PLUGGING THE LEAKS: IMPROVING REACH AND EFFICIENCY OF THE PUBLIC DISTRIBUTION SYSTEM

Arpan Bhalerao Yogesh Joshi Pavas Pathak Shruti Mittal Ishan Goyal

Millions of dollar worth subsidy in India is distributed via PDS and yet intended beneficiaries are not getting benefitted 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
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

Andhra Assam Bihar Gujarat Haryana Himachal Karnataka Kerala

Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal

The above graph shows state wise distribution of three major prevalent errors i.e. Shadow ownership error ; Inclusion Error and Exclusion Error

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

HOW CAN WE FIX THESE PROBLEMS AND IMPROVE PDS USING NEW TECHNOLOGIES
Improving the supply chain 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 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
No. of fair price shops
Cost of biometric verification instruments (Rs) Total Implementation cost

4.78 lacs
9,000

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

430.2 crores

What else can Aadhar do

It can ensure all India coverage of PDS system

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.

STANDARDIZING AND BAR CODING PACKAGED GOODS

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.

Packaged Goods Sizes: Rice: 1kg, 5kg, 10kg Wheat: 1kg, 5kg, 10kg Pulses: 500g, 1kg Sugar: 500g, 1kg Oil: 200g, 500g, 1kg

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.

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.

IMPROVING TRANSPARENCY AT THE LAST MILE

Suggested improvements
Collective ownership of FPS

Description
Management of Fair Price Shops to be shifted from private dealers to communitybased organizations such as gram panchayats, self-help groups (SHGs) and cooperatives. 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 Color scheming of ration cards / aadhar card will go a long way in visually aiding the recognition process

Benefit
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 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 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 Establishment of string grievance system is vital for sustenance of the system. Involvement of society and inviting various NGOs to play the devils advocate will lay the foundation a sustained and constantly improving PDS

Mobile FPS for distant settlements

Readily identifiable ration cards for BPL households 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

CONCLUSION Lack of quality Sale of goods in open market Lack of monitoring No incentives to public officers Identification of BPL Ineffective / No tracking Packaged goods Bar coding of packaged goods GPS implementation Invigilation and Incentivization Aadhar Card Integrated database
We have proposed a topdown 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.

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