1. PLUGGING THE LEAKS: IMPROVING
REACH AND EFFICIENCY OF THE
PUBLIC DISTRIBUTION SYSTEM
Arpan Bhalerao
Yogesh Joshi
Pavas Pathak
Shruti Mittal
Ishan Goyal

2. Millions of dollar worth subsidy in India is distributed via PDS and yet intended beneficiaries are
not getting benefitted
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% Andhra…
Assam
Bihar
Gujarat
Haryana
Himachal…
Karnataka
Kerala
Maharashtra
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Although a large food and oil subsidy is
provided by the government but due to
inefficiencies and leakages in PDS a large
amount of intended benefits are lost
thereby hampering the socio economic
growth of our country particularly the
economically backward section of Indian
population. Some of the major problems
that our PDS system faces are
Targeting Errors
Ghost Cards
Unidentified Households
Adulteration of products by fair price shop
owners
Lack of any standard product packaging
system
The graph in this slide shows the major errors
in our PDS which can be solved with the
new technologies that are now available
to us. The rapid growth of Information
technology has enabled the direct
monitoring of product and services possible
The above graph shows state wise distribution of
three major prevalent errors i.e. Shadow ownership
error ; Inclusion Error and Exclusion Error

3. Present Scenario
• Central government
procurement of goods
from farmers
• Storage at a central
location
• Movement to State
agency godowns via
rail, roads and inland
waterways
• Transfer of goods to Fair
Price Shops (FSP)
Proposed Flow
• Movement of goods
directly to State storage
facilities to prevent
transport cost and
pilferage
Linking Aadhar Card with PDS
Using biometric verification of beneficiary at fair price shops
Using electronic scales at fair price shops
Improving grievance redressal methods and increasing transperancy
Updating all the transactions in PDS in a central online monitoring database
Using biometric verification of beneficiary at fair price shops
Uniform standard packaging of all products
Monitoring all the transport vehicles involved in PDS System
HOW CAN WE FIX THESE PROBLEMS AND IMPROVE PDS USING NEW TECHNOLOGIES
Improving the supply chain

4. How can Aadhar card streamline PDS
Aadhar card can be one of the key factor if we are to
successfully plug the leak in our PDS System.
Aadhar card uses unique biometric features of an individual
and stores them in a central database which can be readily
accessed by any other government agencies. If we link our
distribution system based on Aadhaar card and verification
using biometric scale we will essentially eliminate any chance
of wrongly distributed subsidies
One such pilot project has already been started in Gujarat
where distribution of materials in fair price shop is done after
biometric verification of the beneficiary.
A typical biometric verification instrument costs somewhere
around Rs 9000 and considering the overall number of fair price
shop in India i.e. 4.78 Lacs this whole project will cost
somewhere around Rs 430.2 Crore. This investment can
produce significant results and ensure that the subsidies that
government provides reaches the intended target
No. of fair price shops 4.78 lacs
Cost of biometric
verification instruments
(Rs)
9,000
Total Implementation
cost
430.2 crores

5. What else can Aadhar do
One of the major problems that PDS faces is that certain households are
excluded from the PDS system. Some of the reasons for such exclusions
could be:
Lack of knowledge about PDS system
Remote areas where PDS system is not effective
Improper survey carried out of a particular area
With the increasing coverage of Aadhar and government estimates
that the complete Indian population would be covered by Aadhar by
2020. This would present a tremendous opportunity for the government
to fix all the leakages in its PDS System.
The previously uncovered section of society can then easily reap all the
benefits of PDS System by using Aadhar Cards.
However this step has to be followed by increasing the coverage of fair
price shops i.e. increasing there numbers to ensure that the fair price
shops are evenly distributed throughout the Indian geography and
people can easily access such shops.
It can ensure all India coverage of PDS system

6. STANDARDIZING AND BAR CODING PACKAGED GOODS
Packaged Goods Sizes:
Rice: 1kg, 5kg, 10kg
Wheat: 1kg, 5kg, 10kg
Pulses: 500g, 1kg
Sugar: 500g, 1kg
Oil: 200g, 500g, 1kg
Problem:
1. Ascertaining Quality: The quality of
food grains supplied is a big issue and
often has been found inedible
2. Lack of Monitoring: There is lack of
adequate monitoring at different levels
to ensure quality.
3. Lack of Incentive: Government
Officials are not incentivized to ensure
quality supply.
Solution:
1. Packaging: Foodgrains should be
packaged in different sizes.
2. Bar Coding: Bar Coding of these
packages ensures tampering is not
possible especially as the same will be
monitored through GPS and Integrated
Databases.
3. The mass leakages in FPS centers will
be checked as bar coded packages
can be easily traced if tried to be sold in
open market.

7. Use of electronic weights and electronic receipt system
The government should ensure that all the fair price shops are equipped with
electronic weighing machine and barcode scanner.
Government can follow the model of Smart Cards where millions of
transactions that occur every minute are stored in a central database and
can be monitored from the main server.
By using electronic weighing machine that would be linked to Aadhar card
database the government can ensure that no malpractices such as using
faulty weighing machine or pilfering the packets occurs.
A model similar to supermarkets can be used where before distributing the
goods the fair price shop operator would first have to swipe the Aadhar card
before generating a receipt.
A unique barcode should represent every individual subsidized packet of
good and it should be made mandatory that these packs are scanned using
bar code scanner before distributing them.
By this method government can track every individual packet of subsidized good reaches its intended
beneficiary. Use of electronic weighing machine will also enable generation of a computerized receipt which
can be used for future grievance redressal.
A central database will also help the government in determining the region where there is high demand for the
subsidized goods and region with low demands for subsidized goods. This will enable the government to ramp
up its supply chain in region with high demands and make necessary adjustments in areas where demand is
low.

8. TRACKING OF TRANSPORT TRUCKS THROUGH GPS.
Problems:
1. A large percentage of leakage in
PDS occurs in transportation to
FPSs.
2. The food is often transported to
regional storage centers and from
there to FPS causing unnecessary
expenditure to the exchequer.
3. The delays caused also lead to
spoilage of food.
Solutions:
1. The FPSs should be encouraged
to develop their own delivery
mechanisms. This % should be
increased and supplemented
through government initiatives
and subsidies to cover the
transport costs.
2. GPS should be installed on trucks
to keep a tab on movements. This
will drastically cut down leakages
and prohibit inefficiencies.

9. Suggested
improvements
Description Benefit
Collective ownership of FPS Management of Fair Price Shops to be
shifted from private dealers to community-
based organizations such as gram
panchayats, self-help groups (SHGs) and
cooperatives.
Collective ownership will prevent misuse of
provisions for private gains by indulgence in
black marketeering. The management
should be democratized and allocation of
profits should be used for improvements of
locality
Mobile FPS for distant
settlements
Provision for vans / trucks which can
transport food grains to distant parts of the
country, where brick and mortar FPS are not
viable due to lack of overall demand. Police
support should be provided for accessing
naxal effected areas
This is an important measure in order to
improve the wider reach of TPDS. This will
also solve the issue of reach in hilly regions.
Some local household can be made
custodian of small amounts of inventory
Readily identifiable ration
cards for BPL households
Color scheming of ration cards / aadhar
card will go a long way in visually aiding the
recognition process
Most beneficiaries of the TPDS are typically
illiterate. Visual identification of BPL / APL
cards will go a long way in educating the
citizens about their rights
Public grievance redressal
mechanism
Grievance reports should be acceptable at
local police stations. In addition, NGOs and
self-help groups (SHGs) should be given
direct access to high level government
offices
Establishment of string grievance system is
vital for sustenance of the system.
Involvement of society and inviting various
NGOs to play the devil’s advocate will lay
the foundation a sustained and constantly
improving PDS
IMPROVING TRANSPARENCY AT THE LAST MILE

10. CONCLUSION
Sale of goods in open
market
Bar coding of packaged
goods
Lack of quality Packaged goods
Lack of monitoring GPS implementation
No incentives to
public officers
Invigilation and
Incentivization
Identification of BPL Aadhar Card
Ineffective / No
tracking
Integrated database
We have proposed a top-
down approach with steps
such as biometric
identification, efficient supply
chain, etc to make the public
distribution system more
efficient and reduce the
wastage of goods. All these
changes should be implement
in unison to achieve the
desired results.
As PDS is a joint responsibility of
both central and state
government, both need to
held accountable. The
bureaucracy and the public
officers involved need to be
invigorated with a sense of
purpose and effective
monitoring of goods
transported.

11. REFERENCES:
• http://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf
• http://indiancag.org/manthan/resources
• https://www.google.co.in/webhp?source=search_app&gws_rd=cr&ei=YasoUuJ3x4euB72ZgOgI#q=c
ost+of+pds+in+india