A Technology based Solution for
Plugging the Leaks:
Improving reach and efficiency of the
Public Distribution System
Inefficiency in distribution
Never ending queues..
Leakages in the system..
Isn’t there any solution for this problem.??
Public Distribution System (PDS) : a real big problem
Losses and leakages in PDS
§ Around 43% of food grains are lost due to illegal diversion by people with vested interests.
§ Approximately 19% of food grains gets allocated to non-poor people due to improper identification mechanism.
§ Only 10% of food grains reaches poor people.
Disconcerting characteristics of Indian PDS
§ Illegal diversion of food grains due to absence of central monitoring mechanism. Futility of vigilance teams.
§ FPS make up for lost stock, due to diversion, with adulteration problem
§ Improper identification mechanisms gives opportunities to FPS to misuse the subsidized food grains.
illegal diversion &
Reaches the poor
Can Direct Cash Transfer be an alternative solution? – NO! not completely
§ Major issues related to Direct cash transfer – Infrastructure issues, Targeting problems, difficulty in predicting
inflation, exclusion and inclusion errors
§ Moreover, Poor prefer FOOD to cash – Food policy research institute, Bangladesh 2009 , Slum women
overwhelmingly prefer food – Delhi 2011
What is the Solution? – snapshot of the solution proposed
(Un) Fare Price Shops
- Adulterations, Malpractices
Automated Vending Machine
- No Human Intervention
Middle Man Warehouses Fair Price
• Major source of problem - adulteration,
illegal diversion, not reaching targeted
households - in the complete chain
Due to Human intervention
• Over 0.5 million shops throughout the country
• Inefficient system due to Human
Automated Centralized Monitoring:
§ Automation provides for better monitoring of goods flow.
§ Matching of goods leaving warehouse and goods sold to entitled households, and no human
intervention ensures no illegal diversion.
Automated Vending Machine:
§ Replacement of Fair Price Shops with a completely automated Vending Machines for disbursing
specified food articles (SFAs) to consumers
§ Adhaar card to be used for identification.
§ License holders or franchisees to bear the cost of installing & maintaining the vending machine.
§ This prevents both adulteration problem and selling subsidized goods to non-poor people.
What is it?
§ It is (Fare) replacement for an existing (Un)Fare
§ Completely automatic distribution system, which
could be managed by any common man
What it looks like?
How it Works?
§ Computer system detects the identity of the
beneficiary based on Adhar card detection method
§ After detecting and validating, machine confirms
the applicable quantity of SFAs for the beneficiary
§ Hold a bag/can at the window, where machine
automatically weighs the exact quantity and
pours, to get your share
Why is it Better?
§ No Human intervention (solves 60% of the
problem) in the distribution process, so problems
of adulteration, malpractices could be curbed
§ Fast and highly efficient, reduces long queues in
front of shops
Automated Vending Machine: replacement of FPS
Front View: Automated Vending Machine
Side View: Automated Vending Machine
(With Storage at the back)
Implementation of the solution – Major steps
§ As per Justice Wadhawa committee recommendation implement the timely
delivery of food grains to FPS. States to strive to make doorstep delivery to FPS
§ Government should Partner with private technology firm to design the SFA
• Given the possibility of the bulk order and simplicity of the system, initial R&D cost is not significant.
Manufacturing cost of each machine could be 1 lakh
§ Replace existing FPS with these vending machines
• Area required is same or smaller than existing. FPS owners to bear the cost of machine (to enhance
accountability from ownership)
§ Connect all the Automated Vending machine, and the warehouse to a central data
management centre through a network (internet) which would help in collecting
real time information from the vending machine
§ Set up a Common central data management centre to manage the data and to
control the flow
§ Out source the database management and analytical part to the technology
• This particular technology can help in tracking flow of SFAs, controlling the losses due to weight hedging at
FPS during distribution, controlling adulteration , and maintaining the quality
Proposed Distribution Model
How does the system work?
Impact of the solution
Scalability & Scope of the solution
§ The vending machine model is designed to substitute
current FPSs. The target is to automate the entire
distribution chain i.e. 4.99 lakh vending machines in
place of FPSs: expense to franchise : 4,990 crore
§ Vending machines could be mounted on trucks and
made as mobile shops at places where population is
§ Small size Vending Machines could be made available
– any interested shops can install it at their premises;
This increases the availability.
§ The vending machines may also be used to solve an
alternate issue: Facilitate Family planning. A
compartment may be implemented in the machine to
carry contraceptives. As the machine has multiple utility,
it may make the act of procuring a contraceptive less
conspicuous and reduce the perceived embarrassment
associated with the action.
Criteria to measure the impact of the solution:
§ Percentage improvement in fulfillment by the distribution system (currently 10%) -
Recovery of loss of 62% fulfillment capability (43% from leakages from
transportation and 19% from leakage to non-beneficiaries)
§ Leakages and mismatches between grain transported from the warehouse, grain received
at the vending machine and grain consumed by allotted consumers
Sustainability of the solution
§ Franchise model: An initial investment would be
required from the owners. This can be procured as a
term loan of Rs 1 lakh.
§ The owners will be allowed a margin of Rs 0.40/kg
on SFAs sold to APL/BPL consumers and a
commission of Rs 0.40/kg for sale to AAY
beneficiaries. (Rs 0.05/kg more than existing
§ Volume based compensation to transportation
agents directly under contract guidelines through
government would reduce variations in supply.
§ Ceasing payments to distribution agents from
franchisee owner margins for APL consumers will
allow constancy of revenues, thereby reducing
incentive to hoard for alternative mode of payments
Appropriate monitoring mechanisms
§ Scanners and sensors at supply and receiving end i.e. outside the warehouse and at receipt of
grain at vending machine to match quantity delivered.
§ Quarterly audits at warehouses by CAG agents
§ Vigilance committee at district levels to monitor leakages at linkages between warehouse and
vending machines. Variable incentive for members mapped to efficiency of system
§ Surprise inspections at villages to check vending machines
Challenges and Mitigation Factors
§ Since the solution addresses the issue where people with vested interests earlier
made personal profits, the idea could face opposition from some forces.
§ The vending machine and centralized monitoring solution would require new, but
feasible, technological innovations. This would involve high initial costs.
§ The people, especially in villages might take some time to adjust to this technology.
§ Strong will on the part of government, will keep the forces in check and will help in
faster implementation of this idea.
§ Awareness programs need to be run to showcase the advantages and ease of
operation of the machines. Automatic centralized monitoring would require new
investments and trainings in IT.
§ The security guard guarding this machine needs to be trained to help people use the
§ Automated Vending Machine Solution, if implemented besides justice Wadhawa
recommendations, can solve 90% of adulteration and 75% of the leakage
§ Greatly reduces the human intervention and increases the efficiency
§ Efficient implementation of Food Security bill, which entitles 67 % of our
population to subsidized grains under the Targeted Public Distribution System, is
§ The Objective of the NFSB - to eliminate hunger and malnutrition, to correct the
distribution system to efficiently and effectively deliver to the correctly identified
beneficiary – could be achieved at 80% success rate.
§ Could solve the problems such as - 4 Crores Indians sleep hungry in any given night,
About 7 million children died in 2012 because of hunger / malnutrition.
§ Justice Wadhwa Committee Report on PDS
§ Images - Google images