1. IMPROVING REACH & EFFICIENCY OF PDS
Team Details:
School: SJMSOM, IIT Bombay
ABHISHEK SAHOO
ANKIT GARG
KABIR MAINI
ROHIT MANGAL
VINEET BUDHIRAJA

2. FACTS
2SJMSOM. IIT BOMBAY
The average level of consumption of PDS grains in India is
only 1 kg per person / month.
India has the largest stock of grain in the world besides
China, the government spends Rs. 750 billion ($13.6
billion) per year, almost 1 percent of GDP, yet 21% remain
undernourished
There are about 5 million Fair Price Shops (FPS) across
India.
Under PDS scheme, each family below the poverty line is
eligible for 35 kg of rice or wheat every month, while a
household above the poverty line is entitled to 15 kg of
foodgrain on a monthly basis.
The introduction of rationing in India dates back to the
1940s Bengal famine. this rationing system was revived in
the wake of acute food shortage during the early 1960s,
prior to the Green Revolution
intended to serve as a safety net for the poor whose
number is more than 33 Crores and are nutritionally at
risk.
The study says that in Nagaland, 100% of the grain
procured ends up in the open market. The figure is 70%
for Punjab.
The Planning Commission had the following to say on the
PDS system in its 2005 report: 1. “For every Rs 4 spent on
the PDS, only Rs 1 reaches the poor” 2. “57% of the PDS
food grain does not reach the intended people ”

3. Corruption, hoarding and mismanagement
Bribes for Inclusion
Food grains rotting
Leakages during transportation
Lack of Awareness about rules & regulations
of PDS
PROBLEM STATEMENT
MAJOR PROBLEMS
Out of Stock Food Grains
Exclusion of striving population
Economic viability of Fair Price Shops
Poor quality of available food grains
Overcharge & Undersupply
GENERIC CAUSES
3SJMSOM. IIT BOMBAY

4. ISSUES HIGHLIGHTED & PROPOSED SOLUTIONS
SOLUTIONS
4SJMSOM. IIT BOMBAY
Min Support
Price Politics
Low Quality Grain
Procurement
Pilferage
Exclusion & Inclusion fiasco
Point of sale blues
SYSTEM INEFFICIENCIES
Random auditing Inspector deputed to check the
quality of food grains at source & terminal
Samples of quality food grains for display at the
counters of Fair Price Shops (FPSs) for the benefit
of consumers
Distribution of Food Grains on 2 days in a month
in a particular village under the supervision of
Special Task force
Bar-coding of grain silos , ERP implementation till
state level to avoid grain rotting and last mile
tracking

5. PROPOSED SOLUTION
5SJMSOM. IIT BOMBAY
Using Polio Team for Door to door awareness
creation about PDS
User friendly & convenient new cards will
contain 2D barcodes details of at least two
members of a particular household
Directly routing the food grains required for local
consumption from producers to the domestic
market to minimize transportation cost
FPS owners: Additional commission, Door to door
delivery, Village mall model
GPS, Mobile Messaging for Truck tracking and
avoiding pilferage, Introduce strong Grievance
redressal system
UID based Inclusion, till then to establish identity
of card holder issue EPIC(Electoral Photo identity
card )
Spreading Awareness: Display and dissemination
of relevant publicity material during local
festivals/ community gatherings
Hoardings in local language for displaying
consumer awareness messages; organizing
exhibitions

6. PROPOSED PDS SUPPLY CHAIN STRUCTURE
6SJMSOM. IIT BOMBAY
Food
corporation
of India
STATE
AGENCY
PDS Special Task
Force
FAIR
PRICE
SHOPS
(FPS)
Farmers Card Holders
ALTERNATIVE PROPOSED
SOLUTIONS
Promoting community cooking activities to
minimize losses & attain economies of scale
Provide cooked food or introduce food joints
providing food at subsidized rates like in Tamil
Nadu

7. IMPLEMENTATION
7SJMSOM. IIT BOMBAY
Door to door
survey
• should be conducted initially where designated
enumerators are assigned to obtain identity details
of existing ration card holders.
Cross
verification
and
digitisation
• Either Election Photo Identity Card (EPIC) cards or
UID cards to be used for primary identification with
other Id cards like BPL cards, LPG connection cards,
Electricity bills as secondary verification to weed
out the possibility of bogus cards.
Smart
Ration cards
• The photo and biometric details of the beneficiaries is
obtained. The new ration cards should contain 2D
barcodes that stores crucial information about the card
holder including the EPIC of at least two members of a
household. Handheld device will capture the info &
update regularly in database
SMART CARDS
2 Days
•All FPS would be open 2 days per month. 2 STF
persons would monitor the point of sale
transactions so that the foodgrains are sold fairly.
Monitoring
•They would check the FPS weighing machines
using standard weights. They would monitor that
all customers are given their allotted foodgrains in
one go at correct price. This practise is being
followed in Chattisgarh.
Coverage
•These STF officers would thus cover 26/2=13 FPS
per month (assuming 26 working days in a
month)
STF DEPLOYMENT

8. IMPLEMENTATION
8SJMSOM. IIT BOMBAY
Bar-coding
• All the silos would be barcoded in the warehouse and
thus made trackable.
ERP
• The products would be tracked during transportation by
ERP system. The quantity of products and the date of
delivery at various points would be updated in the ERP
system. The products move from the FCI warehouse to
one railway station per state. From the railway station,
the products are delivered to different warehouses in the
state. From the warehouses, it is shipped to all the FPS.
Checks
• At each delivery, the ERP system would be updated
indicating the movement of goods. If goods are lying at a
station for greater than a week, an automatic mail would
be delivered to a central agency. After 4-5 such defaults
from an entity, appropriate action would be taken against
it.
FOODGRAINS PROTECTION
SHG as FPS
• Giving the licences to not a single individual but to
group communities and other self help groups with
the consent and trust of the concerned locals, giving
interest free loans and support for initial set up,
increasing their commissions and incentivise the
whole process
GPS
• GPS devices to be installed on PDS trucks that carry
the cargo from the warehouse to the FPSs to prevent
delays and curb pilferage.
• Movement of trucks are regularly tracked and
frequent updates are sent to concerned persons at
all stages to maintain transparency.
• SMS are sent to the village headman, beneficiaries
and concerned authorities upon the imminent
arrival of the trucks at the FPS locations.
• The movement of trucks is monitored by a control
room in the district headquarters by a specially
trained team of technicians and any deviations
from the prescribed routes is promptly escalated to
the concerned authorities.
OTHERS

9. IMPACT
9SJMSOM. IIT BOMBAY
Criteria
• % Reach= Amount of food grains reaching to the
people/Amount of food grains procured by FCI
• Numerator can be calculated by totalling the sales
data acquired by the data uploaded by STF officers
at the central website from the swipe device.
• Denominator is known.
Scalability
• implementation in 10 districts of a state . evaluate
the results of the pilot areas . If good, then across
the state and then across the whole country. Due to
the humungous scale, it can be carried out in a
staggered way over a period of 5 years
Sustainability
• Most of the inputs required are one time
investments and require maintenance from time to
time. The technical support team can very well
handle the maintenance issues of the GPS/ERP/
smart cards. This technology implementation project
can be handed over to some IT services giant like
Infosys/wipro/TCS etc.
• The current diversion rates in Bihar, Jharkhand,
Assam, and Rajasthan are between 85-95% which
indicates a complete breakdown of the system in the
coming years. However, bringing down the number
to around 10% would lead to sustainability of the
system.
Appropriate
monitoring
mechanism
• Flying squad for surprise inspections at FPS stations
• STF
• Grievance redressal mechanism for customers
• GPS tracking by STF’s technology wing
• ERP system to track timely takeoff of grains by STf’s
technology team

10. ESTIMATED COST IMPACT
10SJMSOM. IIT BOMBAY
Parameters Cost
**Cost of hiring Special Task Force 33,00,00,00,000
Extra Cost Incurred due to increase in Margins of Ration Shop
Owners 48,92,25,000
Implementation cost of GPS in trucks 10,92,020
Implementation of CCTV/Wall Camera in warehouses
1,13,10,000
Cost of Smart Card Enablement for every BPL family 32,61,50,000
ERP Implementation in PDS
Zonal offices Infra 6,48,00,000
Payroll(Officers) 9,72,00,000
Warehouse Infra 78,27,600
Payroll(Warehouses) 1,17,00,000
Software
Implementation 3,90,00,000
Bar Code Scanner 95,75,60,000
Bar Code Printer 42,90,000
Total Cost 35,01,01,54,620
*OVERALL COSTING ESTIMATES
*Refer Appendix 1 for assumptions and data
**Costing for deployment of Special Task Force
Number of FPS 5,00,000
2 STF officers cover 15 FPS
No of officers required 66,667
On an average, officers required per state 2,299
Approx. 2,500
Salary contribution to the STF
Salary per person including TA/DA per annum 5,00,000
Total expenditure on STF 33,33,33,33,333
In Crores Rs 3300 crores
*Refer Appendix 2 for assumptions and data

11. CHALLENGES
11SJMSOM. IIT BOMBAY
Initial investment needed on the setting up the required technology and
equipping the FPSs with requisite technology
Forming of technical-support teams for addressing technology related glitches
that might crop up
ERP implementation across the country is a significant challenge involving initial
monetary and operational issues
Setting up a flying squad for regular inspections and hiring of the required
personnel/manpower for the proposed PDS Task force for smooth functioning.
Monitoring of FCI procurement at the local levels

12. APPENDIX
12SJMSOM. IIT BOMBAY
Sources:
http://articles.economictimes.indiatimes.com/2011-12-
28/news/30565079_1_storage-capacity-food-grains-godowns
http://news.outlookindia.com/items.aspx?artid=557697 (BPL families)
http://www.thehindu.com/news/national/multipurpose-smart-card-likely-by-
2013/article2506682.ece
http://www.snapdeal.com/product/evis-barcode-
scanner/1455204?utm_source=earth_feed&utm_campaign=21
http://mumbai.quikr.com/barcode-printer-price-all/barcode-printer-price/x31
http://www.amazon.in/CCTV-S-Video-Computer-Monitor-
Converter/dp/B003VJ9R9W/ref=sr_1_4?s=electronics&ie=UTF8&qid=1378401655&
sr=1-4&keywords=cctv+camera
Appendix 1
Inputs already given
Cost per Kg of Wheat and Rice is Rs.3
Quanta per month is 25
Total number of districts 648
Assumptions
Margins per kg is Rs 0.5
Average warehouse capacity is 5000 metric tonnes
Average number of offices per district is 5
Average cost of computer is 20000 2
Officers per office with average income of Rs 15k
Population (No. of families) is 6523000
Average GPS enabled Mobile cost is Rs.2500
Smart Card cost is Rs 50 per family
Assumptions Contd...
Standard Truck Capacity is 8 Metric Tonnes(1000Kg/ MetricTonnes)
No. of working days in a year is 280 Truck makes 2 trips per day
Number of Regional Warehouses are 390(1956900000/5000000)
Barcode Scanner cost is Rs.2000 per unit
Bar Code Printer cost is Rs.11000 per unit
Cost per CCTV Camera is Rs. 2911 (10 units per warehouse)
Appendix 2:
Assuming an entirely new task force of 66000 is created who are given special
training
`
Population(No. of
Families)
Total Consptn
in KPA
Margins for FPS
Owner
Inc. in margins-
0.75/Kg Extra Cost
65,23,000 1,95,69,00,000 97,84,50,000 1,46,76,75,000 48,92,25,000
THANKS