Ensuring food security through shg run pds in bihar january'2013 reports

Ensuring food security through PDS by Village Organizations of SHGs
(Gaya, Khagaria, and Purnia)
By
Manoj Kumar
Consultant, PDS-SD
Mob. +91-74881-16811
E-mail : manojirmaprm24@gmail.com
Monthly Report (January’2013)
Submitted to
Smt. Archana Tiwari,
SPM - SD
In continuation of the assignment to capacitate VOs run and manage PDS effectively
Bihar Rural Livelihoods Promotion Society (BRLPS) – JEEVIKA
Vidyut Bhawan-II, Bailey Road,Patna -800021,
www.brlp.in

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Manoj Kumar, manojirmaprm24@gmail.com
SUMMARY
The consultant undertook following works in the month of January’2013 in the guidance of
the SPM - SD :
A. Problem solving at the official level.
B. Establishing communication channel for Delivery of rations between community and
officials
C. Designing Internal Control System
D. Collecting Profit & Loss informations and organizing them
PROBLEM SOLVING
The consultant spent of the time of January in Khagaria in his efforts to resolve various
issues which adversely affect delivery of ration to beneficiaries. He visited every
concerned office of BSFC,DSO,SFC godown,Collectorate and SDO and met all the
concerned people of MOs of both block of Khagaria and Alouli,SDO of
Khagaria,ADM/DM ,Dist.Manager & accounts officer of SFC,godown in charge,and the
man who has been given charge of preparing the roster for delivery of the ration.The
consultant also met the president of the district’s PDS dealers’ association and the owner of
the nearmost Dharam-kanta namely Maa Kamakhya Dharam-kanta, Bazar Samiti Road,
Khagaria.
One of major problems in Khagaria is related with issuance of SIOs and delivery of ration
in time.Right from epositing the amount in the account of the SFC to delivery of the ration
there are multiple stages where VO members face problems .After several rounds of
sittings and meetings with officials we identified reasons responsible for such delays and
then communicated it to the book-keepers and VO members the ways to correct them. The

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consultant established a communication link between book keepers, the consultant and
concerned officials.
Stage Activity Reasons identified
Correction
done/Steps taken
Stage 1 VO estimates lifting of ration
for the next month and the
amount to be deposited
accordingly.
VO deposits the
amount as told by
the MO in the
beginning of starting
PDS or by
neighbouring dealer.
Proper maintenance of
coupons and
estimation of the
amount on the basis of
coupons deposited.
Stage 2 Deposit of amount by VOs in
the account of SFC.
Pay-in-slip not being
deposited by VOs.
thereby taking
longer time by SFC
accountant to verify
if the amount has
been deposited or
not.
VOs advised to deposit
the pay-in-slip .
Book-keepers given
the responsibility to do
so.
Stage 3 Stock-issue-orders (SIOs) being
issued by the SFC office.
SIOs are not issued
in time till SFC
confirms that
amount is deposited
in it’s account. To
verify this
Pay-in-slips are to be
made available to
MO/SFC office so that
time being taken in
verification is
shortened.

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accountant has to
check and verify
which VOs have
deposited what
amount. Only after
that SIOs are issued.
All this takes time.
Pink and green coloured SIOs
are sent to the SFC godown .
Longer time is taken
by SFC in sending
them to godown.
Submission of pay-in-
slip and the use of
communication
channel will shorten
the time .
Godown manager
doesn’t make the
roster available to
VOs.
The details of roster
was communicated to
VOs .The man who
prepares the roster
does inform the
consultant about the
date of lifting who
passes it on to VOs.
Yellow coloured SIOs are sent
to MO who in turn gives it to
VOs .
MO doesn’t give
SIOs to VOs in time.
MO wait for
confirmation from SFC
office. Pay-in-slip
resolves the issue.

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Godown manager
refuses to give ration
in absence of SIOs
and on date not
following the roster.
Ensuring availability
of pink and green SIOs
to the godown manager
in time and yellow SIO
to VO resolves the
issue.
Roster further helps to
sort out issues.
Stage 4
Taking samples of ration and
asking for weighing before
receiving the Release Order
(RO) .
Godown manager
refusing both .
Empowered women
through training to
insist those two
demands.
Weight loss Convinced the godown
manager to get them
weighed before lifting.
Link was established
with a local Dharam-
kanta for the purpose.
In efforts to resolve issues the consultant also involved women in dealing with officials.
Women were given chance to interact with concerned officials and put their points
explicitly. Now, to follow up the process on daily basis is the duty of the grass root staff,
book-keepers and VOs. And, in case the issues are not resolved this has to be escalated to
the consultant .

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COMMUNICATION CHANNEL
In order to ensure the smooth and on time flow of informations between key govt. offices
and VOs and in particular the flow from the govt. offices to VOs the consultant established
appropriate communication channel in concultation with concerned authorities so that there
is no scope of information asymmetry and VOs don’t waste their time and energy to run
here and there and the delivery of ration is done quite smoothly with nil hassles.
This channel was developed with keeping the manager-SD/consultant in the centre.
Accordingly , the concerned offices provide necessary information at appropriate time to
the consultant/Manager-SD whenever there’s gap in what’s desired and what’s happening.
The consultant then contacts the concerned VO for making correction and vice-versa.
DESIGNING INTERNAL CONTROL SYSTEM
In order to bring in standardization in book-keeping /records-keeping the consultant
conceptualized to design the internal control system. On this issue later on discussions
were also held with the young professional Miss Valleri who’s working exclusively on
PDS and Mr.Sanjay Mishra the accounts consultant. The contents being re-produced here
was mainly prepared by Miss Valleri with inputs from the consultant .The consultant feels
that following things have to be properly taken care of in the VO run PDS :
 Books of Records have to be maintained regularly uniformly across VOs.
 Heads of accounting have to be decided and better understood by book-keepers
 Tracking the Purchase and Sales register has to be developed
 Cash transactions with Bihar State Food Corporations and other agencies to be
tracked
 Bank Reconciliation

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After the internal control system is designed and finalized all VOs’ office-bearers and
book-keepers could be trained to maintain uniformity .
A. Cash Control:
At the VO level it’s important to control cash transaction and in order to do that we need to
maintain transparency in rates of items .Accordingly the rate at which the food grains for
Antyodaya & BPL and kerosene oil for all are distributed from the village organization
must be maintained in the minute book as well as sales register .To capture the details of
transactions as per rates mentioned we have to design the format and the sales register .For
controlling the expenses further , vouchers are required to be maintained and should be
adequately stamped by the PDS stamp. The accounting for left over stocks are done
properly and this has to be decided how to calculate their financial values.Also,we need to
decide to if we use the LIFO or FIFO system for distribution. The loss of stock too is to be
taken care of in the book of records. Records of pay-slip have to be maintained and this has
to be quoted in the books of records in a way that amount spent be properly taken care of.
The Adjustment entry for the BSFC draft has also to be taken care in the Ledger, Cash
Book with adequate narration.
B. Books of Records
While tracking transactions VOs need to maintain following book of records:
(i) Cash Book
This particular book will record all the recurring as well as non-recurring cash expenses. It
should incorporate all the expenses in such a way that the respective vouchers should be
available to support those expenses and the respective cash sales should be supported with

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our Sales register. The Purchase of AAY and BPL food grains should be supported with
the documents of permits.
(ii) Ledger
The Ledger of the PDS should incorporate all the transactions which confirm with the Cash
inflows and Cash Outflows.
(iii) Sales Register
The Sales Register should ensure the number of coupons we sold to and the exact quantity
charged to each beneficiary. This will help us to track the number of sales made in a
month, this register should be maintained for all the Beneficiaries starting from:
a) AAY
b) BPL
c) Kerosene oil
The amount calculated by this register should conform to the figure in the Cash Sales.
In the sales register, we have to be very careful that each card type should have a separate
Sale register, like they have separate Stock Register. Maintaining the register categorically
will help us to track the omissions made by Book Keepers. It will also help us to have a
control over the cash and it will be easy to keep an internal check over the transactions
done by the office bearer and book keepers.
(iv) Stock Register
The Stock Register should be designed in such a way that it enables us to understand the
quantity of food grains received and the quantity of food grains sold. The quantity of food

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grains should conform to the amount mentioned in the SIO [permits] provided by the
BSFC to Marketing Officer and then to the dealer that is to us, and second the sales
quantity should correspond with the Sales register as the same register will carry the
number of coupons coming under our Village Organization.
The maintenance of stock register will help us to track the actual quantity received and the
actual quantity sold and will also help us to understand the amount of loss incurred due to
the deficit of the food grains or any malpractice at the Village organization level.
It should be ensured that the Stock Register should be separate for each Card, which is
categorically it should be separate. Separate stock registers will help us to work separately
on each book and this won’t mix the expenses and receipts earned from cardholders
coming under each category.
This method is necessary as there are lots of problems in keeping a track of procurement of
AAY and BPL. Because, in many cases it happens that the dealers distribute the grains of
BPL food grains to AAY card holders and vice – versa. This will help us in controlling the
system better.
(v) Stock Issue Order Register
It is also a significant part of the sales and purchase. As Stock Issue Order will ensure the
amount which has been invested by the respective Village Organization and it will also tell
us the amount adjusted in the particular SIO which could be carried forward for the next
procurement. The amount in stock issue order should correspond to the pay-in-slip attached
for the particular month and this will help us to track how much more amount is required to
be deposited in the next month.

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(vi) Cash Memo
Cash memo is required to be circulated in all the Village Organizations running PDS, these
Cash memo will help us to track the beneficiaries which are given the food grains and will
also help us to highlight any discrepancy at the VO run PDS Book keeper level or at the
level of Adhyaksh. It should conform to our Sales Register, as the number of Cash memo
will help us to know how many of beneficiaries received the food grains and how many of
the m received Kerosene oil.
Cash memo play a significant role in tracking the number of beneficiaries procuring food
grains from our VO run PDS. The Cash memo of particular month should be numbered so
that we can estimate the number of beneficiaries procuring food grains of particular month.
The cash memo should correspond to the Coupon register.
(vii) Coupon Register
A coupon register, should be made categorically, that is, each card type should have a
separate coupon register for tracking each beneficiary. These beneficiaries should have
each detail which should conform to the sales register, which will enclose; the following
details the coupon no. , the ward no. , the name of the beneficiary [cardholder name] , the
name of the beneficiary who procured the food grains.
The benefit of the coupon register is to keep a track of number of beneficiaries. It will also
help us to:
 Understand the consistency of beneficiaries who procure food grains from us, and
also to understand the margin if deficit in the procured food grains.

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 To show the deficit to the higher officials.
PROFIT AND LOSS DATA
The consultant collected the profit and loss data from VOs through personal visits and
book-keepers,ACs,CCs,BPMs,and Manager-SD. Proper book-keeping and records-
keeping have been an issue in almost VO as there’s no standardized process designed so
far.
The consultant managed to gather this data for two months of November and December
from 37 VOs (out of 43 VOs running PDS in 3 dist. of Gaya,Khagaria,and Purnia) as per
lifting and distribution done till the time of sending it.However,data of 12 VOs were not
organized and so were returned back .Even the data of 25 VOs are subject to verification
and authenticity can be ensured only after the control system is put in place. Also,as supply
and distribution of ration is not uniform across the state and it’s erratic in supply many
times, we find erratic figures as profit and loss. The indicative profit and loss figure for two
months of November and December are as follows :
Sr.
No.
VO’s name Block Indicative Profit or Loss (In Rs.)
November’2012 December’2012
1 Annapurna Bodhgaya -15455 -4277
2 Varsha Banmankhi 2208.32 49534.96
3 Rupa Banmankhi 409 -4944
4 Radha Krishna Banmankhi 3667.5 1368.75
5 Puja Banmankhi 94 640
6 Nirala Dhamdaha 208 -1617
7 Jai Bharat Dhamdaha -834 -2902

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8 Akash Sherghati 1200.45 -860.4
9 Shivam Dobhi 2425 2290
10 Seeta Dobhi 2112.54 636
11 Suraj Dobhi 1204 14976
12 Khushi Manpur 6528.4 11385.0
13 Lakshmi Dhamdaha -37103 -37250
14 Ganga Bodhgaya -1819 -5623
15 Adarsh Alouli -50831 -16437
16 Astha Alouli -26640 -745
17 Jai Shri Ram Alouli -23493.8 NA
18 Chandramukhi Banmankhi -1817 2950
19 Chandni Dhamdaha -28724 -28716
20 Jyoti Barachatti -19311 -20192
21 Kamal Barachatti -21979 -20982.5
22 Deepak Khagaria -3410 -12615
23 Bandhan Khagaria 1218.45 -11405
24 Milan Khagaria -3150.6 -5660
25 Ekta Khagaria 5387 -2430
As can be seen from the above table 12 VOs in November and 7 VOs in December showed
profitable results. Upon analysis we found that non-profitability is not because of non-
viability of the PDS. Rather there are multiple factors which leads to non-profitability.

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Factors of current non-profitability can be listed as :
A. Supply side factors
 Irregular supply of ration
 Insufficient supply
 Supply not in time
 Inferior quality resulting in non-acceptance by beneficiaries
 Process delays
 Weight loss
B. Demand Side factors
 Depositing the amount without doing proper estimation of quantity of
ration and their purchase amount.
 Improper inventory management
 Poor records/accounts-keeping
 Absence of control system
 Internal conflicts in the VOs
 Non-active participation of VO members in the entire process of
purchase,carriage,storage,distribution,and managing.
Annexure can be referred for profit and loss data.

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ACHIEVEMENT SUMMARY
Achievements of the consultant in the last two months of the contract are as follows :
(I) Profit and Loss Data : A summary of Profit & Loss data as per targets is as
under :
Sr.No. Month Target (No. of VOs
whose P & L data are
to be submitted) as
per contract
Actual no. of
VOs whose P
& L data were
found
Achievement
(in percentage)
1 December’2012 43 35 81.4%
2 January’2013 43 37 86.1%
(II) Collection of Basic Informations regarding VOs
(III) Rapid Impact assessment Study
(IV) Establishing communication channel between Govt. officials and VOs
(V) Designing Internal Control System
(VI) Training of VOs and BKs
(VII) Problem solving and hand-holding support on day to day basis
_____________________________________________________________________
NOTE : 1.Profit & Loss data is being made available with SPMU in the soft copy.

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