Public Distribution System (PDS)

India’s Public Distribution System (PDS) is a government-run initiative offering discounted food and other necessities to the underprivileged.

In the 1960s, the PDS was established in response to a lack of food and rising costs. The programme is carried out by a network of fair-pricing shops (FPS), which provide food and other necessities to the underprivileged and destitute.

Among the many products, the PDS covers are rice, wheat, sugar, kerosene, and cooking oil. Food grains are purchased from farmers at a set minimum support price by the government, which then provides them to the underprivileged at discounted prices. The PDS ensures that the poor have access to necessities at reasonable rates and cushions against inflation.

How did PDS evolve?

  • PDS was first implemented during World War Two as rationing strategy.
  • Before the 1960s, food grain imports were typically necessary for distribution via PDS.
  • The government established the Agricultural Prices Commission and the Food Corporation of India to enhance domestic procurement and storage of food grains for PDS when it was enlarged in the 1960s in response to the period’s food shortages.
  • PDS had developed into global programme for the delivery of subsidised food by the 1970s.
  • In order to expand the PDS’s reach in the far-flung, hilly, rural, and inaccessible places where a sizable portion of the disadvantaged classes lives, the Revamped Public Distribution System (RPDS) was introduced in June 1992.
  • With a focus on the underprivileged, the Indian government introduced the Targeted Public Distribution System (TPDS) in June 1997. Beneficiaries of the TPDS were split into two groups: BPL (below the poverty line) households and APL (above the poverty line) households.
  • Antyodaya Anna Yojana (AAY) was started in December 2000 and provides 25kg/month per household (increasing to 35kg in 2002) at the heavily discounted rate of Rs 2/kg of wheat and Rs 3/kg of rice to the lowest of the poor (the hungry). One crore Antyodaya families were to be reached by the programme. Between 2003 and 2006, there were three expansions, adding 1.5 crore people (38% of the BPL) who were landless and marginal farmers, widows, elderly people without social support, rickshaw pullers, rag pickers, members of primitive tribal groups, etc. to AAY.
  • In 2013, National Food Security Act (NFSA) was enacted. It introduced individual entitlement of 5 kg per person per month foodgrains to around 82 crores of the population.

How does PDS work?

  • Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution.
  • State governments, who are in charge of running the system on the ground, are urged to include additional necessities like pulses, salt, candles, matchboxes, regular clothing, school text books/copies etc.
  • Provision of additional goods through PDS is particularly important in communities living in remote areas, which are removed from markets and where a small number of traditional shopkeepers who also serve as moneylenders have a monopoly on the market.
  • In order to purchase these extra commodities directly from the producers and leverage the PDS’s current structure to arrange for the sale at lower than market prices, a number of state governments have established Civil Supplies or Essential Commodities Companies.
  • The central government is in charge of providing the six essential commodities (rice, wheat, sugar, edible oil, soft coke, and kerosene oil) to the state governments.
Food Corporation of India (FCI)
FCI is a statutory organisation set up in 1965 under Food Corporation Act 1964. It is the main agency providing food grains to the PDS. Its primary duty is to undertake the purchase, storage, movement, transport, distribution and sale of food grains and other foodstuffs.FCI is mandated with three basic objectives:
1. To provide effective price support to the farmers, also, it ensures that the farmers are getting the announced remunerative prices and the consumers are getting food grains at the uniform price fixed by the Government.
2. To procure and supply grains to PDS for distributing subsidized staples to economically vulnerable sections of society.
3. Keep a strategic reserve to stabilize the market (for basic food grains).

Issues with Public Distribution System

First, there is a problem with the definition of eligibility for below-the-poverty-line status based on income are examples of conceptual concerns. This line does not cover a substantial portion of the vulnerable population. Identification has been cited as the largest hurdle in operational issues, which ultimately causes exclusion errors. A high inclusion error is also recorded since APL had an excessive amount of grain that had been receiving subsidies. NCAER provides information on “ghost” cardholders.

Second, there is an urban bias in the scheme. For a considerable amount of time, PDS was confined primarily to metropolitan regions. Even if things have changed and PDS has been extended to rural regions, its efficacy in terms of timely and sufficient availability is still limited. However, their relevance in isolated, inhospitable, and under-developed regions is still debatable.

Third, the cost of food subsidies has increased significantly since the NFSA-2013 was included. Moreover, APL has no need to purchase from PDS, so FCI’s stock has been growing. Aside from that, issue prices are declining as a result of populist policies, while procurement costs have been steadily increasing because of the advocacy of wealthy farmers. The PDS is no longer viable as a result of everything put together.

Fourth, FCI’s operations are inefficient. The financial cost of the FCI food grains business has been increasing due to increases in procurement prices and other expenditures (such as distribution costs and carrying costs), as well as inefficiencies brought on by the mode of operations’ highly centralised and bureaucratic nature.

Fifth, price hikes are a result of PDS since the government purchases a significant amount of food grains each year, reducing the net quantities accessible on the open market. Pricing increases as a result of this. The PDS and Open Market dual market system works against the interests of the poor, particularly those who are left out of the system of food security.

Last, the majority of leakages are caused by the diversion of food grains to open markets due to the pervasiveness of corruption. Losses from transportation and diversion also occur. Ghost eneficiaries are another issue.


Shanta Kumar Committee Recommendations on Revamping of PDS

1. States which have gained sufficient experience (Andhra Pradesh, Chhattisgarh, Punjab,Haryana and MP) should be encouraged to procure for PDS directly from the farmers.

2. FCI should focus on states which suffer from distress sale at prices much below MSP, and which are dominated by small holdings, like Eastern Uttar Pradesh, Bihar, West Bengal, Assam etc.

3. Private sector should be encouraged to shoulder the responsibility of procuring, storage and distribution of PDS commodities.

4. GoI should widen its procurement basket so as to incorporate an adequate nutrient mix. It will prevent skewed incentives to wheat and rice only and promote crop diversification.

5. End-to-end computerization by mapping of Fair Price Shop (FPS) and the registered customers at each FPS will
help to identify exact requirements at each FPS.

6. GPS-based tracking of trucks carrying PDS goods.


Steps Taken to Improve Public Distribution System

  • End-to-end Computerization of PDS
    • Under PDS reforms, the Department of Food and Public Distribution implemented a scheme on ‘End-to-end Computerization of TPDS Operations’ to improve the efficiency and transparency of the food grain distribution system and to address other challenges such as leakages and diversion of food grains, elimination of fake and bogus ration cards, and so on.
  • Integrated Management of Public Distribution System (IM-PDS)
    • The primary goal of this scheme is to implement nationwide portability of ration cards issued by States/UTs under the National Food Security Act, 2013 (NFSA) for anywhere distribution of subsidised food grains to ration card holders in India.
    • The system is now known as the ‘One Nation One Ration Card (ONORC) Plan.’ The ONORC plan allows NFSA beneficiaries, particularly migrant beneficiaries, to obtain their entitled foodgrains from any ePoS-enabled Fair Price Shop (FPS) in the country by using their same/existing NFSA ration card after biometric/Aadhaar authentication on an electronic Point of Sale (EPoS) device.
  • Integration of the PDS and the Aadhaar system
    • The government has done this as well. This has made it easier to locate legitimate beneficiaries and guarantee that the rewards are distributed to the right people.
  • Ration card deletion
    • A total of 2.33 crore ration cards have been deleted/cancelled as a result of digitization of Ration Cards/beneficiary records, de-duplication due to Aadhaar seeding, transfer/migration/deaths, change in economic status of beneficiaries, and during the run-up to and implementation of NFSA.
  • Self-help groups
    • The government has also encouraged the formation of self-help groups to manage the PDS operations at the local level. This has helped in enhancing community participation and ensuring effective implementation.

The Public Distribution System (PDS) has evolved from a “welfare-based” scheme for distributing foodgrains in urban areas to a “rights-based” system under the National Food Security Act (NFSA) 2013. PDS is one of the government’s largest welfare programmes, assisting farmers in selling their produce at fair prices and assisting the poorer sections of society in purchasing food grains at reasonable prices. Its effectiveness can be increased with technology-based solutions, as evidenced by some of the states’ successes in this area.









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