PUBLIC DISTRIBUTION SYSTEM [PDS] Public Distribution System (PDS) is an Indian food security system.

Established by the Government 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, such as wheat, rice, sugar, and kerosene, through a network of Public distribution shops, also known as Ration shops established in several states across the country. Food Corporation of India, a Government-owned corporation, procures, maintains the Public Distribution System In terms of both coverage and public expenditure, it is considered to be the most important food security network. However, the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality. The average level of consumption of PDS grains in India is only 1 kg per person / month. The PDS has been criticized for its urban bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to much corruption in the process of extricating the poor from those who are less needy. Today, India has the largest stock of grain in the world besides China, the government spends Rs. 750 billion ($13.6 billion) per year, almost 1 percent of GDP, yet 21% remain undernourished. Distribution of food grains to poor people throughout the country is managed by state governments. As of date there are about 4.99 lakh Fair Price Shops (FPS) across India. OVERVIEW Both the central and state governments shared the responsibility of regulating the PDS. While the central government is responsible for procurement, storage, transportation, and bulk allocation of food grains, state governments hold the responsibility for distributing the same to the consumers through the established network of Fair Price Shops (FPSs). State governments are also responsible for operational responsibilities including allocation and identification of families below poverty line, issue of ration cards, supervision and monitoring the functioning of FPSs . Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month, while a household above the poverty line is entitled to 15 kg of food grain on a monthly basis. A BPL card holder should be given 35 kg of food grain and the card holder above BPL should be given 15 kg of food grain as per the norms of PDS. However, there are concerns about the efficiency of the distribution process. FALLOUTS OF P.D.S SYSTEM Generally, the consumers get inferior food grains in ration shops. Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of India) with inferior stock. Many retail shopkeepers have large number of bogus cards to sell food grains in the open market. Many FPS dealers resort to malpractice since they acquire less salary.

Despite the PDS, India accounts for over 400 million poor and hungry people. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poor. Several schemes have augmented the number of people aided by PDS, but the number is still extremely low. Poor supervision of FPS and lack of accountability have spurred a number of middlemen who consume a good proportion of the stock meant for the poor. There is also no clarity as to which families should be included in the BPL list and which excluded. This results in the genuinely poor being excluded whilst the ineligible get several cards. The stock assigned to a single family cannot be bought in installments. This is one of the biggest barriers to the efficient functioning of PDS in India. Many BPL families are not able to acquire ration cards either because they are seasonal migrant workers or because they live in unauthorized colonies. A lot of families also mortgage their ration cards for money. To improve the current system of the PDS, the following suggestions are furnished for: Vigilance squad should be strengthened to detect corruption, which is an added expenditure for taxpayers. Personnel-in-charge of the department should be chosen locally. Margin of profit should be increased for honest business, in which case the market system is more apt anyway. F.C.I. and other prominent agencies should provide quality food grains for distribution, which is a tall order for an agency that has no real incentive to do so. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards, which is again an added expenditure and not fool proof. The Civil supplies Corporation should open more Fair Price shops in rural areas. The Fair Price dealers seldom display rate chart and quantity available in the blockboards in front of the shop. This should be enforced. In aggregate, only about 42% of subsidized grains issued by the central pool reach the target group, according to a Planning Commission study released in March 2008. FOOD STAMPS Food stamps is an indirect financial support given to the needy and to the underprivileged by issue of coupons, vouchers, electronic card transfer etc. they can purchase commodities at any shop or outlet and would not have to purchase food from a particular shop as in the case of the PDS system in India. The state government would than pay back the grocers shop for the stamps they possess. This was the plan proposed by the Finance minister in his budget but the United Progressive Alliance (UPA) government which came to power in 2004, it decided on a Common minimum program (CMP) and one of the agenda was food and nutrition security. Under that the government had plans for strengthening the Public distribution System (PDS). However the Finance minister P. Chidambaram in his budget speech went contrary to the idea proposed in the CMP and proposed the idea of the food stamp scheme and has proposed to try the scheme in few districts of India to know its viability. In the CMP the government had proposed that if it is viable it would universalize the PDS but if the Food stamps would be introduced it would be a Targeted public distribution system and a group of about 40 economist

have cautioned the NAC headed by Sonia Gandhi against the food security bill as it would put an additional burden on the ex-chequer and instead have advised to go ahead and experiment with food stamps and other alternative methods and did point out the flaws in PDS. These set of 40 economist hail from different institutes like Delhi School of Economics, Indian Statistical Institute, Jawaharlal Nehru University, Indira Gandhi Institute of Development Research, Centre for Development Studies, Harvard, MIT, Columbia, Princeton, London School of Economics, University of British Columbia, University of California and University of Warwick.

DISTRIBUTION OF FOOD STAMPS Opportunities 1. It will reduce our dependence on buffer stock for price stabilization and in turn reduce cost 2. It provides incentive to deregulate the domestic market and thus will induce private entrepreneurs. Challenges 1. There is an immense need to develop appropriate marketing infrastructure and institutions to deal with trade in agricultural commodities. 2. Appropriate policy changes are a must, for instance, in the post WTO period the international prices of wheat and rice came to their lowest levels. But in India due to high MSPs the prices were relatively high. Thus as a result importing was cheaper than buying from the domestic market. As a result, the government levied 50% tariff on wheat and 80% percent tariff on rice which further resulted in one of the outlandish incidents in the Indian history that was accumulation of buffer stocks which were exported which, incidentally, came back for sale at high MSPs for instance in 2002 -03, the government sold 1.6 million tones to exporters but actual exports were only 0.682 million tones. The government may have to set up a complete system for the same or would have to put this responsibility on Post office, banks or such other institutions. In this process there could be leakages which are a matter of concern. Also there would be a burden which would come on the poor class who has to benefit from the same of going and collecting the food stamps.