1. PLUGGING THE LEAKS:
Improving reach and efficiency of Public
Distribution System
TEAM NAME: VNIT CAG
TEAM MEMBERS:
1.DEBOJYOTI SANYAL
2.URJIT AGARWAL
3.CHINTAN DAND
4.P.R.GOKUL
5.SIDDHANT PRAKASH GOYAL

2. “58% of the targeted subsidized food grains does not reach targeted beneficiaries.”
“The PDS is said to distribute commodities worth 15000 crore to about
9.6 crore families each year.”
0
5
10
15
20
% FPS
% BPL
The above chart illustrates the current
scenario of presence of operation FPS in the
states and the percentage of Below Poverty
Line(BPL) people inhabiting these states. The
motive is to highlight the insufficiency of FPS
in states having a significant population,
except Maharashtra, where condition is
marginally better.
STATE NO. OF PEOPLE
CATERED BY 1 FPS
UP 808
MP 1207
Bihar 829
Maharashtra 627
INDIA 731
The afore-mentioned data is about the number of
people catered by each Fair Price Shop(FPS), and
are expected to visit every month to collect their
share. However, regional population density
should also be considered, as huge variations may
exist in no. of people catered by each FPS due to
varying regional population density.
“You cannot distribute what is leaked.”
“Centre releases 46000 crore as food subsidy so far.”

3. LEAKS: A BROAD CLASSIFICATION
75+ % Bihar, Punjab
50- 75% MP, UP
25- 50% Maharashtra,
Rajasthan
0- 25% AP, WB,
Kerala
50+ % Bihar, Punjab
25- 50% Rajasthan,
UP
10- 25% Maharashtra,
AP
0- 10% MP, WB
30+ % MP
10- 30% Bihar,
Maharashtra,
UP, WB
0- 10% AP, Rajasthan
Ghost cards comprises of two
broad categories- excess
ration cards over the number
of households (DE) and the
BPL cards that are not with
their owners (SE). These are
referred to as “Double
Counting Error
(DE)” and “Shadow
Ownership Error (SE).
Leakage through Ghost
Cards
Leakage at FPS level
Leakage at FPS level is due to
inefficient delivery system,
absence of Central Control and
poor maintenance of records,
low operational days and time
of FPS and inaccessible
locations of FPS.
Overall Leakage
This includes discrepancies like
Inclusion (proportion of
subsidized grains received by
APL Households), Exclusion
(exclusion of poor in the issue
of BPL cards), Diversion of food
grains to unidentified
beneficiaries and Improper
delivery mechanism.
“Over 10 lac tonnes of foodgrains was damaged with which 1 crore people could have fed
for a year.”

4. LEAKS IN THE DISTRIBUTION AND DELIVERY SYSTEM
0
200
400
600
Allocation from
central pool(in
kg/household per
annum)
Foodgrains not
reaching the poor
households
This discrepancy in the amount of foodgrains reaching the poor can be briefly accounted
to:
1.Improper and inefficient inspection of quantity and quality at the godowns leading to birth of malpractices like
diversion of foodgrains by the shop owners, local mafia etc.
2.Lack of communication between the FPS owners and the Centre resulting in unavailability (SHORTAGE) or excess
availability( WASTAGE) of foodgrains in the godowns.
3.Improper storage and preservation conditions leading to wastage of large amount of foodgrains
4.Inaccesible locations of FPS as well as constraint in the time for which foodgrains are available during a month.
5.Hoarding of foodgrains meant for BPL families by the shop owners.

5. GODOWN A
1. Quantity of commodity
2.Time and detail of subsequent godowns
3.Details of vehicle and driver
GODOWN B
1. Quantity received
2. Time and date of receiving
3. Confirmation of receiving
CENTRAL
SERVER
INSPECTOR A INSPECTOR B
INFORMATION CONVEYED VIA SMS
• Valid for any transportation from one storage place to other
• Valid for all godowns between the State godowns to the FPSs.
ADVANTAGES
1. Use of a central system and technology brings transparency in supply of .
2. Reasons for delay in arrival/departure of goods can be monitored and examined and controlled
3. Theft of products during transportation can be eradicated.
4. A central control by the food department of the respective states enables proper control on the delivery system
5. Penalties for any delay in transportation would enable timely distribution and availability.
DISADVANTAGE
1. Implementation of this system will incur an additional cost to the government.
PROPOSED DELIVERY SYSTEM
CONSIGNMENT TRACKING BY GPS
A PDS for a PDS !!!
Foodgrains unfit for further delivery must
be reported and removed from the bulk

6. VIGILANCE AND MONITORING OF PDS
Three principal instruments built in to ensure
transparency in the distribution of food grains
and other items, mostly sugar and kerosene oil
under TPDS include;
a) norms prescribed for the display of important
FPS-specific details visibly in the FPSs;
b) directions for involving Panchayati Raj
Institutions in the delivery and monitoring of
PDS items; and
c) instruction to adopt measures for giving wide
publicity to the Citizen’s Charter which lays down
the rights and privileges of the consumer.
Guidelines state that the monitoring system
should build in inspection schedules for District
and Taluka level officials, provision of check lists
for pointed inspections and room for immediate
remedial actions.
It is envisaged that the ground level
monitoring of PDS could be effected through.
a) inspections of FPSs by district and taluka
level officials;
b) involvement of PRIs in the identification of
poor and in the functioning of FPS and other
transparency measures to be taken by
authorities.
c) Vigilance squad should be strengthened to
detect corruption, which is an added
expenditure for tax payers.
d) Personnel-incharge of the department
should be chosen locally
VIGILANCE MONITORING
0
5
10
15
20
25
MP UP Bihar Maha
No. of selected
FPS
Avg No. of
Inspections per
FPS per year
“Proper vigilance is mandatory for efficient functioning.”

7. • Leakages and diversions raised the delivery
cost in the sense that for every kg of food
grains delivered to the poor, the GOI had to
issue 2.4 kg of subsidized grains from the
Central Pool. In addition to minimizing
leakages and diversions of subsidized grains
through reform measures suggested above,
there is need for bringing down the
Economic Cost of grains through
rationalization of the cost structure of
handling food grains (procurement, storage,
transport, etc.) through public agencies.
DIVERSION OF FOODGRAINS
0 200400600
UP
MP
Bihar
Maharashtra
Off take by
genuine poor
Off take by
APL holding
BPL cards
In Kg per household
per annum
• Though at the all-India level, this diversion constitutes
around 21.45% of the subsidized grains distribution, some
States like, TamilNadu, Karnataka, Punjab, Orissa,
Andhra Pradesh, Himachal Pradesh and Kerala distribute a
large proportion of subsidized grains to APL households.
• Some States have deliberately included a larger proportion
of the households, while the smaller values of IE (and
hence small levels of diversion through this mode) could
be identification errors due to imperfect information and
improper methodology of BPL Census.
0
5
10
15
20
25
30
35
Exclusion
error
Inclusion
error
% of households
“Reduce diversion by proper classification.”

8. All figures in lacs
0
20
40
60
80
100 BPL
Households
BPL ration
cards issued
Fictitious
ration cards 0
20
40
60
80
100
UP
MP
BIHAR
MAHA
Total
leakage
leakage
through
ghost
card
The discrepancy in the above graphs can be attributed to the following reasons
1. False classification of BLP households leading to exclusion of BPL families and wrong inclusion of APL families in the
offtake of foodgrains under the PDS scheme
2. Issue of ghost ration cards which includes the proportion of BPL cards behind held by persons or agencies other
than original owners(shadow ownership)
Orissa incurred 45 crores of loss due to 1 lakh ghost BPL cards each card having an investment of Rs.4500 annually
detected in year 2011
A recent scam of 40 lakh bogus ration cards in Karnataka state.
Maharashtra had approximately 1.24 lakhs of total bogus BPL ration cards amounting to a sum of Rs.55 crores
according to an expenditure of 4500 per ration card in the year 2011
LEAKAGES THROUGH GHOST RATION CARDS
Some facts-

9. BPL
person A
Local Fair Price
Shop
1.Swipes card
2.Fingerprint verification
Display of
quantity available
on a monitor
Entry and
submission of
quantity to be
purchased
Central Server
Two receipts printed for
the FPS records and
aonee for the consumer
Computerized
Ration cards
issued
Equipped with credit
card type machines and
active GPRS system
The mechanism proposed above will bring forth the following changes and benefits:
CHANGES BENEFITS
1.A central control at district level Vigilance over distribution
2.Scanning of fingerprints and digitized
ration cards
Eradicate ghost BPL card and shadow
ownership problems
3.Annual updation of ration cards Eradicate inclusion and exclusion errors
4.Conveyance of information from district
to state and state to Centre
Great help while preparing budget
PROPOSED DISTRIBUTION SYSTEM MECHANISM

10. OTHER MEASURES
Increase in number of storage warehouses to ease
transportation of consignments and improving storage
conditions to combat rottening of foodgrains
For better transportation, government can join hands with
private sector to share the load. This would ensure delivery in
stipulated time
Removal of private shopkeepers and handing over the
responsibility of managing the FPS to women’s self help
group organisation this would lead to empowerment of
women
Ensuring strict law and order against the ones found corrupt.
As of today out of the corrupts only few have been punished
and not many stringent actions have been taken besides
cancellation of license.
Policies can be reformed where foodgrains are provided per
person basis and not per family basis. This would ensure
proper distribution according to family size
0
1
2
3
4
5
6
7
8
9
Avg no. of
persons per
family
Kgs of
foodgrain
per person

11. BRINGING IN INNOVATION AND TECHNOLOGY CALLS FOR
ADDITIONAL INVESTMENT
1.Implementation of a central system at the district level would call for additional
investment in terms of provision of computers and other systems.
2.Issuing of digitized ration cards would incur an additional cost to the government.
3.Provision of proper storage and preservation of food grains would require an
additional investment on the construction of warehouses.
1.Private involvement in the mechanisms would help to reduce the cost to the
government and give better and more efficient results.
PROBLEMS
EVERY PROBLEM HAS A SOLUTION
2.This is a one time investment with very less recurring cost to the government and it
will yield benefits in terms of lesser wastage , lesser diversion of commodities as well
as proper distribution of food grains under the PDS .

12. REFERENCES
• Report on “Trends in diversion on PDS “ by Reetika Khera
• “Performance Evaluation Report” -Planning Commission 2005
• Data collected from the website of Department of Food and Public
Distribution - http://dfpd.nic.in
• “Targeting and Efficiency in the Public Distribution System” – a report by
Bhaskar Dutta
• The National Food Security Bill
• Standing committee on Food Consumer affairs and public distribution-8th lok
sabha report
• Times of India and Indian Express articles on the leaks in PDS
• Chattisgarh and Kerala model of PDS system
• Kurukshetra –A journal on rural development Volume 60 March 2012