Public Distribution System (PDS) | Indian Economy for UPSC CSE PDF Download

Public Distribution System (PDS)

The Public Distribution System (PDS) in India began during the 2nd World War in 1942 when there was a shortage of food grains. The government intervened to distribute food and essential commodities. Initially, PDS focused on urban areas during the food shortages of the 1960s, especially during the China and Pakistan wars and subsequent droughts. With the Green Revolution and increased agricultural production, PDS expanded to include tribal areas and regions with high poverty in the 1970s and 1980s.

• Over time, PDS has become a crucial part of the government's food economy management, evolving into a system for managing scarcity and distributing food grains at affordable prices. 
• It is incremental, meaning it does not provide the entire requirement of any commodity to a household but distributes them in manageable quantities. Commodities distributed under PDS mainly include wheat, rice, sugar, and kerosene, with some states also distributing pulses, edible oils, iodized salt, spices, etc.

Evolution of PDS:

• General Entitlement Scheme: Until 1992, PDS was a general entitlement scheme available to all consumers without targeting specific groups. 
• Revamped PDS (1992): Launched in June 1992 to strengthen and streamline PDS, improving its reach in remote and inaccessible areas. 
• Targeted Public Distribution System (TPDS) (1997): Introduced to focus on the poor, requiring states to identify and deliver food grains to the poor transparently and accountably at Fair Price Shops (FPS).

Objectives of TPDS:

• To provide food grains to the poor identified through a transparent process.
• To ensure accountability and transparency in distribution at Fair Price Shops.
• To include vulnerable sections of society such as landless agricultural labourers, marginal farmers, and urban poor.
• The Antyodaya Anna Yojana (AAY) is a government initiative in India aimed at providing food security to the poorest and most vulnerable households in the country. Launched in December 2000, the scheme was designed to ensure that the "poorest of the poor" families have access to essential food grains at highly subsidized rates.
• Under the AAY, eligible families are entitled to receive 35 kilograms of food grains per month, with wheat priced at Rs. 2 per kilogram and rice at Rs. 3 per kilogram. The program aims to address the issue of hunger and malnutrition among the most disadvantaged sections of society by providing them with a reliable source of affordable food.
• Over the years, the AAY has been expanded to include more families, reflecting the government’s commitment to improving food security for the poorest segments of the population. The scheme is part of the broader Public Distribution System (PDS) in India, which aims to distribute food grains at subsidized prices to various segments of the population, including those below the poverty line.
• The AAY is a crucial component of India’s efforts to combat hunger and ensure that all citizens have access to sufficient and nutritious food, particularly in a country where a significant portion of the population still faces food insecurity.

Background

• To further enhance the Targeted Public Distribution System (TPDS) and address the needs of the most vulnerable populations, the government introduced the Antyodaya Anna Yojana (AAY) in December 2000. This initiative was based on the findings of the National Sample Survey (NSS) in 2000, which indicated that around 5% of the Indian population was struggling to secure two square meals a day, highlighting the presence of hunger in the country.
• The AAY was initially launched to benefit 1 crore (10 million) of the poorest families by providing them with 35 kg of food grains per month at highly subsidized rates—Rs. 2 per kg for wheat and Rs. 3 per kg for rice. This scheme aimed to make the TPDS more focused and targeted, ensuring that the most vulnerable households received adequate food supplies.
• Over time, the AAY was expanded to include an additional 1.5 crore (15 million) families, reflecting the government’s commitment to improving food security for the poorest segments of the population. Under the AAY, food grains are distributed at the Central Issue Price (CIP), with no additional charges, ensuring that the beneficiaries receive the food grains at the subsidized rates.
• This program is part of the broader efforts to strengthen food security in India and ensure that the most vulnerable populations have access to essential food items, thereby addressing the critical issue of hunger and malnutrition in the country.

Implementation

• The Antyodaya Anna Yojana (AAY) operates under the Targeted Public Distribution System (TPDS), where the end retail price of food grains is determined by the respective States and Union Territories (UTs). The pricing takes into account various factors such as wholesale and retail margins, transportation charges, local taxes, and other levies.
• Under the TPDS, states are required to distribute food grains to Below Poverty Line (BPL) families at a price not exceeding 50 paise per kilogram above the Central Issue Price (CIP). For families under the AAY, the retail price is maintained at the CIP, which is Rs. 2 per kg for wheat and Rs. 3 per kg for rice. There are no restrictions on Above Poverty Line (APL) families and other welfare schemes under the TPDS, allowing states to set retail prices above the CIP as per their discretion.
• The AAY ensures that the most vulnerable families have access to essential food grains at subsidized rates, contributing to food security and nutritional support for the poorest segments of the population.

National Food Security Act (NFSA) 2013

Overview: The National Food Security Act 2013 is an improvement and expansion of the earlier Targeted Public Distribution System (TPDS) scheme. It aims to provide food security to a larger segment of the population, covering approximately 84 crore people in India. Coverage: The Act is applicable to 75% of the rural population and 50% of the urban population, totaling around 84 crore people. This requires about 60 million tonnes (MT) of food grains, costing the government around ₹1.90 lakh crore. Before the Act, the TPDS benefited around 40 crore people.

Categories of Beneficiary Households: Households under the NFSA are divided into two main categories: 

1. Antyodaya Anna Yojana (AAY):

• Allocation: 35 kg of food grains per month per family.
• Pricing: ₹3/kg for rice, ₹2/kg for wheat, and ₹1/kg for coarse grains.

2. Priority Households:

• Allocation: 5 kg of food grains per person per month.
• Pricing: Same as AAY (₹3/kg for rice, ₹2/kg for wheat, and ₹1/kg for coarse grains).

Identification of Households:

• The Central Government determines the percentage coverage under the Act for each State, within the limits of 75% for rural and 50% for urban populations.
• State governments identify households to be covered under the AAY and Priority categories based on specific guidelines.
• Temporary Provision (2023): From January 1, 2023, to December 31, 2023, the Central Government will provide food grains (rice, wheat, and coarse grains) for free under the NFSA 2013.

Additional Benefits: The Act provides extra benefits to specific groups: 

1. Pregnant Women and Lactating Mothers:

• Free meals during pregnancy and up to six months after childbirth through Anganwadi centers.
• Financial assistance of ₹6,000 in instalments.

2. Children Aged 6 Months to 6 Years:

• Free meals at local Anganwadi centers.

3. Children Aged 6 Years to 14 Years:

• Mid-day meals provided at schools.

Key Features of the National Food Security Act 2013

 1. Women Empowerment: 

• In eligible households, the eldest woman aged 18 or older will be considered the head of the household for the purpose of obtaining ration cards.
• If there is no woman above 18 in the household, and only a female under 18, the eldest male member will receive the ration card. Once the female turns 18, she will be entitled to receive the ration card.

 2. Grievance Redressal Mechanism: 

• Each State government is required to establish an internal grievance redressal mechanism. This may include call centers, helpline numbers, designated nodal officers, or other prescribed methods.
• A State Food Commission must be constituted by every State government to monitor and review the implementation of the Act. This Commission will consist of a chairman and five other members.

 3. Obligations of Central and State Governments: 

• State governments are responsible for taking delivery of food grains from the Central government’s designated depots at the Central Issue Price (CIP) and organizing intra-state allocations for delivery to Fair Price Shops (FPS). They must ensure actual delivery of food grains to entitled persons at the specified prices.
• The Central government will assist State governments in covering expenses related to intra-state movement, handling of food grains, and margins paid to FPS dealers, as per prescribed norms.

4. Miscellaneous Provisions

• The provisions of this Act shall not preclude the Central government or the State government from continuing or formulating other food-based welfare schemes.
• State government may continue with or may formulate food or nutrition-based plans or schemes providing for benefits higher than the benefits provided under this Act, from its own resources.
• Central government or the State government shall be liable for a claim by any person entitled under this Act, except in the case of war, flood, drought, fire, cyclone, earthquake affecting the regular supply of food grains or meals to such person under this Act.
• Central government, State government and local authorities, shall for the purpose of advancing food and nutritional security strive to progressively ensure livelihood security to farmers by way of remunerative prices, access to inputs, credit, irrigation, power, crop insurance etc.

One Nation one Ration Card (ONORC)

• To enable nationwide portability of ration cards under the National Food Security Act, 2013, the Central Government introduced the One Nation One Ration Card (ONORC) plan.
• The ONORC scheme aims to allow migrant workers and their families to purchase subsidized rations from any fair price shop across the country under the NFSA.
• For example, a migrant worker from Kanpur can access Public Distribution System (PDS) benefits in Mumbai while searching for work.
• The ONORC scheme is based on technology that includes details of beneficiaries’ ration cards, Aadhaar numbers, and electronic Points of Sale (ePoS) systems.

Recommendations of the Shanta Kumar Committee

In August 2014, the Government of India (GOI) established a High-Level Committee (HLC) chaired by Shanta Kumar to propose ways to restructure or unbundle the Food Corporation of India (FCI) for enhanced operational efficiency and financial management. The committee presented its recommendations in 2015. Here are the key recommendations:

1. Procurement

• The FCI should transfer all procurement operations of wheat, paddy, and rice to state governments that have demonstrated sufficient experience and developed adequate infrastructure for procurement.
• The FCI will only accept surplus stocks from these state governments after meeting their own needs under the National Food Security Act (NFSA) for distribution to deficit states.

2. Public Distribution System (PDS) and National Food Security Act (NFSA)

• The HLC recommends reassessing the current coverage of 67 percent of the population under the NFSA, suggesting it be reduced to around 40 percent, which would still adequately cover Below Poverty Line (BPL) families and some above that threshold.
• To address the issue of grain distribution, the committee suggests that BPL households should receive 7 kg of grain per person, as opposed to the current 5 kg per person for priority households.
• The pricing for grain distribution to priority households should be linked to the Minimum Support Price (MSP), recommending a rate of 50 percent of the MSP. This adjustment is crucial to prevent excessive financial strain on the exchequer and to ensure continued investment in agriculture and food sectors.
• The HLC also advocates for the gradual introduction of cash transfers within the PDS as a means to enhance efficiency and flexibility.

Stocking and Movement

Stocking Operations

• FCI should outsource its stocking operations to various agencies such as Central Warehousing Corporation, State Warehousing Corporation, and the Private Sector.
• Many of FCI's old conventional storages can be converted to silos with the help of the private sector and other stocking agencies.
• There is a need for better mechanization in all silos and conventional storages.

Movement of Grains

• The movement of grains needs to be gradually containerized to reduce transit losses and improve turnaround time.
• This can be achieved by having more mechanized facilities at railway sidings.

Buffer Stocking and Liquidation Policy

• A transparent liquidation policy is essential, which should automatically activate when FCI faces surplus stocks beyond buffer norms.
• FCI needs greater flexibility with a business orientation to operate in open market sale schemes (OMSS) and export markets.

Labour

• FCI currently relies on a large number of workers (loaders) for loading and unloading, resulting in high costs for the government.
• To reduce reliance on departmental labour, FCI should prioritize mechanization in its depots.

Direct Subsidy to Farmers

• To ensure food security at both national and household levels, farmers need incentives to increase productivity and overall food production.
• The committee recommends providing farmers with a direct cash subsidy (around Rs 7000/ha) and deregulating the fertilizer sector.

End-to-End Computerization

The entire food management system will be fully computerized from start to finish. This includes:

• Procurement: Buying food grains directly from farmers.
• Stocking: Storing the food grains securely.
• Movement: Transporting the food grains as needed.
• Distribution: Distributing the food grains through the Targeted Public Distribution System (TPDS).

New Role of FCI

The Food Corporation of India (FCI) will transform into an innovative agency for the Food Management System. Its main goals will be to:

• Foster Competition: Encourage competition at every stage of the food grain supply chain, including procurement, stocking, movement, and distribution.
• Reduce Costs: Lower the overall costs of the system.
• Plug Leakages: Eliminate any leakages in the system.
• Serve More Farmers and Consumers: Ensure that a larger number of farmers and consumers are served effectively.