What is Ailing India’s PDS?


The Public Distribution System, abbreviated as PDS, is an Indian food security scheme instituted by the Government of India to procure and distribute food and non-food basic essentials to the poorest strata at heavily subsidised rates. Some of the major items distributed under the scheme are wheat, rice, sugar, Kerosene, etc., through a pan-India network of Fair price shops (Ration depot). Food Corporation of India (FCI) is the nodal agency to undertake PDS.

Despite feeding millions of Indians and evading famines successfully for over decades, it is riddled with scores of drawbacks for which it is regularly in the news. Before discussing about it, let us first have a fair idea about PDS.

What is PDS?

The basic idea behind the formulation of PDS was to avail food to poorer strata at affordable prices with the intention of ensuring food security. It remained a flagship program for successive regimes for decades. It entails the procurement of food, storage, and then distribution to the identified beneficiaries at cheaper prices. In other words, it’s about subsidizing food for the poor.

Its evolution

  • PDS had its genesis during the world war-2 food crisis. It was a rationing scheme where the imported food wasInfo 1 rationed among the needy.
  • Later it was expanded to rise up to the challenges of food shortages during the 1960s, and the establishment of FCI followed for the procurement and storage of food.
  • In the next decade that followed, it was made universal, reaching out to the entire population, and remained universal till 1992.
  • In 1992, it was revamped and called Revamped PDS. RPDS was formulated to effectively reach out to remote corners of India.
  • In 1997, RPDS was rechristened as Targeted PDS (TPDS), to specifically target the needy beneficiaries and delist the well-off sections. Under TPDS, the population was categorised into two sections, below the poverty line and above the poverty line. People below the poverty line are entitled to higher subsidies than the people above the poverty line.
  • In 2003, Antyodaya Anna Yojana was initiated to target the poorest of the poor one crore population of India. Beneficiaries were entitled to more benefits than the previously identified people.
  • Later in 2013, GOI enacted the National Food Security Actthat predominantly relies on PDS, making PDS a statutory right. As per NFSA norms, Priority household members are entitled to 5 kgs of grain per month at Rs. 2/kg for wheat and Rs. 3/kg for rice. Antyodaya households get 35 kg/month at the same prices, regardless of family size.

How does it function?

  • Both Central and state governments are involved in its functioning.
  • The central government shoulders the burden of procuring the food grains directly from the farmers atPicture 1 statutory Minimum Support Price (MSP), stores it, and then sells the grains to state governments at Central Issue Prices (CIP). The Centre bears the responsibility of transporting the food to the state’s storage godowns.
  • States dispatch the food from godowns to the fair price shops, where the final beneficiaries buy the grains at the subsidised Central Issue Price. Some states offer their own subsidies beyond the CIP.

Significance of PDS

  • Ensuring food security by availing food grains at affordable prices.
  • Ensured basic nutritional levels (Albeit not at desired level).
  • Stabilised food supply.
  • Helped in re-distribution of food from food excess regions to regions with scarcity of food production.

Status of PDS

India’s PDS is touted as the world’s largest distribution mechanism, with around 5.4 lakh Fair price shops dispensing commodities worth more than 15,000 crores to around 80.9 crore people (59% of the population) hailing from 16 crore families. More than 2.5 crore people hailing from the poorest strata are being benefited under the Antyodaya Yojana. During the pandemic year, the central pool’s disbursal of rice and wheat crossed an all-time high of 93 Metric Tonnes in 2020-21. Around 91% of the Fair Price Shops in the country are automated using Electronic Point of Sale (EPoS) devices for the transparent distribution of grains.

Drawbacks Choking the PDS

However, right from its beginning, PDS is laced with a plethora of issues. We shall discuss the major bottlenecks that are choking the world’s largest distribution network.

  1. Issues with the identification of beneficiaries:  Owing to the sheer scale of the scheme, it is riddled with identification errors. Inclusion and exclusion errors have been resulting in the wastage of valuable resources. An expert group exclusively constituted for this job in 2009 had reckoned that PDS is riddled with 61% ofPicture 2 exclusion errors and 25% of inclusion errors. Going by the PDS portal, it is catering to only 59% of the population as against the mandated 67% by the NFSA 2013. According to the reputed economist Jean Dreze, more than 10 crore beneficiaries are denied their rightful ration under the PDS scheme. This anomaly predominantly stems from the fact that PDS beneficiaries are drawn on the basis of the 2011 census, whereas the present population of India far outnumbers the 2011 census figures. By applying the mandatory 67% ratio to the latest population, around 90 crore people are entitled to avail of PDS, but only around 81 crore people are availing it.
  2. Issues with procurement: Procurement is the first stage of PDS, and the rot creeps in right from the first step. Since it adopted an open-ended procurement, there is no limit on procurement. As a result, a large number of farmers, especially those who are cultivating paddy and wheat, tend to sell their produce to the government rather than in the open market due to the price assurance from the government. As a result, there is a shortage of grains available in the open market, which naturally inflates their price in the open market. Another issue was the penchant for paddy and wheat in the procurement, ignoring the other crops. Similarly, most of the procurement happens from a handful of states like Punjab, Haryana, west Bengal, and Andhra Pradesh. So, only farmers from these states have largely benefitted, leaving behind a large chunk of the Indian farming community. Shanta Kumar committee in 2005 estimated that only 6% of the farmers are being benefitted from the government’s procurement.
  3. Issues with storage: The FCI is the nodal agency for the storage of PDS grains and it is handicapped by a shortage of storage infrastructure. It is bereft of adequate modern storage silos. Hence, grains are often stored in outdoor ‘Cover and Plinth’ storage systems. This leaves the grains vulnerable to the attacks of rodents, insects, birds, pests, and the moisture of the environment. Unexpected rainfall and storms further compound the woes. The current warehousing capacity in India, including the centre, state, and private firms, is 526 million MT, whereas we are in dire need of an additional 35 million MT warehousing capacity. Also, poor storage often results in theft and black marketing of the grains.
  4. Issues with distribution: The distribution of grains is riddled with heavy leakages. These leakages mainly emanate during transportation and due to black marketing. As a result, a huge chunk of grains doesn’t reach the fair price shops and is rather channelised to illegitimate destinations like rice mills and unauthorized dealers. The erstwhile Planning commission has found that 36% of the rice and wheat are channelized to illegal destinations. Even the recent Shanta Kumar committee estimates the leakage of PDS grains to be about 45%.
  5. Environmental issues: Our urge to attain food security with scant regard for the environmental toll has left an exhausting impact on our environment. Our penchant for paddy and wheat to distribute under PDS has motivated most of the farmers to undertake their cultivation. But on the flip side, these crops are highly water-guzzling crops. One 1kg of rice roughly needs 3,500 litres of water during cultivation. As a result, our PDS is taking a toll on India’s water resources, bringing us to the brink of becoming a water deficit country.
  6. Ignores nutrition: Our PDS, right from the beginning, is purely focused on calorific aspects rather than nutritional aspects. As a result, even though India has achieved food sufficiency, still the majority of theInfo 2 population suffers from malnutrition. PDS commodities aren’t diverse enough to cover all the necessary nutrients and micro-nutrients. As a result, paradoxically, the world’s largest producer of grains also shoulders the burden of the largest malnourished population. The comprehensive National Nutrition strategy (2016-18) reveals that 35% of Indian children aged between 1-5 years and 22% of children aged between 5-9 years suffer from stunting. Even among adolescents, 24% of the population were found to be underweight.

How to streamline?

The Shanta Kumar committee has prescribed the following corrective measures.

Procurement: As the procurement stage is widely being criticised for the lopsided implementation, the committee has given the following suggestions.

  • Adopt a decentralised procurement system wherein states that have already developed adequate procurement infrastructure are allowed to procure the grains directly from the farmers, averting the FCI route. In states like Punjab, Haryana, West Bengal, etc., the market rates are above the MSP, and hence there is no point in procuring from these states. Rather, FCI should focus on procuring more from the remaining states, particularly where the market prices are below the MSP.
  • Do away with the open-ended procurement as they lead to stocks’ piling up. The committee had asked to place a threshold level beyond which should be automatically liquidated in the open markets. This would serve two purposes. Firstly, it would reduce the storage costs and storage losses, and secondly, it would stabilize the prices of grains in open markets.

Storage reforms

  • FCI should gradually outsource the storage task to private players, thereby relieving the central and state warehouses from this job. Private players bring in new scientific methods and efficiency in storage.
  • ‘Cover and plinth’ storage should be replaced by the Silos system with the aid of the private sector.
  • End-End computerization to track the stocks at godowns and movements of grains from the godowns.
  • Remote regions like the north-east states and Jammu Kashmir should install sufficient storage capacity that can stock up grains that would last for three months at least. This provides them the cushion to withstand climatic catastrophes, which may isolate them from the rest of India.
  • Disburse the rations for six months on a go rather than dishing out monthly rations. This would reduce the storage burden on governments, and people will themselves store them in their homes.


  • While transporting the grains on vehicles, pack them in containers rather than gunny bags. This would preserve the grains from moisture and rodents and also reduce the turnaround time during loading and off-loading processes. Gunny bags should only be used during the final transit.
  • 85% of the PDS grains are transported through railways, and most of the theft occurs here. Hence night security at rail points should be strengthened.
  • Construct silos at mandi points and connect them with railways.
  • Tap the services of inland waterways where and when possible. Develop a multi-modal transport system for PDS transportation.

Direct cash transfer to Consumer: The committee recommends Direct cash transfer to the beneficiaries in place of subsidising the PDS grains. It is recommended to disburse some fixed amounts directly into the accounts of beneficiaries and let them buy whatever cereals they want. Its potential advantages are;

  • Available cash-on-hand increases consumer choice.
  • Would relieve the government off the burden of undertaking the world’s largest distribution network.
  • Reduces leakages, inclusion & exclusion errors as the transfers are Aadhar based.

However, it is not totally foolproof. The committee hasn’t factored in the possibility of the following backfiring.

  • There is no guarantee that the money would be spent on acquiring grains. In patriarchal societies like ours, men have all the sway on household money, and they may abuse it for personal addictions.
  • May leave beneficiaries vulnerable to inflation.
  • Poor financial illiteracy among the masses and lack of adequate banking facilities in rural areas.

Rationalising the NFSA-2013: The act presently mandates to cover 75% of the rural population and 50% of the Urban population, amounting to 67% of the population. But the committee sees this figure to be exorbitantly high. It opines that only 40% of the population needs subsidized grains, and hence the act should be amended in line with changing times. This would benefit the government’s exchequer.

Rationalising the subsidies: The PDS grains are highly subsidized to the extent that India has spent 2.94 lakh crores on food subsidies for the years 2021-22. So, the committee proposes the subsidies be rationalised. At present, for Antyodaya beneficiaries, rice is sold at 2/- per KG and wheat at 3/- per KG whereas government spends 20 rupees to 30 rupees per kg on the same grains. So, the committee recommends cutting down the subsidy to 50% below the MSP.

Strides in the right direction

Technology would be a game changer in schemes of this mammoth scale. Already, many states have taken up technological reforms to strengthen the PDS and plug its loopholes.

  1. Digitisation of Ration cards: All the beneficiary profiles have been computerised and linked to Aadhar. This would remove the duplicate and ghost beneficiaries. The user data regarding the offtake of the grains, quantity of the offtake, etc., would be recorded. This would prevent excess disbursement and denial of disbursements to the valid beneficiaries. States like Andhra Pradesh, Chhattisgarh, Tamil Nadu, Madhya Pradesh, Karnataka, etc., have been implementing this. A total of about 4.39 Crore ineligible ration cards have been weeded out by States during the period spanning from 2013 to 2020.
  2. Computerised allocation to FPS: Since a lot of corruption has been unearthed at FPS levels, many states have computerised the transactions at FPS. Stock balances, disbursements, the arrival of stocks, etc. can be tracked through portals. States like Chhattisgarh, Delhi, and Madhya Pradesh have been implementing this.
  3. Leveraging GPS technology: The transportation trucks are GPS tagged and hence can be tracked. Their movements and arrival at FPS can be known through portals, thereby leaving no room for the concealment of stocks. Tamil Nādu and Chhattisgarh have championed this reform to great effect.
  4. SMS-based monitoring: People who subscribe to SMS-based alerts would get notified on their mobiles about the arrival of stocks at FPS. Uttar Pradesh, Chhattisgarh, and Tamil Nadu are successfully implemented this.
  5. Online grievance redressal: Toll-free number and online portal to voice out the grievances regarding the PDS. Chhattisgarh is a front-runner in this regard.

PDS through the Pandemic Turbulence

The onset of covid had necessitated a total lockdown in the country. As a result, people’s incomes have nose-dived during the lockdown. Diminished incomes in tandem with supply disruption of PDS due to lockdowns have taken a toll on public consumption of food during the pandemic years. A survey conducted by the Centre for Sustainable Employment at Azim Premji University estimated that more than 75% of the households were consuming less during the lockdown year than the preceding year. The Centre wasted no time and rose up to the challenge by declaring a slew of reforms to strengthen the PDS and insulate it from pandemic disruptions and vagaries.

–       PM Garib Kalyan Yojana: During the lockdown period, the Centre has notified the Pradhan Mantri Garib Kalyan Anna Yojana, which aims to provide 5 kgs of rice or wheat and 1 kg of pulses to eligible people (beneficiaries of NFSA-2013) free of cost. This disbursement is in addition to the regular entitlement under the PDS scheme and was executed under the PDS mechanism. Owing to this scheme, the offtake of rice and wheat from the central warehouses has hit an all-time-high of 93 MT in 2020-21, which is about 50% higher than the previous year’s offtake.

–       One Nation-one Ration: The NFSA beneficiaries could avail their PDS quota from any electronic point of sale enabled Fair price shops from any state in India using their existing ration cards with biometric authentication. This enabled the migrant workers to stay put during the lockdown and access their PDS quota from their place.

– Under Atmanirbhar Bharat scheme, 5 Kg food grains/person/month were delivered to stranded migrants and all those in need at free of cost, obviating the need for ration cards for a period of 2 months.

These measures along with a few others have ensured that PDS stood resilient among the chaotic pandemic that threatened to land us into a food crisis. Timely interventions have averted an impending food crisis. While there are shortfalls, on the whole India managed to navigate through the rough water and emerged as an example to the rest of the world.

What next: The task on hand?

India has long achieved its much-cherished food security. Now we have abundant food stocks available in godowns. Now it’s time for us to widen the definition of food security and incorporate nutritional aspects into the definition. In other words, we need to focus on delivering nutritious food and not being content with just delivering the food. With more than 50% of the population suffering from at least one kind of malnutrition, the time is ripe to move away from calories-based intake targets.

How can India shift from Food security to Nutrition security?

  • Rework on the PDS commodities to diversify the basket.
  • Fortification of the existing entitlements with essential micronutrients.
  • Experimenting with cash transfers on a pilot basis to understand the link between cash transfers and nutritional outcomes.
  • Improving the human and technological resources to improve the existing network of PDS disbursal.
  • Incorporate behavioural changes and awareness among the masses on nutritional aspects.
  • Strengthening of the Mid-day meals and ICDS program.
  • Roping in Civil societies to plan, implement, access the programmes, and to instil nutritional literacy among the masses.

The optimistic projections of India’s economic ascendency by various agencies mainly stem from the assumption that as India entered the demographic dividend zone, our economy was destined to expand. But India should realise that only a healthy population would yield economic dividends. Hence, it is imperative for India to rationalize and optimize its food policy as it treads forward toward global ambitions. The above recommendations, if implemented in the true spirit, would help India’s march from food security to nutrition security.



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