The document proposes solutions to improve the reach and efficiency of India's Public Distribution System by addressing issues such as improper storage and handling of food grains, lack of transparency, and intended benefits not reaching below poverty line families. It suggests implementing flexible storage systems with mechanized handling in warehouses, integrating information and communication technology across the supply chain, and establishing standardized packaging solutions for fair price shops. The proposed solutions aim to increase accountability, reduce losses and inefficiencies, and better ensure intended beneficiaries receive subsidized food grains.

1. Improving reach and efficiency of
the Public Distribution System
Team
Randheer Singh
Prashanna Kumar Jha
Vedik Bobba
R.Karthik
Prakhar Jha 1
DAKSH
Plugging the Leaks :

2.  Improper Storage, handling and shortage of covered warehouse
 “Rs 58000 Cr” – Loss due to improper storage in 2011-12 *
 “Rs 85000 Cr” – Loss due to improper storage in 2012-13 *
 Middle men and lack of information in procurement of food grains from farmers
 39% of farmers unaware of minimum support price *
 Nexus between officials and middlemen causing significant losses in the supply chain
 Intended Benefits not reaching “below poverty line families(BPL)”
 “Rs 8.5 spent to transfer Rs 1 to the poor” *
 58% subsidized food grains doesn't reach BPL families *
 Lack of transparency and accountability
 Lack of awareness on quality requirement of food grains
 Information asymmetry in the supply chain
 Fare price shop are barely profitable
 Cronyism and nepotism in license distribution to FPS
 “Rs 8 commission per quintal of food grain” *
2
Problem Definition
* References in last slide

3. 3
Proposed Solution
Increasing accountability of procurement process through closed
loop verification system
Flexible storage systems and mechanized handling in warehouse
Information and communication technology integration across the
supply chain
Standardized packaging solution for Fair Price Shop

4. Implementation
strategy
Proposed sources of funding : Initial funding can be arranged by
Public Private partnerships, incubators like IITs & SMEs.
4
Pilferages on
account of less
quantity i.e.
malpractice of
less weighing can
be controlled
Getting
appointment in
advance will
reduce waiting
time at DPC
Reduction of
corruption and
involvement of
middleman from
procurement
process
State
participation in
training farmers
will lead to
Improvement of
food grain quality
Instant payment
of MSP to farmers
due to e-transfer.
Better control
over the process
through ERP
implementation.
Mobile number
and past supply
record of
farmers to be
integrated with
their UID No. in
database
Farmers can get
appointment at
DPC by sending
message from
registered
mobile number,
mentioning
type and
amount of food
grain.
At DPC rejected
food sample has
to be collected &
sealed which will
be tested at
District
agricultural
testing facility.
District testing
facility will
educate the
farmers to
improve quality
Electronic receipts
will be given to
farmers at DPC
and System
generated
message will be
sent to
warehouse
Resource required:
ERP solutions with
mobile applications
and IVRS system.
Recruit trained
people to work on
ERP and database
management.
Funding has to
come from removal
of subsidy from APL
category
Advantages
Increasing accountability of procurement process through
closed loop verification system

5. 5
Organizational
challenge :
Procurement staffs
and their union may
oppose this solution
Economic Challenges:
MSP is the best price
that farmers can get.
More and more farmers
will come to sell at DPC
and this will create
overstocking problem
for FCI.
Resource :
recruitment of
trained manpower
and capacity
expansion of DPC
facilities.
Criteria to measure the impact of the solution :
Reduced length of queue at DPC. Increase in acceptance rate at DPC year on year.
Scalability of the solution: Solution can be implemented at Mandi level.
Sustainability of the solution : Increase in number of counters at DPC and better
database management will provide sustainable solution.
Appropriate monitoring mechanisms: Implementation of ICT and integration with
IVRS and mobile applications.
Impact
of the solution
Challenges and Mitigation Factors
Government has to procure whatever comes for sell at DPC and increase the capacity of warehouse to reduce wastage.
Communication from top management will help in clearing the doubt / fear of rejecting a bad sample by Government
employees.

6. 80% handling
&
warehousing
facilities not
mechanized
70% grains
stored at farm
level
Significant
wastage due to
rodents, pests,
birds
Hermetic
storage
Conveyor
systems for
ease of
handling
Increase steel
silos storage
space from the
current 5
million tons
Cameras in
warehouses
connected to
public domain
for
transparency
Uniforms
and ID cards
for workers
for
accountabili
ty
Lease/rent
warehouse
space for
community
activities
when not in
use
Usage of public
school
playground in
case of
unavailability of
warehouse space
6
Problems Implementation
Flexible storage systems and mechanized handling in warehouse

7. 7
“Information and Communication Technology (ICT) driven supply chain”
 ICT opportunities to improve accountability and effectiveness:
Food Grain collection
at DPC
Inspection
Procurement
Cash Transfer
Transportation to
warehouse and FPS
Packing and
Labeling
Vehicle Tracking
Security
Storage at
warehouse
Security
Distribution
Inventory
Management
Distribution to
intended customer
Information on
availability
Delivery
Billing and
collection
Food Grain
Collection
Food Grain
Transportation
Distribution at FPSFood Grain Storage
Scope of ICT
 Mobile grain testing equipment
Direct cash transfer to farmers
Recorded testing data for farmer support
Bar-coding of packages for storage and retrieval
GPS tracking of vehicles
CCTV camera for accountability and security
ERP for functional integration and effectiveness
RFID for package tracking and accountability
Information and communication technology integration across the supply chain

8. Cash Transfer To farmers:
Unique identification and
integration with
“Aadhaar”
Collection of food grains
based on unique
identification
Direct cash transfer to
farmer’s unique account
number
Step 1 Step 3Step 2
Advantages:
 Eliminates middlemen from the collection process
Incentive for farmer to deliver food grains directly to government, due to higher price
Automated process and hence operation cost is reduced
Resource Needed:
 “Aadhaar” is used as a source of unique identification
 Integration of computers at collection center to server through internet connectivity
 Application to connect the various functions, e.g.: ERP software like SAP
 Training of employees in collection center to use the application
“Information and Communication Technology (ICT) driven supply chain”

9. 9
“Information and Communication Technology (ICT) driven supply chain”
Vehicle Tracking:
Resource Needed:
Transportation vehicle fitted with GPS and communication device
Integration of GPS to control center
Integration of control center to mobile phone of stake holders
 Physical IT infrastructure
Advantages:
 Tracking and monitoring of vehicles for accountability and security
 Information transfer to stake holders (customer, officials, FPS)
 Two way communication with transportation vehicle
Information and Control

10. Proposed sources of funding : Initial funding can be arranged
Public Private partnerships and in fact with the help of incubators
like IITs and other institutions SMEs and Entrepreneurs can be
developed & encouraged.
10
Pilferages on
account of less
quantity i.e.
malpractice of
less weighing
can be
controlled
Faster delivery of
can be
ascertained as
standard package
delivery will
reduce the
Queues and time
taken to weight,
hence Queuing
problem can also
be tackled.
Reduced handling
and storage
wastages as well as
time.
Easy to transport,
Controlled pricing
and tracking through
ICT
Hermetic packing
reduces wastage
due to moisture
and other factors.
Establishment
of Packaging
facility nearby
Mandis or FCI,
CWC, SWC
storage houses
before
distributing to
FPS
Packaging task
can be
outsourced to
private
parties/SMEs on
tonnage basis or
lumpsum basis
under recorded
supervision like
video
supervision
Infrastructure
needed for this is
minimal and can be
sourced easily ,
Further, Hermetic
packing also
ensures that usage
of pesticides and
other handling and
tracking issues can
be resolved.
Machines like
Automatically
powder weighing
and packaging
machines require
just two persons
per machine &
Fixed cost shall be
around 2.5 lacs
Variable cost shall
be of electricity and
operator : 1.5 lacs
per month
o/p shall be
minimum 1000
fills/hr with least
investment ,
hence reliable and
fast.This can be
increased
multifold
Advantages
Implementation
strategy
Standardized packaging solution for Fair Price Shop

11. 11
Social challenge :
People will doubt the
packaging only if it is
not visible to them.
Better packaging will
mitigate their doubts
once they start using it.
Economic
Challenge: Price will
remain same for
consumers but will
result in increased
price for government
with the increased
efficiency and
effectiveness of the
system.
Political : FPS
owners may not
accept this as
some of their
unfair practices
would be
hindered.
Criteria to measure the impact of the solution :
Customer feedback, wastages measurements, reduction
in handling expenses
Scalability of the solution: Solution can be
implemented at ware house level or at mandi level.
Sustainability of the solution : Reusable bags can be
used.
Appropriate monitoring mechanisms : RFID tags/ bar
codes ( refer ICT section of solution)
Impact
of the solution
Challenges and Mitigation Factors
Although, all the challenges can be mitigated with the participation of local
public in this mission. Packaging being semi-skilled work can help in
assembling ladies and we can build the network like Shakti Ammas ( ref.
P&G model).

12. 12
Achieving food security in a cost effective way: Implications of domestic deregulation
and reform under liberalized trade - Shikha Jha, P.V.Srinivasan, May 2004
How can food subsidies work better? Answers from India and the Philippines - Shikha
Jha and Bharat Ramaswami, No.221, September 2010
Food prices and the efficiency of public intervention: the case of the public distribution
system in India - B.Ramaswami, P.Balakrishnan
Food subsidy, income transfer and the poor: A comparative analysis of the public
distribution system in India's states - Raghbendra Jha, Raghav Gaiha, Manoj K.Pandey,
Nidhi Kaicker
Report of working group on warehousing development and regulation for the twelfth
plan period (2012-17) - Planning commission
Towards greater food security for India's poor: balancing government intervention and
private competition - Dina L.Umali-Deininger, Klaus W.Deininger
References