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TOPIC: Plugging the Leaks: Improving reach and efficiency of the Public Distribution System DRONACHARYA COLLEGE OF ENGINEERING:- Rahul Rajpal (coordinator) Saurabh Setia Kirti Sharma Praveen Rohilla Raman Khanna

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Page 1: YoungWarriors

TOPIC:Plugging the Leaks: Improving reach and

efficiency of the Public Distribution System

DRONACHARYA COLLEGE OF ENGINEERING:-Rahul Rajpal (coordinator)Saurabh SetiaKirti SharmaPraveen RohillaRaman Khanna

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Public Distribution System (PDS) is an Indian food security system. Established by theGovernment of India under Ministry of Consumer Affairs, Food, and Public Distribution and

managed jointly with state governments in India, it distributes subsidized food and non-food items to India's poor. Major commodities distributed include staple food grains, suchas wheat, rice, sugar, and kerosene, through a network of Public distribution shops, also

known as Ration shops established in several states across the country.

Both the central and state governments sharedthe responsibility of regulating the PDS. Whilethe central government is responsible forprocurement, storage, transportation, and bulkallocation of food grains, state governments holdthe responsibility for distributing the same to theconsumers through the established network ofFair Price Shops (FPSs). State governments arealso responsible for operational responsibilitiesincluding allocation and identification of familiesbelow poverty line, issue of ration cards,supervision and monitoring the functioning ofFPSs. Under PDS scheme, each family below thepoverty line is eligible for 35 kg of rice or wheatevery month

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The problems face by PDS have serious implications for the performance,impact and delivery cost of TPDS. These, along with certain weaknessesin the delivery mechanism , have led to large scale leakages (36.38%) anddiversion (21.45%) of subsidized grains to unintended beneficiaries.Wide inter-State variations in different types of leakages have beenobserved. The States are grouped with respect to the intensity of theproblem of leakage of subsidized grains.

A 2012 Asian Development Bank study on the subsidies offered by India’sPublic Distribution System (PDS) observed that deserving poor receiveonly 10% of the intended benefits; 19% of the subsidy goes to the non-poor, illegal diversion and administrative expenses consume 43% and 28%of the same respectively. The Economic Survey of 2011 admitted that40% of all food grains do not reach intended recipients.

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• Irregular delivery schedule of FPS quota is a persistent problem in mostStates. This has contributed to low off-take by consumers and hence to largediversion of subsidized grains to the open market.

• Monitoring of activities of FPSs through inspection by district/ taluka levelofficials was irregular and ineffective.

In addition to leakages, PDS suffers from diversions of subsidized grains tounintended beneficiaries (APL households) because of Error of Inclusion.While small inclusion errors and diversions could be ignored (as these couldbe due to genuine measurement errors), in the States of Andhra Pradesh(36%), Himachal Pradesh (20%), Karnataka (42%), Kerala (21%) and TamilNadu (50%), the proportion of subsidized grains received by APLhouseholds is unacceptably large. Notes prepared by the field units of PEOsuggest that a section of the APL households holding BPL cards actually donot lift their ration quota. Thus, a part of the entitlement of these APLhouseholds holding BPL cards is actually leaked out of the PDS supplychain. It is, however, difficult to capture this form of leakage empirically.

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Leakages and diversions raised the delivery cost in the sense that for everykilogram of food grains delivered to the poor, the GOI had to issue 2.4 kg. ofsubsidized grains from the Central Pool. In other words, the amount ofimplicit subsidy per kilogram of food grains delivered to the poor is morethan the difference between the Economic Cost and Central Issue Price. Thebreak up the Central Subsidy to the poor in terms of intended andunintended subsidies for 2003-04

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The key challenge faced by the government is to improve the existing PDS

Solutions:

Notwithstanding greater participation of consumers and higher off-take offood grains by the poor households under TPDS, the findings of the study revealthat PDS has neither led to a reduction of budgetary food subsidies, nor has itbeen able to benefit the large majority of the food insecure households in thedesired manner.

The two pivotal issues that relate to the implementation of PDS are;

a)Evolving a method for the identification of the poor that minimizes errors andeconomies resources; and

b) instituting a delivery system that is effective,efficient and transparent. The forgoing analysis suggests that correctivemeasures are required in both these areas for realization of the objectives ofPDS.

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On Making Delivery Mechanism Effective

The full monthly quota of food grains for distribution must reach the retailoutlets (FPSs) within the first seven days of the month. For this, doorstepdelivery of grains to FPS in the presence of PRI members or any otherresponsible organization is required. For ensuring transparency in delivery,it should be authenticated by the PRI or other designated agencies.

transparent operation

To minimize leakages at FPS level and ensure their transparentoperation, these retail outlets must be made financially viable.Through simulation exercises w.r.t. alternate values of the relevantparameters

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The main objective of holding Consumer Awareness program is toemphasize the commitment of the Government towards consumer welfareand also to make them aware of their rights and other entitlements onPublic Distribution System, Packaged Commodities Rights, Legal MetrologyAct & Rules and Consumer Protection Act, etc.

Organizing a skit on this issue would be appealing with a bunch of artistswho will work honorary . The campaign should be supported with bannersand loud speakers.

We’ll organize various awareness campaigns specifically to make peopleaware about the right policies and their rights.This can be done through skits (street plays) by taking help from any of aNGO or even forming a NGO own our own.

Our TAKE on this ISSUE

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There are many NGOs working against corruption as inefficiency and leakage in PDSis majorly due to corruption. One of the NGOs could be approached or we can havevolunteers from general public.

The volunteers will set up information booths, which also serve as grievanceredressal cells. Complaints pertaining to non-functioning or inadequate functioningof government schemes will be registered.

We’ll hire a few Governance Guides who will counsel the villagers and brief them onaction points to be followed up by the team. A signature campaign to showcasesolidarity on the issues will be carried out.

The camps will also mark the launch of Governance mail, an provisionenabling the villagers to voice their concerns and suggestions to the Centreand State government, Commissions and Judiciary.

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References:

• http://www.smsfoundation.org

• www.pdsportal.nic.in

• http://www.indianexpress.com/news/improving-pds-critical-to-food-security-law-says-food-minister/1141719/

• www.planningcommission.nic.in/plans/planrel/fiveyr/10th/.../v2_ch3_4.pdf