1. Plugging
the
Leaks
Improving
reach
and
efficiency
of
the
Public
Distribu<on
System
Team Name: Juggernauts

2. NSS
es<mates
that
41%
of
the
intended
food
grains
are
diverted
• Close
to
400
million
live
below
poverty
line
• India
has
more
than
68.7%
of
people
living
on
less
than
2$/day
• Survival
a
big
challenge
given
the
infla:on
rates
• Moral
responsibility
of
the
privileged
to
look
a>er
the
underprivileged
• Various
Government
plans
to
support
the
underprivileged
• But
corrup:on
at
grass
root
level
nullifying
the
impact
• On
average,
only
66%
of
the
intended
grains
reaches
the
end
stakeholder
in
India
• Implementa:on
of
Food
Security
Bill
will
only
add
to
the
leakages

3. Leakage
occurs
at
various
points
in
the
current
process
flow
Farmers
Fair
price
shops-­‐
Run
by
dealers
on
commission
basis
Mandal
level
stocking
points
Godowns
Integrated
tribal
dev
agency
Primary
agriculture
coop
Different
execu<ve
bodies
Rice
Millers
(75%
sold
to
FCI)
Civil
supplies
Transport
(Route
officer)

4. We
see
a
host
of
reasons
for
leakage
and
diversion
but
will
concentrate
only
on
the
most
important
aspects
White
cards
Leakage
in
the
distribu<on
system
Changing
poverty
line
Due
to
various
reasons,
even
people
above
the
poverty
line
have
white
cards.
This
means
more
food
grains
will
have
to
be
sold
at
subsidized
rates
to
people
who
can
afford
otherwise.
Leakage
is
occurring
at
majorly
two
sources
in
the
distribu:on
mechanism:
•
While
transpor:ng
the
foodgrains
from
godown
to
stocking
point
• At
fair
price
shops,
the
shop
keeper
sells
subsidized
grains
at
market
price
The
BPL
has
been
a
maRer
of
great
debate
and
concern,
In
recent
:mes,
different
commiRees
have
come
out
with
different
levels
of
poverty
thus
making
it
tough
for
the
government
to
issue
ra:on
cards.
Poli<cal
pressure
Due
to
vote
bank
poli:cs,
the
white
cards
that
have
served
their
purpose
(example
provided
to
gain
insurance
benefit)
care
not
being
cancelled.
Moreover,
no
suitable
ac:on
is
taken
when
the
surveyed
popula:on
falsifies
informa:on
about
their
economic
well
being.
Focus
of
this
document

5. White
cards
should
be
allocated
to
only
people
in
need
as
mass
distribu<on
defeats
the
purpose
of
subsidy
Challenges
in
cancella<on
of
exis<ng
white
cards
Low
penetra:on
of
alternate
id
(aadhaar
card)
Poten:al
for
the
issue
to
become
a
poli:cal
roadblock
as
poli:cal
par:es
will
look
to
save
on
their
vote
bank
Opera:onal
challenges
in
issuing
new
cards
Recommended
solu<ons
and
implementa<on
plan
Simultaneous
redistribu:on
of
expired
benefits.
The
number
of
people
losing
benefits
at
one
par:cular
:me
should
be
outnumbered
by
genuine
people
receiving
them.
This
will
help
prevent
from
the
issue
becoming
poli:cal.
The
process
of
reissuing
new
cards
needs
to
involve
minimum
human
interven:on.
Aadhaar
card
to
serve
as
the
new
white
card
with
privileged
controlled
through
technology.
Strict
ac:ons
to
be
taken
against
people
giving
false
informa:on.
Guidelines
have
to
be
in
place
for
BPL
benchmark.
The
new
poverty
guidelines
seem
promising.
Problem
1

6. There
is
a
need
to
priva<ze/incen<vize
the
fair
price
shops
to
reduce
the
urge
to
steal
from
the
government
Problems
faced
with
fair
price
shops
Recommended
solu<ons
and
implementa<on
plan
Fair
price
shops
to
buy
from
Government
at
the
Market
Price
BPL
people
to
present
their
Aadhaar
cards
at
these
shops.
Using
the
bar
code,
the
shopkeeper
to
verify
status
of
the
person
from
the
Government
database.
The
BPL
person
to
pay
a
minimal
price
(set
by
the
Govt.).
The
dealer
records
the
transac:on
with
the
Govt.
Database.
A
bill
to
be
generated
with
invoice
recorded
with
the
Govt.
and
a
copy
handed
over
to
the
customer.
Problem
2
Informa:on
asymmetry
between
people
and
dealers
about
the
quality
of
food
grains
and
the
arrival
cycle
of
those
High
arbitrage
opportunity
as
shop
keepers
buy
at
subsidized
rates
and
sell
later
at
market
price
Severe
levels
of
adultera:on
to
make
up
for
inventory
sold
through
unfair
means
“Priva'zing
the
Fair
price
shop
system
along
the
business
model
of
petrol
pumps”

7. • The
Aadhaar
card
is
rela:vely
new
in
terms
of
reach.
Although
new,
it
is
rapidly
becoming
the
new
standard
with
more
than
360
million
cards
in
place
currently.
• Technology
implementa:on
is
a
major
challenge
especially
due
to
non
IT
savvy
nature
of
members
involved.
• Delay
in
payments
to
dealers
can
jeopardize
their
incen:ves
to
cooperate
with
the
system.
• Redistribu:on
of
benefits
has
to
be
done
very
tac]ully.
Slight
problems
can
turn
into
poli:cal
upheavals.
• Losing
corrup:on
benefits
can
result
into
bureaucra:c
hurdles.
• Corrup:on
in
assigning
contracts
to
shopkeepers
can
jeopardize
their
incen:ves
to
act
as
desired.
While
the
solu<on
looks
feasible
to
implement,
there
are
some
things
we
need
to
keep
in
mind

8. We
need
to
keep
in
check
the
progress
we
make
on
these
sugges<ons..
Encourage
Fair
price
dealers
to
sell
to
BPL
families
by
incen:vizing
them.
Slightly
extra
earning
over
the
retail
margin
would
be
a
strong
mo:vator.
Rigorous
process
to
be
followed
while
selec:ng
the
dealer.
The
installa:on
of
technology
infrastructure
to
be
mandatory
for
the
shopkeeper.
Strong
punishments
for
viola:ng
guidelines.
Govt.
IT
systems
need
to
be
in
place
to
process
huge
amounts
of
requests.
Support
systems
for
IT
to
be
developed
for
shopkeepers.
Data
Analy:cs
to
be
employed
on
the
lines
of
FMCG
organiza:ons.
Inventory
turnover
helps
forecas:ng
demand
beRer.
Leakages
will
be
easier
to
detect.
Hence,
eliminate
the
en:re
process
of
acquiring
the
food
grains
from
the
government
at
subsidized
rate,
rather
encourage
to
buy
at
market
price.
Timely
payment
by
the
government
to
the
dealers
is
extremely
cri:cal
for
success
of
this
model

9. • E-­‐PDS:
PDS
portal
of
India
-­‐
www.pdsportal.nic.in/
• Na:onal
Food
Security
Bill
:
Challenges
and
Op:ons
-­‐
cacp.dacnet.nic.in/NFSB.pdf‎
•
UIDAI
–
hRp://uadai.gov.in
• Andhra
Prades
State
Government
PDS
process
• Does
Economic
Theory
Inform
Government
Policy?
–
Kaushik
Basu
-­‐
hRp://www.iegindia.org/kbdlecture.pdf
• Poverty
in
India
–
Wikipedia
–
hRp://en.wikipedia.org/wiki/Poverty_in_India
• Performance
Evalua:on
of
Targeted
Public
Distribu:on
System
(TPDS)
-­‐
hRp://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf
References