any stage (while procuring, storage, at the timeof movement from warehouse to FPS or at FPS) is possible only when proxy issues canbe recorded in the system.Target Group:End users of COREPDS are about 1.5 lakh Ration carGeographical Reach within India:COREPDS has been operational in 151 FPSs of Raipur City.Geographical Reach outside India: YesDate From which the Project became Operational: 1-3-2012Is the Project still operational? Yes47
  58. 58. Innovations of programme/project/initiative:1.Portability:Portability of FPSs in PDS is first time being offered in COREPDS in the country‘sPDS history. Other FPS automation models being tried in other States do not offerportability, leaving no reason for improvement in service at FPS.2. One Time Pin (OTP):The penetration of mobile telephony is increasing every day in the country.Authentication of a beneficiary can easily be done sending a One Time Pin to thebeneficiary‘s registered mobile phone number. The beneficiary is then required to providethe OTP sent to her at the time of transaction. The OTP provided by the beneficiary is thenconfirmed from the data available at the server through the POS device. COREPDS uses thistype of authentication for issue of commodities to APL beneficiaries.3. RSBY smart card as a Smart Ration card:COREPDS is designed to use RSBY cards as Smart Ration Cards. This will be thefirst successful experiment in the country that provides for a synthesis between the efforts oftwo departments of the government to provide services to common beneficiaries through thesame instrument (RSBY smart card). It also leads to significant savings for the governmenton account of time and money required to duplicate the efforts in absence of the synthesis. 64K RSBY cards are being issued by Health department from Sep 15th 2012.Key achievements of the programme/project/initiative:1.Reduced waiting time for service delivery: Due to equal distribution of beneficiariesin all nearby FPS‘ the average waiting time has reduced to half an hour from 2 to 3 hours beforeimplementation of CORE PDS2.Reduction in diversion: Mechanical authentication at the time of delivery completelychecks the record of proxy issues and thus reduced diversion. Scheme % of sales declared byFPS earlier Actual % of sales in Aug 2012 BPL 99.5 % 95 % APL 50 % 20 % Kerosene 100%75%.3.Behavioral change in behavior of FPS personnel: The portability offered in48

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