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Annapurna
1. Improving reach and efficiency of the Public
Distribution System
Prepared By:-
Apoorva Mishra
Maulin Shukla
Tarun Tiwari
Trisha Jhaveri
Varun Pradhan
PLUGGING THE LEAKS
College: Institute of Technology,Nirma University
2. Indian government pays a subsidy of 15.7 rupees per kg and yet only 10% of the
poor are able to receive benefits offered by Public Distribution System
Problem Scope:-
• It causes widespread malnutrition and starvation
problems due to hunger.
• It leads to corruption to the tunes of 20,000 crore
in the system.
• Subsidy provided by the government is being
wasted as the beneficiaries are not able to
receive any.
• With the implementation of food security bill the
problems in the present system are bound to rise
Causes :-
• Leakage of goods during transportation and
because of system failure.
• Impractical Fair Price Shop(FPS) causing
failure in distribution system and also leading to
squatting of goods by the owners.
• Lack of government vigilance and monitoring in
the system.
• Improper identification of the beneficiaries
leading to high inclusion and exclusion error of
BPL people.
As a result, at present, a developing nation such as
ours is facing malnutrition and death from starvation
mainly because of insufficient PDS. Consequently, we
have on one side grains rotting in godowns and on the
other people dying of hunger. Clearly indicating that
there is a dire need to evolve the present system and
ensure that everyone gets what they are entitled to.
3. Proposed Solution
• Introducing government owned smart
stores which will replace the
traditional and not at all viable fair
price shops.
• Counting of BPL people in census,
reducing the exclusion and inclusion
net, and at the same time bringing
down fraudulent cases.
• Providing smart food cards instead of
the old age ration cards to reduce the
concept of ghost cards.
• Maintaining a vigilant monitoring
system to ensure an efficient public
distribution system
Advantages over current
system
• As the stores will be government owned,
leakages from fair price shops and
corruption will reduce to a great extent.
• Smart cards and smart stores will reduce
malpractices and corruption, increasing
the reach of supplies
• The system will be less costly and more
efficient than the existing one.
• There will be less error in BPL and APL
calculation as data from the census is
used. This further will reduce fake
entries and will ensure the usage of one
card per family.
• Reducing number of store from 5 lakh to
30,000 by using technology and
increasing efficiency.
The current PDS corruption estimate is around Rs. 20,747 crore
which calls for an immediate need to overhaul the whole PDS
system...
4. The first step of leakage starts at transportation level, hence plugging it becomes a
foremost priority...
Implementing :
STAGE 1:
• FCI works as the central authority
buying grains from the farmers
and then distributing it throughout
the country. Right now we face
20 % leakage during
transportation and thus, to
combat the same we introduce
tagging of goods with barcodes.
This makes it possible to keep
track of the exact items dispatched
before being loaded into trucks
which will then be tallied when
the stock is received. Plus, later
when sold, they are entered in the
data via barcode entries to keep a
check over measuring leakages.
Roughly a barcode system costs
around 60,000 -90,000.
FCI
[BUYS GOODS]
Goods coded
with Barcode
TransportationSmart shops
Tallying with
master
database of FCI
CVC and
Monitoring
authority
5. The Planning Commission deemed only 23% of the ration shops as viable. So, an
alternative to them is presented as Smart Stores.
STAGE 2: [Smart Stores]
• The stores will be owned by the Government having a linked warehouse for storing goods .They will be equipped
with computers, barcode systems, CCTV monitoring etc.
• The store will have a total of 9 employees(3 computer operators and 6 helpers) and 3 counters.
• Handling capacity of the store:
- It has been assumed that each person will take about 2 minutes to collect ration from the store.
- The store will remain open for 10 hr each day.
- Breaks and holidays will be given on rotation basis.
Smart store
Handling capacity per
month=27000*
Counter 1
Handling capacity
=30*60*10/2
=9000
Counter 2
Handling capacity
=30*60*10/2
=9000
Counter 3
Handling capacity
=30*60*10/2
=9000
*Maximum handling capacity comes out to be 27,000 per month but keeping in mind all the operating errors
handling capacity roughly comes out to be 20 to 22,000.
6. 10 crore ration cards exist for 6.5 crore BPL families; hence the problem of
identification is leading to high errors. We need to ensure that supplies reach
those is genuine need.
Allocation of stores
• Stores are to be located all across the country on
the basis of population density index of the
area. So ideally the total number of stores
required will roughly be =
40 crore(targeted population)/22,000 (maximum
handling capacity) = 18,200
Identification of beneficiaries
Total stores
allocated
There should
be at least one
store located
in a radius of 7
km
Handling
capacity of the
store should be
at least
15k.(minimum
70% efficiency)
If either of these criteria are not met the number of
counter per store are reduced from 3 to suit the area
population density. This reduces our inventory cost at the
same time ensuring accessibility to all the beneficiaries
To ensure no beneficiaries are excluded and no false
beneficiaries are included we suggest adding house
hold income as a stringent part of the census of India.
Problems Solved by using Census
The census volunteers will take the certified
income of household and depending upon that
will mark them down as APL or BPL.
Instead of current system for deciding BPL we suggest
keeping in mind the inflammation factor and area wise
income distribution while making calculations. Thus
keeping it as a dynamic factor rather than present static.
This will help in reducing the inclusion and exclusion
net error which at present stands at 25% and 61%
respectively.
STAGE 3:
7. Smart Cards
We suggest using smart ATM type food cards instead of the present
old age ration cards.
There will be a unique card for each household, containing all
family data and income allocated through the census, and also
biometric data such as iris or fingerprints for unique identification.
This way there is no possibility of creating ghost cards
They will be used by the user at his or her allocated store to collect
his quota of grains on a particular day of the month inscribed on the
card (this way there is even distribution among shops and working
days)
A backlog date will be provided to the users if the miss out on the
original one due to some reason.
Benefits
All data stored digitally and record of sales kept and
tallied to ensure that there is no foul play
Only a family member can use the card and as routine
will tally the data, thus not allowing card laundering
and making sure that the goods reach the right hands.
Since it can be used only once in a month, no one can
take more than their share.
Process will be smooth and easy to manage with all
records kept online and cross checked from time to
time.
In case the beneficiaries change places a simple
process by the present store operator will shift them to
the other store database.
Monitoring System
STORE
Will have CCTV
manifested to
maintain the
security of goods
and proper
measurement
standards to be
followed
HELPLINE NUMBER
Will be set up on
which a complain
can be registered
any time. It will be
outsourced to an
outstation BPO
ensuring fair play
and quick action
CITY OFFICER
Two will be appointed
for a district. Will verify
the complains and then
report them to state
head of CVC for
required action to be
taken. Will be
responsible for anything
happening in stores
under their area.
SURPRISE RAIDS
May be conducted
by the FCI and CVC
from time to time to
keep a check on the
proceedings and
running of the
stores.
8. .
Building our Food Army…
Management of vigilance committee:-
•FCI will setup a vigilance and monitoring committee in collaboration with CVC.
•This will include appointing a state and union territory head for the system reporting directly to the chief of CVC.
•Every state head will have under him a team of officials recruited by state government civil services especially for
monitoring PDS.
•There will be 2 officials per district who will investigate and verify all the complaints made by the people against the
store operating staff.
Management of Stores:-
•First tie up with a renowned consulting company to recruit store computer operator in define period of time.
•Arranging a workshop for all operator to accustom them with new system
•Employing helpers under MGNREGA to increase employment
•Operators to be transferred time to time to ensure transparency
Management of Transportation system:-
•Privatizing the whole transport network outsourcing it to a recognized transportation company
9. .
Barcode ,smart card and CCTV implementation cost
=30000*30000+50 Crore(smart card)=80 crore
Store construction and renovation cost
=5lakh*30,000(no. of stores)=1500 crore
Store management cost(employee’s salary and store
resources)
=(3*2 lpa+6*0.8lpa+1lakh)*30,000=3600 crore
Vigilance and Monitoring System(official’s salary and
BPO)
=35*8LPA+546*LPA*2+200 crore=250 crore
Estimated
Total Cost
5450 crore
Cost remaining an important factor, we aim to bring it down, simultaneously
ensuring that the efficiency and the ability of our system is not compromised.
Technology cost
Inventory cost
Organizational
cost
Currently 5 lakh fair price shops are working and as per the data of planning commission each shop owner
is paid a subsidy of 5 Rs which generates an average income of Rs 3lpa per store. Thus, current working cost
of the whole system roughly comes out to 15000 crore.
We reduce it substantially by bringing down the number of stores to 30,000 ;simultaneously increasing
their efficiency manifolds to maintain the balance.
10. We have one of the world’s largest distribution system affecting nearly 400
million people which is bound to be doubled to 800 million , therefore we
require the most efficient system possible.
Impacts
• The proposed solution will
overhaul the present system and
is bound to effect the reach of
PDS nearly targeting 40 crore
people.
• This will reduce the problems of
hunger and malnutrition and will
provide our people with the Right
to Food.
• High and vigilant monitoring will
ensure the right use of subsidy.
• It will reduce the number of stores
by at least 5 times hence cutting
down on Government expense by
roughly 60% .
• Also it will create around a lakh or
more new jobs for our youth.
• It can also be amended to
implement the new food security
bill easily.
Reach
• It is expected to cover the entire BPL population ensuring a regular supply of ration.
• It will be rolled out in the entire nation taking over from the inefficient present fair price
shops.
• These smart stores are quite sustainable as the technology used is quite cheap and easy
to handle.
• The idea is to slowly integrate it into the mainstream adding privately owned stores in
the loop for accepting the smart cards thus reducing government’s burden and expense.
• They can be easily modified to implement food security bill.
.
HOW?
•Increasing number of stores to cater to the
increased beneficiaries. i.e. for 80 crore
people the number of stores will have to be
doubled from what we are using now.
•Modifying the smart food card to also
contain the detail of the quota of subsidized
commodities to be distributed
•The whole scheme can be implemented in
the targeted fund of 125 thousand crore
allocated by the government.
11. Challenges
• Can make use of the already
existing FPS .
• Centre should share the
responsibilities with state
governments.
• Review the database and
amend accordingly on a
regular basis.
• Take aid of organizations like
UNESCO to confirm the
validity of data
The identification of
beneficiaries may not turn
out to be as accurate as
expected.
• Using a vigilant and powerful
monitoring system thus
enabling strict and timely
actions against such
deception
There may still remain
some form of corruption
prevailing in the system.
Government may not
readily take the entire
responsibility of the
system and setting up of
new shops.
CONCEPTUAL MITIGATION
• Central vigilance committee
will check from time to time
to ensure that proper grains
are transported and all the
equipments are fair.
• The government can buy
their shop from them at a
fair market price as
compensation.
FPS owners will protest as
government employees will
work instead of having shop
owners.
• A workshop of 15 days will
be conducted for all the
employees to make them
familiar with system and
ensuring proper
implementation.
Use of technology may be
hard to implement in rural
areas.
Quality of grains
distributed may be
inferior or there may
be tampering with
measurement
instruments.
IMPLEMENTATION MITIGATION
