Public Distribution System

A
Project
On
―Pattern of Allocation & Off takes of Food grains Under Public
Distribution System in Chhattisgarh with special reference to
Raipur city‖
Submitted in
Partial fulfillment of the requirement for the award of the degree of
Master of Arts
Session 2012 – 2013
Guided By
Dr. VENU GOPAL
Govt. D.B.Girls‘ P.G. (Autonomous) College
Submitted By
DIVYA JAIN
At
AFFILIATED TO:
Pt. RAVISHANKAR SHUKLA UNIVERSITY, RAIPUR

CERTIFICATE OF APPROVAL
This is to certify that the project work entitled ―Pattern of Allocation & Off
takes of Food grains Under Public Distribution System in Chhattisgarh with
special reference to Raipur city” Submitted by “Divya Jain” in the partial
fulfillment of the requirements for the award of the degree of Master of Arts,
Session 2011 -13 at Govt.D.B.Girls P.G College affiliated to Pt. Ravishankar
Shukla University, Raipur is a record of the students own work. This work has not
been submitted to any other University or institute for the award of any degree or
diploma to the best of my knowledge.

CERTIFICATE OF EVALUATION
This is to certify that the project work entitled‖ “Pattern of Allocation & Off
takes of Food grains Under Public Distribution System in Chhattisgarh
withspecial reference to Raipur city” Submitted by “Divya Jain” in the partial
fulfillment of the requirements for the award of the degree of Master of Arts,
Session 2011 -13 at Govt. D.B. Girls P.G College affiliated to Pt. Ravishankar
Shukla University, Raipur is a record of the students own work. This work has not
been submitted to any other University or institute for the award of any degree or
diploma to the best of my knowledge.
Internal Examiner

DECLRATION
This is certify that the project report entitled, “Pattern of Allocation &
Off takes of Food grains Under Public Distribution System in
Chhattisgarh with reference to Raipur city” is done by me is an
authentic work carried out for the partial fulfillment of the requirements
for the award of the degree of Master of Arts under the guidance of
Dr Venu Gopal.
Divya Jain

PREFACE
Quiet frequently these days people talk of research, both in academic institution &
outside, several studies are undertaken & accomplished every year, but in most
cases very little attention is paid to an important dimension related to research i.e.
its practical importance. It may be noted in the context of planning & development
that the significance of research lays in its quality & not quantity.
As far as this project report is concerned, the report consist of four chapters along
with webliography, Bibliography & appendix well arranged in coherent manner.
Chapter-1 consists of Introduction of PDS in context of India. Chapter-2 consists
of Chhattisgarh TPDS details. Chapter-3 contain Research Methodology, Chapter-
4 Procurement, Allocation& off takes of food grains, Chapter-5 contain Data
analysis & Interpretation.Chapter-6 contain Main conclusion & recommendations
I shall amply reward, if this project proves helpful in the development of
knowledge of the readers as well as improves the working of PDS.
DIVYA JAIN
M.A. (4th
Sem)
Govt. D.B. Girls P.G. College,
Raipur

ACKNOWLEDEGEMENT
The exclusivity of this project cannot be claimed as a singular effort. I am offering
profound gratitude, as without their generous assistance this work would never
have completed. As it is impossible to include all the names, some of the
prominent names are recognized at appropriate places.
My project on ―Pattern of Allocation & off takes of Food grains Under Public
Distribution System in Chhattisgarh particularly in Raipur city‖ would be my
dream for ever if I would not have got inspiration, encouragement & the blessing
of parents, teachers & friends. How can it be possible to start up my report without
saying a word of thanks to all of them?
By the grace of almighty it was very favorable on my part to work under the
guidance of Dr. Venu Gopal in Govt. D.B.Girls‘ P.G.College.He guided me full of
magnanimity on every difficult step to my work & thus I completed my report in a
very efficient way & over come the hurdles.
I would also like to pay my regards & thanks to my parents & my family members
& my friends who supported me & gave their full cooperation & assistance in my
study.
Last but not least, I pay my sincere thanks to almighty God for enabling me to do
my work with his abounding grace.

INDEX
CHAPTER TITLE PG. NO.
CHAPTER-1 INTRODUCTION OF PDS :INDIA 1-25
CHAPTER-2 CHHATTISGARH PDS SYSTEM 26-50
CHAPTER-3 RESEARCH METHODOLOGY 51-59
CHAPTER-4 PROCUREMENT,ALLOCATION & OFFTAKES OF
FOODGRAINS
60-71
CHAPTER-5 DATA ANALYSIS & INTERPRETATION 72-84
CHAPTER-6 FINDINGS,LIMITATIONS,SUGGESTIONS &
CONCLUSION
85-87

TABLE OF CONTENT
Chpater Title Pg. No.
Chapter 1 Public Distribution System : India 1
1.1 PDS : Introduction 2
1.2 Features of PDS 3
1.3 Main Constituents of PDS 3
1.4 PDS : Procurement 5
1.5 Administration & Organisation of PDS 10
1.6 Food Subsidy in India 20
Chapter 2 Public Distribution System : Chhattisgarh 26
2.1 Introduction 29
2.2 Economic Profile of the Chhattisgarh 30
2.3 Fair Price Shop 35
2.4 Ration Card 36
2.5 PDS Beneficiaries Register 38
2.6 Eligibility for ration card material 39
2.7 Supply System of Ration Material 40
2.8 Consumer Price 41
2.9 Departmental Schemes 42
2.10 Core Public Distribution System 47
2.11 Achievements 51
Chapter 3 Research Methodology 57
3.1 Problem Statement 58
3.2 Objective of Study 58
3.3 Purpose of Study 58
3.4 Methodology of Study 58
3.5 Research Methodology 58
3.6 Literature Survey 59
3.7 Collection of Data 59
3.8 Execution of Project 59
3.9 Limitation of Streamlining Results 59
Chapter 4 Allocation & Off takes 60
4.1 Regular allocation of food grains in Chhattisgarh under PDS 64
4.2 Adhoc allocation of food grains in Chhattisgarh under PDS 66
4.3 Procurement of food grains 70
Chapter 5 Data Analysis & Interpretation 72
Chapter 6 Findings, Recommendations & Conclusion 85

List of Tables & Charts
Chapter:-1 Public Distribution System : India Page No.
Table 1.1 Price Situation from 1968 onwards 6
Table 1.1 Price Situation from 1975 onwards 6
Chart 1.3 Organizational Design of the PDS in India 12
Chart 1.4 The Public Distribution System: A simple Model 13
Table 1.5 Administrative Functional Framework 14
Table 1.6 Important Decision at Various Level 15
Table 1.7 Major Subsidies in India 1990-91 to 2012-13 22
Table 1.8 Trends in Consumer Subsidy on Rice & Wheat & share of
consumer & Buffer Subsidy in Total Subsidy in India : 2002-03 to
2011-12.
23
Table 1.9 Trends in Minimum Support Price, Procurement incidentals, Distribution
Costs & Economic Costs & Economic Cost of Rice & Wheat : 2001-02 to
2012-13
25
Chapter:-2 Public Distribution System : Chhattisgarh 26
Table 2.1 Chhattisgarh at Glance 27
Chart 2.2 Public Distribution System of Chhattisgarh 32
Chart 2.3 Food,Civil Supplies & Consumer Protection, Directorate 34
Table 2.4 Number of Fair Price Shops in State 35
Table 2.5 Ration Cards Holders 36
Table 2.6 Public Distribution System 39
Table 2.7 Mukhyamantri Khadaya Sahayata Yojana 39
Table 2.8 State supply Center Governed by Chhattisgarh State civil Supplies
Corporation
40
Table 2.9 Consumer Rates of Ration Material 41
Table 2.10 Monthly allocation of Ration Material by Indian Government
Under Public Distribution System
41
Table 2.11 Schemes by Central Government Under TPDS 44
Chapter 3 Research Methodology
Chapter 4 Procurement ,Allocation & Off takes of food grains
Figure 4.1 Allocation & Off take 61
Table 4.2 Monthly allocation of Rice &wheat for APL,BPL,AAY under
TPDS for the Year 2010-11
64
65
65
Table 4.5 Additional Allocation of Food grains under TPDS during 2011-12 66
Table 4.6 Additional Allocation of Food grains under TPDS during 2012-13 66
Table 4.7 C.G. Allocation & Off take under TPDS scheme for the year 2008 67

Table 4.13 Procurement of wheat & rice from the Central Pool 70
Table 4.14 Procurement of rice during KMS 2011-12 by FCI & State Agencies 70
Table 4.15 Procurement of rice during KMS 2012-13 by FCI & State Agencies 71
Chapter:-5 Data Analysis & Interpretation
Table 5.1 Percentage Change in Allocation of Wheat in different years 73
Table 5.2 Percentage Change in Off takes of Wheat in different years 74
Chart 5.3 Monthly off takes of wheat under TPDS Scheme,2005-06 75
Chart 5.4 Monthly off takes of rice under TPDS Scheme,2006-07 76

CHAPTER-1
PUBLIC DISTRIBUTION SYSTEM:INDIA
1

1.2 Features of Public Distribution System
1. Essential consumer goods are provided to the people of country.
2. These goods are provided at fixed prices, fixed by government.
3. Government agencies & shops are established or licenses are granted to private shops for
the purpose of such distribution.
4. These agencies of licenses have to work under strict government supervision, regulation
& control.
5. The commodities to be distributed, quantity of distribution, period & price of distribution,
all are determined by government.
1.3 Main constituents of Public Distribution System
1) Fair price shops (FPS’s) or Ration Shops: -
Public Distribution system ensures supply of essential
commodities through network of fair price shops. At present there are about 4.62 lakh fair
price shops in India out of which about 3.70 lakh shops are operating in urban areas. Each
shop is envisaged to serve a population of about 2,200.
2) Shops of Controlled cloth: -
These shops sell contributed clothes to consumers on the basis of
their ration cards. More than 66,000 shops are selling such cloth throughout the country.
3) Soft coke depots: -
These depots sell soft coke to consumers on the basis of their ration
cards. About 2.5lakh such depot are working in the country.
4) Super Bazaars’:-
Super Bazaars are the bazaars which provide all the goods of daily
needs at controlled prices. These markets enable the consumers to complete their
purchasing from one place. These bazaars are working in almost all the major cities of
India. About 100 Super bazaars are working in the country out of which top 15 super
bazaars are in co-operative sector.
5) Kerosene Retailers: -
In some states, Kerosene oil is distributes through fair price shops
while in other states; specific retailers have been licensed for the purpose. These retailers
sell kerosene oil to the consumers at fixed price.
3

6) Commodities of Distribution: -
Six key essential commodities viz. Wheat, rice, sugar, imported
edible oils, kerosene & soft coke are distributed to consumers through public distribution
system. Besides, state governments are empowered to include other essential goods in the
system on the basis of their particular needs & Circumstances. Accordingly, cloth, toilet
soaps, tyre-tubes, copies, cells, match-box etc, have been included by different state
governments at different times.
7) Allocation & Distribution: -
Central Government procures, allocates & supplies these goods
to states & union territories which, in turn, are responsible for their allocation &
distribution within the concerned state or territory. Government is emphasizing to
streamliner the system to improve its reach to the consumers living in the areas of relative
economic disadvantage.
8) Responsibility of Supply of Commodities :-
Different institutions have been assigned the responsibility
of procurement, allocation & distribution of different goods as under- (i) Food
Corporation of India for Wheat, rice & other food grains, (ii) Indian Oil Corporation &
Ministry of Petroleum for kerosene, (iii) Coal India Limited for soft coke, (iv)National
Textile Corporation & National Federation of Consumer Co-operatives for controlled
cloth, (v) State Trading Corporation for imported edible oils.
9) Review & Improvement: -
Working of Public Distribution system is periodically
reviewed in consultation with state governments & necessary corrective measures are
taken. At the centre , an advisor council functions to review its working from time to
time. In the states & union territories, Consumer Advisory Committees perform this duty.
At the district, block & village levels also, consumer advisory committees oversee the
working of fair price shops.
10) Consumers Co-operative Stores: -
Consumer Co-operatives play an important role in the
supply of quality goods at reasonable rates to common people. Government has been
emphasing the need for strengthening co-operative so as to enable these organizations to
play a dominant role in public distribution system. There is a 3-tier structure of consumer
co-operative societies in India.
4

1.4 PUBLIC DISTRIBUTION SYSTEM: PROCUREMENT
The PDS in India forms an important part of state strategy for intervening in the distribution of
food grains & other essential commodities. However, the nature of the policy of state‘s
intervention is largely determined by the causes & conditions which are responsible for its
emergence & growth. Therefore, the major causes of the origin of this policy are as follows:-
Drought, famine & war conditions
Inflation
Market Imperfections
Poverty
Lack of distributive justice.
Explanation:-
1. Drought, famine & war conditions:-
The Primary impetus for the growth of public distribution system in India has been
shortage of essential commodities from time to time. These shortages were caused due to war,
famine, drought & other natural calamities. Thus the emergence of PDS in India has been more
in response to some specific critical situation rather than to the conscious public policy. The PDS
through Fair Price Scheme (FPS) was first introduced in India in the wake of the Second World
War in 1939. In 1942, when Bengal suffered from famine, this system of fair price shops was
turned into the rationing system. The partition of the country in 1947 & separation of Burma
further weakened India on the food-front; there were controls & decontrols in the country
depending upon the climatic conditions. In 1966 & in 1959, there were reports of food crisis in
certain parts of Rajasthan, Bombay, and Bihar, Orissa & Tamil Nadu mainly caused by drought,
floods & cyclone. The Indo- Chinese hostility of 1962 was also an important reason for the
growth of the fair price shop system in the country. Thus it is found that PDS in India started &
gained momentum during the periods of shortages of commodities which were the result of
either natural or man-made calamities.
2. Inflation:-
Secondly, it is the inflation which renders PDS necessary. The term inflation is associated
with an economic state in which too much money chases too few goods. Inflation is considered
as a monetary, political, social & a structural problem. Therefore, it is a state of imbalance
between the market stock of the basic goods or basic commodities & the active stock of money.
A State of inflation exists, when there prevails not only an imbalance between the stock of
money & the stock of basic goods but also the increasing disparities in the economic levels
among the different social classes putting the poorest segment of the poorer strata to a great
disadvantage. In other words, Inflation in a pro country like India is a class phenomenon. It
augments the difficulties of poorer classes & distorts the distribution process. Even persons with
fixed income are hit hard. The distribution process is most severely jolted by persistent inflation.
The gap between equilibrium economics & reality grows wider.
The rate if inflation in India, Whether measured by the movements of the Wholesale price index
or by the movements of the cost of living index, was much higher in the decade 1961-71 than in
1951-61. The inflationary situation can be perceived from the following Tables of Wholesale
Price Indexes.
5

Table 1.1
Price Situation from 1968 onwards
Index Numbers of Wholesale Prices of all Commodities
(1961-1962=100)
Year
1968-1969 165
1969-1970 172
1970-1971 181
1971-1972 188
1972-1973 207
1973-1974 254
Source: Economic Survey, Government of India, 1975-1976
Table 1.2
Price situation from 1975 onwards
(1970-71=100)
Year All commodities
July, 1975 176
July,1976 178
March,1977 183
January, 1978 184
January,1979 185
January,1980 224
September,1980 263
Source: Economic Survey, 1978-1979 & Reserve Bank of India Bulletin, various issues
The Table 1 & 2 clearly indicates a ‗galloping‘ inflation in India. This inflationary
tendency had been spread over a wide range of commodities including food grains & essential
commodities. This tendency further worsens the conditions of the poor. Therefore, PDS has been
used as an important instrument for containing the tendency of price-rise & to check inflation by
supplying the food grains & essential commodities at fair & reasonable prices to public in
general & to the poor & vulnerable sections of the society in particular.
3. Market Imperfection:-
Thirdly, widespread market imperfections warrant the intervention of the State in the
market mechanism. In India, the agricultural sectors play a predominant role. The agricultural
development is an essential condition of the economic growth in India as it contributes about
50percent to India‘s national income & provides livelihood to 70 percent of the population.
Further, it not only supplies the bulk of wage goods to the non-agricultural sector, but also
produces raw material for a large number of industries & accounts for 50 percent of the country‘s
exports. In a country like India, the agricultural prices determine the nature of the distributive
mechanism for the majority of population spends the major part of their income on food grains
6

which also forms the major part of the total consumption expenditure of the poor & vulnerable
sections. The expenditure of lower strata of the society on the consumer goods ranges from 60 to
80 percent of their income. A study reveals that in rural sector food accounts for about two-third
of the total expenditure. Abrupt fluctuations in the food grain prices adversely affect the whole
population of the country in general & the poorer sections of the society in particular. Stability of
prices is vital for the economic growth & it is the agricultural sector which holds the key to the
price stability. Rise in the agricultural prices will have several serious repercussions as it touches
the economic life of the community at many points.
Stability in the food grains prices depends upon the market mechanism. In a perfect
market, prices are determined on the basis of demand & supply.But markets are hardly perfect in
developing countries. In India, the imperfections in the market are further accentuated in the
recent past partly due to the entry of various unscrupulous persons into the market with the
blessings of political elite. The traders include not only the licensed wholesalers & retailers, but
also the speculators & hoarders who make huge purchases with their unaccounted money to
make quick profits. All these & many other factors rendered the food markets. Further, only rich
landlords have large marketable surpluses. Hence, they indulge in speculative hoarding of food
grains by withholding larger supplies from the market causing deleterious effect on the economy.
Some rises in prices are inevitable in a developing economy. In fact, it is the to be paid for
development. But if it generates speculative tendencies resulting in withholding of stocks from
the market, it will tend to aggravate the inflationary pressure. In India, it appears that, the
majority of traders & producers turn into hoarders. The traders, profiteers & other anti social
elements are concerning off the stocks, thus creating artificial scarcity with a view to earn
abnormal profits. This tendency of producers & traders hits hard the poor & makes it impossible
for them to purchase the food grains required for their bare subsistence.
4. Poverty:-
Fourthly, the cause of removal of ubiquitous poverty calls for continuous intervention of
the state in the market mechanism. In fact, it is the cause of many problems in the society. The
term poverty is closely associated with hunger & low standard of living. Poverty is a problem of
low income & its unequal distribution, of slow pace of development & inequitable distribution of
the grains of development.
It can be described as social phenomenon in which a section of the society is unable to
fulfill even the basic necessities of life. Its manifestations are clearly visible in under-
nourishment, under-employment & unemployment, insecurity & world wide unrest. The roots of
poverty are identified by Marx in the sphere of economic structure. He considers poverty as an
outcome of a defective pattern of distribution of the means of consumption i.e.
incomes,&,therefore,lays the primary emphasis on restructuring the pattern on income
distirbution.Hence, in any sincere effort to eliminate poverty, elimination of concentration of
wealth & property would be indispensable. In the absence of such structural changes the gains of
development get monopolized by the upper middle & richer sections of the society leaving the
lower middle & poorer sections untouched by the process of development resulting in the
deterioration of their living conditions. In their pioneering study, Poverty in India, Dandekar &
Rath showed that in 1960-61 about one-third of the rural people & half of the urban population
lived on diet of inadequate even in respect of calories. They further forecast that this percentage
of household will continue to grow in future. This led them to conclude that it would take 35
7

years after 1980-81 for the per capita consumption to reach the national desirable minimum level
of consumption. In regard to per capita income/consumption, a study reveals that, in 1960-61, 52
percent of the rural population lived below the poverty line. There has been the increasing trend
in this regard and in 1967-1968, 70 percent of the rural population was found below the poverty
line. According to the planning minister, there are 249 millions of the rural poor people who are
living below the poverty line. Further, it is now officially acknowledged that nearly 50 percent of
our population has been living below the poverty line. Further, it is now officially acknowledged
that nearly 50 percent of our population has been living below the poverty line continuously over
a long period.
All these studies denote that in India the poverty remained constantly high or
increasing. Large number of the poor is deprived of their basic necessities & is even denied of
adequate food to maintain their body indicates the degree of dehumanization the system is
subjected to. However, in modern times, it is widely accepted that ―it is no longer inevitable or
desirable & its abolition of poverty has been increasingly merged with, & has often become the
foundation for the social & political policy of the government. The policy of PDS falls in this
category as it attempts to reduce the misery.
Since Independence, the government of India has been emphasizing on the removal of poverty.
All the Five Year Plan documents elaborately discussed the problem of poverty & suggested
measure to eradicate it. The PDS has been developed as an important instrument in this regard
through which the foodgrains & essential commodities are distributed to the poor & vulnerable
sections of the society at fair prices. Thus it emerged as an important welfare programme.
5. Problem of distributive justice
Finally, there is the problem of distributive justice which is a corollary of poverty &
economic inequalities In fact; poverty & economic inequality are closely related. The studies
conducted by Ojha Bhat (1960-1962), Ranade(1961-1962), Ahmed Bhattacharya(1963-1964),&
NACER (1964-1965) indicate that the degree of inequality in the distribution of disposable
income was quite serious in India. There is substantial evidence to state that in India the gap
between the poor & rich is getting wider. According to a study, the bottom 20 percent of the
population had over 7 percent of the total disposable personal income while the top 20 percent of
the population had a share of 48 percent in it. Another study glaringly distinguishes the rich &
the poor because the private consumption expenditure of the bottom 5 percent people was Rs. 78
at 1966-67 prices while it was Rs 1350 for top 5 percent of the population. A study in 1973-74
denotes that the average per capita expenditure of 5 percent at the bottom comes to be Rs.68 at
1960-61 prices & for the 3 percent at the top it is Rs 932.
The urban-rural inequalities are also glaring. In 1967-68, the per capita consumption expenditure
in villages was Rs 269 at 1960-61 prices whereas in the urban areas it was about Rs 365. In
Urban areas the distance between the rich & the poor is much wider, An idea about this can be
formed from the fact that, in 1967-1968, annual per capita consumption expenditure for the
poorest in the rural sector was Rs 75 at 1960-1961 prices while it was Rs 909 in the case of rich.
In the urban areas, the figures were Rs 78 & Rs 1330 respectively. Further, in 1974-75, there
were wide differences in the per capita income in different states, ranging from Rs 493 to Rs
1482, indicating large inequalities among the different states.
Besides inequalities in income, there are inequalities in the distribution of poverty &
wealth. According to the agriculture census for 1970-71, 15 percent of the operational holdings
(medium & large) controls 61percent of the total land whereas 85 of the holdings (marginal,
8

small & semi-medium) and have 39 percent of the total land. The Urban areas are no exception
to this phenomenon. According to the National Council of Applied Economic Research, 57
percent of the built up property is in the possession of the top 10 percent of property owners
whereas the bottom 10 percent of such households own only 1 percent of the property. Large
inequalities are also seen in the ownership pattern of share-wealth. According to an expert
committee, more than half of the wealth in the form of shares is concentrated in the hands of
one-tenth of the top one percent of the households receiving profit income.
In India, these inequalities in income, wealth, pattern of consumption combined with the
market imperfection have adverse effects on investment, production & consumption. People with
very low incomes are unable to meet the basic needs of physical existence resulting in miserable
conditions. This affects the productivity of labor which ultimately reduces production. The few
who get larger income are able to enjoy the luxury goods. This type of resource distribution is
bound to cause social tensions & unrest. Under these circumstances, it has become the
responsibility of the state to intervene in the market mechanism as the State has ―to achieve the
objective of a socialist society & shoulder the total responsibility for the socio-economic welfare
of the people.‖
Several policy measures are initiated to bring about social justice. The fiscal & pricing
policies seek to achieve this objective. These measures attempt to improve the lot of the poor by
providing them with subsidized food & the other basic necessities of life. In India, Income Tax,
Estate Duty & Wealth Tax have been sought to be used for reducing the inequalities in income &
wealth. It is reported that considerable portion of the Tax on capital gain either goes unrealized
or unreported. The Estate Duty, Gift Tax & Wealth Tax have been little help in containing the
accentuation of the inequalities resulting from the concentration of wealth, much less leveling
them down.
To bring a change in the existing distribution of assets within rural & urban sectors, the
Government of India has enacted laws relating to agricultural land holding & ceiling on urban
property. Huge Investment in public sector has been made since the inception of planning in
order to build up a socialistic pattern of society. To avoid concentration of economic power in
the hands of the private corporate sector the government adopted anti-monopoly policy &,
consequently, the Monopolistic & Restrictive Trade Practices Act (1969) was enacted.
Institutions have been established to directly assist the small farmers, small industrial units &
tribal. The Twenty-Point Economic Programme, & the Anti- Poverty Programme in the wake of
―Garibi Hatao‖ policy, was introduced to ensure distributive justice.
Institutional reforms in this country, even though legislated in right earnest by the State
Assemblies, have not proved to be successful in ameliorating the condition of the poor & in
removing inequalities. As the institutional changes are taking place at a very slow pace, the fiscal
policy & other measures are expected to ensure distributive justice. Even in the case of the Fiscal
policy, as there are many loopholes in the tax laws, taxation of income & property has also not
proved to be a powerful instrument of socio-economic changes. The government, therefore,
initiated some direct measures to help the poor to ensure distributive justice. The Public
Distribution of essential commodities is one such measure which is mainly intended to protect
the real wages of the poor on the one hand & to make the essential goods accessible to the people
on the other hand.
9

1.5 ADMINISTRATION AND ORGANISATION OF PDS
The term ‗Organisation‘ relates to the organisational structures at central & state level
with a special emphasis on the organisational set up of PDS at the district level & below. The
term ‗management‘ refers largely to the managerial aspects of the fair shops which play an
important role in the retail distribution of essential commodities under PDS. Management
structure of the PDS includes policy formulation, fixing of objectives, strategy for procurement
& distribution of food grains & other essential commodities.
Administration of the PDS :-
The Operational detail of the PDS differs from state to state. Though the policy of setting
up fair price shops owes its initiation to national food policy, its implementation remains the
direct responsibility of the state governments. The centre plays a prominent role in procurement
& interstate movement of cereals. It also has a prominent hand in determining the support price
which is the basic factor influencing the PDS issue price in the state. The Food Corporation of
India (FCI) has come to acquire the role of providing supplies to states, needed for feeding the
PDS channels on the basis of central allocations. In order to operate the PDS effectively, the
central government also issues guidelines from time to time to the states regarding the
operational details of the PDS.
In case of states, it is the food & civil supplies department which looks after the PDS.
Each state has gone about it in its own way to make organisational, administrative & operational
arrangements for instituting PDS. Of course, the central government scales guidelines are taken
into account, but the final decisions are made by the state governments. These include the
commodities to be brought under the PDS, ration scales, number, location & licensing of fair
price shops, the terms & conditions of supplies, methods of supplying, checking, remunerating
FPS dealers, etc.
As a result, a great deal of diversity in the actual design of PDS has come exist. The
major operational influence can probably be seen in two crucial matters. Firstly, the allocation of
wheat, rice, sugar, edible oil, kerosene, controlled cloth etc to the states & secondly, the
determination of the central ex-godown price for the centrally supplied commodities. The ration
scale granted by a state, their regularity & the final issue price charged from the consumers
substantially carry the influence of these two central policy decisions. In terms of entries 33 & 34
of the concurrent list of the Constitution of India, PDS falls within the preview of both the
central and state governments but in terms of entry 26 of the state list, the state also as substantial
scope in decision making. In any case, in practice, it is found that in determining the actual
administrative & organizational design of the PDS, which requires a significant level of
decentralized decision making, it is the state government which has played an important role.
It may be mentioned that setting up of an effective delivery system, granting fair &
equitable access at a low administrative cost & in accordance with the needs of the local
population at various places, depend upon a large number of administrative & organisational
details & many subsidiary policy decisions. Apart from the decisions taken at the state level,
those taken at the district, block, rationing circle & at FPS level, also play their part in
determining the availability, cost & benefits of access to the PDS. Table C-1 depicts the overall
administrative functional model of PDS, showing roles , responsibilities & areas of decision-
making at the level of the central government, state governments, district & local agencies,
10

exerting upon the FPS & the consumer. Table C-2 portrays the critical decision variables at each
of the levels at which policy & administrative decision governing access to the PDS are made.
Some of the important aspects are as follows:-
Important
Aspects
Issue of Ration Cards
Ration Scales
Periodicity of
Purchases
PDS Issue Price
Quality of PDS
Supplies
Commodity Coverage
Procedure of Issuing
Ration Cards
11

CHART 1.3
Organizational Design of the PDS in India
Govt. of India
Planning Commission
Decided by the Dept. of Food &
Supplies and Planning
Commission, Govt. of India
State Civil Supplies Dept.
&/or Corporation
Warehousing
Corporation FCI
Regional Depots
From Farmers, Traders,
Millers, & Imports by
FCI & NAFED
Ministry of Food & Civil
Supplies, Dept. of Food
District Supply
Officer
Block Revenue
Officers
Fair Price Shops
PDS Consumer
Consumer/Advisory
Committees
Type of FPS Co-
Operative Private
Government
Policy Formulation
Objectives
Implementation
Procurement Marketing
Federation Pvt.
Traders as Agents
CACP Recommends
Price State Co-
Operative
Consumer Advisory
Council
Wholesalers Flour
Mills Export
Distribution
Warehousing
Retailing
F
E
E
D
B
A
C
K
12

Chart 1.4
The Public Distribution System: A Simple Model
Macro Factors Related to
the size PDS
Factors Related to Retail
Outlets
Factors Related to
Consumers
Involuntary Exclusion of
Consumers (Vulnerable
Groups)
Open Market Demand
& Prices
Legal Viability of Retail
Consumers
Consumer Confidence &
demand for
Turnover of Outlets
Stocking & Availability
Diversion to Open
Markets
Excess Licensing of
Retail Outlets
Outlets
Malnutrition
Involuntary Operational
Stocks with Govt.
Illegal Viability
13

Chart 1.5
The Administrative Functional Framework
Central Government
1. Obtaining supplies, procurement & imports;
2. Procurement price, issue prices to state &
subsidies;
3. Guidelines to states on the design of PDS;
4. Allotment to states.
1. Receipts of central allocations;
2. Procurement in the state;
3. Purchases from other states;
4. Warehousing;
5. Determination of :
i. Consumer issue price;
ii. Commodity coverage;
iii. Ration scales;
iv. Rules for issue of ration cards; FPS
license;
v. Profit margins to FPS;
vi. Periodicity of sale;
6. Allotment to district & transport arrangements.
1. Lifting stocks, warehousing;
2. Issue of ration cards;
3. Licensing of FPS dealers;
4. Arranging/ensuring lifting by Fps dealers;
5. Enforcement, inspection,vigilance.
District or Local
Agencies
State Government
14

Chart 1.6
Important Decisions at Various Levels
1. Commodity coverage;
2. Total PDS supplies, procurement by imports/ exports+
inventories;
3. Size of covered population: exclusions;
4. Nature of PDS support- total or supplementary;
5. Preferential treatment to area or population group;
6. Difference between open market price by PDS issue
price;&
7. Size of subsidy
1. Matching of supplies with needs by intra-state
procurement;
2. Adequate & well-dispersed warehousing;
3. Capacity to buy from other states;
4. Inclusion of additional goods;
5. Appropriation of issue price in relation to open market
price;
6. Commodity coverage;
7. Periodicity;
8. Ration Scale;
9. Cost of ease of getting ration card;
10. Location & behavior of FPS;
11. Adequacy & profit margin;
12. Adequacy & regularity of allotment;
13. Public, private or cooperative transport of stocks to
FPS;
14. Transport charges, zoning for the purpose.
1. Delivery to FPS of assured quality And quantity;
2. Proper storage by FPS;
3. Cost & case of betting;
4. Variation in state government determined scale;
5. Ensuring regularity in lifting of stocks by FPS for
around the year availability;
6. Need for reserve stocks; rate to state deliveries to
FPS;
7. Govt. monitoring of stocking & sales performance of
FPS.
Central
Government
District or Local
Agencies
State Government
15

EXPLAINATION:-
1) Issue of Ration Cards :-
The first major decision in the organizational administrative set up of the PDS is the issue
of ration cards. This also involves a decision about whom to grant access to the PDS, on what
terms & conditions & to what extent. Notably, the process of making an application for the ration
card & the process of verification, the time taken for issuing the ration card, the conditions which
have been satisfied for the issue of ration card, the conditions which have to be satisfied for the
issue of ration card & the procedure for recommendation or verification, & the practice of
charging a certain fee for the ration card differ from state to state
Generally, one has to make an application by filling in a form & then a Food Inspector
visits the household for verification & after sometime, the applicant has to go to the civil
supplies office. The collection of the ration card generally involves three visits to civil supplies
office. Not only does it take a lot of time, but most often poor people find it very difficult to
obtain the ration card. At times, their ration cards gets issued to some one else by various kinds
of manipulation or simple administrative lapses. In states, with rather irregular supply of PDS
goods, some people do not find it worth to pay the fees & taxes & spend time for obtaining
access to the PDS supply, it can be said that the gateway is not easily accessible to the poor
people living in rural areas & away from the administrative headquarters of the food & civil
supplies department. So also, is the case with the people in urban areas who live in the slums or
who are temporary migrant workers.
2. Procedure for Issuing Ration Cards:-
The Procedure for issuing ration cards generally follows different patterns for the urban
& the rural areas. In the urban areas, one has to make an application to the civil supplies
authority for obtaining a ration cards. In Rural areas, ration cards are issued by the village
panchayat or village Patawari or some equivalent institution or agency. The Procedure in Urban
areas involves some inherent discrimination against the poor illiterate,homeless,slum dwellers &
temporary migrant workers because they cannot satisfy all the formalities & requirements like
that of a permanent residential address.
Similarly, those who live at a relatively longer distance from the ration card issuing
authorities, or those who live in inaccessible areas, have to incur a relatively greater real
monetary cost for applying for, & obtaining ration cards. While some people may not obtain
ration cards or may not succeed in doing so, some manage to obtain ration cards. One fairly
common practice is to inflate the number the number of family members by including the name
of servants, benamis, dead family members, relatives, dogs, pets etc. In many cases, the purpose
of obtaining bogus ration cards is the desire on the part of the FPS dealers to divert the PDS
supplies. For this purpose, the FPS dealer in connivance with the functionaries of civil supplies
department, get bogus ration cards made.
16

3. Commodity Coverage:-
The Utility & significance of the PDS are greatly dependent on the commodities which
are supplied under it at fixed price and in desired quantities. Partly on account of the importance
of cereals are covered in PDS by all the states. Wheat & rice, the main cereals produced &
consumed in the country are supplied everywhere under the PDS. The Wheat & rice account for
over 95 percent of the PDS supplies. The share of coarse grains rarely exceeds 5 percent, more
frequently remaining just around one to three percent.
In the Urban pockets, predominantly inhabited by the industrial working class,
construction labour & workers employed in the informal sectors, there is a distinct preference for
wheat flour (atta) as compared to wheat. The preference for atta is largely because it is convient
to consume specially by the working people who cannot afford the time & effort of cleaning &
milling of the wheat supplied through the PDS.
Apart from cereals, certain other commodities are also included under the PDS. Important
among these are: sugar, edible oil, kerosene oil & controlled cloth. Sugar is the universal & most
regularly supplied PDS commodity. This is also the commodity sold throughout the country at a
uniform PDS price.
4. Ration Scales:-
Another important aspect of the PDS is the determination of ration scales or entitlements
for every adult & child for the commodities supplies through the PDS channels. A large number
of considerations influence the determination of the entitlement per family or per person. The
ration scales even for the commodities, which are supplied under the PDS all over the country,
like wheat, rice, sugar, edible oils, differ widely among & even within various states. The ration
scale for rice & wheat would differ among the states on the basis of the fact whether rice or
wheat constitute the staple food of the majority of the people in a particular state. Similarly, an
informal rationing or PDS may not provide ration entitlement equal to the full demand or need of
the people.
A decision to fix ration scale will have to be based on certain assumptions about the
demand & need concerning the average consumption pattern in a particular area. In addition to
the considerations operating on the demand side, many factors regarding supply, availability,
production & overall surplus or deficit position of the commodities concerned will also exercise
their influence. It is well known that the deficit states place their demands with the central
government for obtaining the PDS supplies. The Ration scales prevalent in various states may be
expected to differ from each other, depending on whether the states are ‗surpluses or ‗deficit‘ in
cereals.
5. Periodicity of Purchases:-
The PDS is not only a system of predetermined, fixed price, fixed quantity, supply of
some selected essential goods but also a system with a certain fixed periodicity of purchases. The
PDS permits only a fixed periodicity of purchases. One can buy an one‘s ration card a given
amount of PDS goods, at a fixed price from a predetermined source of supply at an interval of
given periodicity. It means that the frequency of purchases & the size of each purchase from the
PDS are determined by a set of rules & regulations. These rules impose certain restrictions on the
consumers, though it is also essential to fix the periodicity of purchase in order to plan supplies
from the supplying agency to FPS.
17

Most states have gone in for a monthly system of periodicity, i.e. permitted one purchase
every month, because it simplifies the task of the FPS dealers. It also helps the consumers, to the
extent that he has to make only one visit to the FPS. However, it would be unrealistic to assume
that the majority of intended beneficiaries of the PDS have a regular monthly income. A large
number of urban casual workers, landless agricultural workers and many such persons & urban
informal sector workers & many such persons do not have a regular income flow. Their income
flows are irregular & uncertain, having a changing periodicity.
Given the income level, housing situation & availability of utensils for storage of
monthly cereal requirements, it is unrealistic that a large number of intended beneficiaries of the
PDS would be in a position to buy their monthly cereal requirements for the whole month in one
single installment. Thus, the question of periodicity, lapsing of the entitlement & lumping
together of purchases of all PDS commodities, therefore, are no more routine administrative
matters. These have a clearly identifiable hand in the granting or denial of the extent of access to
the PDS, particularly to the poorer sections of the society.
6. PDS Issue Price:-
The Central Issue Price (CIP) is related to the support price announced by the Central
government. The determination of support price is a complicated task & is influenced by many
considerations relating to national food policy. Following from the CIP, ex-godown prices are
fixed for making supplies to the state government. This includes, transport & administrative
overhead incurred by the Food Corporation of India. On the basis of the ex-godown price &
taking into account transport, handling, storage & interest charges & the margins given to the
FPS dealers, the issue prices to consumers are fixed.
It is significant to note that the price at the PDS outlet is kept at a level lower than the
open market prices & the difference between the price at which FCI issues to states & economic
cost to FCI, is borne by the government out of the food subsidy budget. The difference between
the ‗Central Issue Price‘ & ‗State Retail Issue Price‘ is quite substantial among the various states.
7. Quality of PDS Supplies:-
The users of the PDS often complain about the poor quality of the cereals and at times, of
sugar, supplied by the FPS. In certain areas, the criticism of the quality of the PDS supplied
commodities is very strident. However, it appears that the reasons for poor quality are rarely
properly understood.
The macro-level design of the PDS policy which makes the PDS a component of a dual
market & its relatively small size has some identifiable consequences for the quality of wheat,
rice, etc procured by the public agencies for supply through the PDS channels. Uniform
procurement prices for fair average quality of grains are announced & no premium is paid for
superior qualities. It is quite natural that the open market bulk buyers are attracted towards
superior qualities, while the public procurement agencies end up buying the poorer grades. The
procured grains further deteriorate owing to poor warehousing. Thus, it is to be expected that the
PDS supplies are relatively lower grades of quality, compared to the private, uncontrolled
market, which is able to procure better qualities of the commodities.
Further, the inherent difficulty of the PDS to acquire control over better qualities is made
still more difficult by the poor storage & care in transit & made still worse by the storage &
handling conditions at the FPS. The possibilities of adulteration or substitution of government
supplied quantities by other may be added to the poor quality of grains.
18

The quality conscious better off sections are inclined to opt out of the PDS supplies of
cereals on the ground of quality of cereals they would like to consume. However, there is little
reason to provide only inferior qualities of inflation insulated supplies of cereals to the relatively
worse-off, when bulk-cleaned, properly stored, graded & pre-packaged supplies with guaranteed
correct weightment can be provided under the PDS in order to make it serve its objectives better.
This quality factor would not only improve off-take from the PDS, but also serve its nutritional
goals as well. It would mean improving the poor mans access to cereals, both qualitatively &
quantitatively.
It is seen that though formal exclusion may be limited, there are some other factors
which may informally restrict access to the PDS. Such factors have important bearing on who
benefits from the PDS & to what extent. It is the decisions concerning them which determine the
effectiveness of the PDS, i.e. who benefits from it, at what & whose cost, to what extent & how
much in conformity with the expressed or implicit policy goals. A large number of arrangements
concerning FPS also contribute to the same direction. These factors bearing access to the PDS
have been only to a limited extent consciously & carefully recognized in designing the PDS
operations.
19

1.6 Food Subsidy in India
Food prices play an important role in the well-being of the poor and poverty reduction in
developing countries. Therefore, government interventions in food grains markets have existed
in one form or another for several decades, starting during the Second World War. Although
there has been a decline in the share of expenditure on food items in last few decades in both
urban and rural areas but poor consumers still spend a large share of budget on food in
developing countries (Pinstrup-Andersen, 1985). For example, in India the proportion of
expenditure on food items has declined by about 10 percentage points in the rural areas and by
about 16 percentage points in the urban areas between 1987-88 and 2009-10 (NSSO, 2012) but
bottom decile class of consumers (based on per monthly per capita consumer expenditure)
spends about 65 per cent of total expenditure on food items in rural areas and about 62 per cent
in urban areas. The relative importance of individual food commodities in the food budgets also
varies among consumers. In case of poorest among poor (bottom decile), cereals account for
more than 30 per cent of the food expenditures (36.3% in rural and 30% in urban areas), while in
case of rich people (top decile expenditure group), cereals account for less than 20 per cent of
food expenditure (16.2% in rural and 11.50% in urban areas), while share of high value products,
namely, livestock and fruits and vegetables is high, 46.6 per cent in rural areas and 44.6 per cent
in urban areas.
Therefore, the level of food prices is important determinant of their purchasing power.
Even small food price increases may adversely affect the ability of poor consumers to meet their
basic needs, including nutritional requirements. Wage goods prices also influence wages and
employment in other sectors of the economy, and thus have impact on urban poor (Pinstrup-
Andersen, 1985). Because of the high budget share spent on food among both rural and urban
poor, negative impact of high food prices is much more severe among the poor than the rich
people. Therefore, the role of the state in providing food subsidies to poor consumers is socially
justifiable as food subsidies are needed to protect the welfare and nutritional status of the
economically disadvantaged people. However, food subsidies are under increasing criticism
because of their large impact on government budget deficits and inefficiency because it is
generally argued that the benefits often do not reach the poor(Ali and Adams, 1996).
TRENDS IN FOOD SUBSIDY
Subsidies in Indian agriculture have increased significantly in the post-reforms period.
Food subsidies increased from Rs. 2,850 crore in 1991-92 to about Rs. 72,823 crore in 2011-12
(Revised Estimates), an increase of over 25 times in 21 years (Table 1). As a result, its share in
total central government subsidies under non-plan expenditure increased from 23.3 percent to
33.7 per cent between 1991-92 and 2011-12. As a percentage of agricultural GDP,the food
subsidy increased from 1.8 per cent to 5.8 per cent during 1991-92 and 2010-11. Food subsidy,
which increased at an annual compound growth rate of about 17.8 per cent during the 1990s,
remained stable between 2002-03 and 2006-07 mainly due to low off take of food grains and
marginal increases in procurement prices. However, there has been a significant increase in food
subsidy during the last few 5-6 years. For example, food subsidy more than tripled from Rs.
24,014 crore in 2006-07 to Rs. 72,823 crore in 2011-12 and is estimated to cross Rs. 75,000
crore in 2012-12, at an annual compound growth rate of 21.6 per cent.
20

The Government of India fixes the Minimum Support Price (MSP) of food grains at
which procurement is made from the farmers. The Central Issue Price (CIP) of food grains
at which food grains are sold under different government schemes and allocations of
quantity of food grains under Targeted Public Distribution Scheme (TPDS) and other welfare
schemes are also fixed by the Government of India. The difference between the Economic
Cost and the Central Issue Price is reimbursed by the Government of India as consumer
subsidy to the Food Corporation of India (FCI). The economic cost includes MSP,
procurement costs/incidentals and distribution costs. Various components of economic cost,
procurement costs/incidentals and distribution costs are shown in Figure 1. The Government of
India also reimburses the cost of carrying of buffer stock of food grains maintained by FCI as a
part of subsidy. The trends in average consumer subsidy on rice and wheat and share of buffer
subsidy during the period 2002-03 and 2011-12 are given in Table.
ECONOMIC COST
Procurement/ Minimum
Support Price
Procurement Incidentals Distribution Costs
Statutory Charges like market free, rural
development cess, VAT
Non Statutory Charges like dami/arhatia
commission, cost of gunny bags, labour &
transport charges, administrative charges,
charges to state governments for storage &
interest
Handling expense
Storage Charges
Interest charges
Freight Cost
Transit losses
Storage losses
Administrative overheads
21

The average consumer subsidy on wheat for Antyodaya Anna Yojna (AAY) households
has increased from Rs. 684 per quintal in 2002-03 to about Rs. 1452 per quintal during 2011-12
and in case of Below Poverty Line (BPL) households from Rs. 469 to about Rs. 1237 during the
corresponding period (more than 2.6 times increase). In case of Above Poverty Line (APL)
households, average subsidy has more than tripled from Rs. 301 to about Rs. 1042 between
2002-03 and 2011-12. Almost a similar trend was observed in case of rice, where average
subsidy for APL households increased by more than 3.5 times from Rs. 370 in 2002-03 to Rs.
1354 in 2011-12, for BPL consumers from Rs. 600 to Rs. 1619 and in case of AAY consumer
subsidy more than doubled. The share of cost of carry subsidy varied from about 2 per cent
during 2005-06 and 2006-07, mainly due to low stocks of food grains, to 26.3 percent in 2002-03
when the stocks were very high. The share of buffer stock subsidy recorded an increasing trend
since 2007-08 due to build-up of food grains stocks with the FCI.
Major Subsidies (in crores of Rupees) in India: 1990-91 to 2012-13
Year Food Percentage Change
over Previous Year
Percentage of GDP
from Agriculture
Percentage of total
Subsidies
1991-92 2850 - 1.8 23.3
1992-93 2800 -1.8 1.5 23.3
1993-94 5537 97.8 2.6 47.7
1994-95 5100 -7.9 2.1 43.0
1995-96 5377 5.4 2.0 42.5
1996-97 6066 12.8 1,9 39.1
1997-98 7900 30.2 2.4 42.6
1998-99 9100 15.2 2.4 38.6
1999-00 9434 3.7 2.3 38.5
2000-01 12060 27.8 2.9 44.9
2001-02 17499 45.1 4.0 56.1
2002-03 24176 38.2 5.7 55.5
2003-04 25181 4.2 5.2 56.8
2004-05 25798 2.5 5.3 56.1
2005-06 23077 -10.5 4.3 48.6
2006-07 24014 4.1 4.0 42.0
2007-08 31328 30.5 4.4 44.2
2008-09 43751 39.7 5.4 33.7
2009-10 58443 33.6 6.3 41.3
2010-11 63844 9.2 5.8 36.8
2011-12 72823 14.1 33.7
2012-13 75000 3.0 39.5
Sources: Government of India (2012)
Table 1.7
22

Trends in Consumer Subsidy on Rice and Wheat (Rs./quintal) and Share of
Consumer and Buffer Subsidy in Total Subsidy in India: 2002-03 to 2011-12
SOURCES: - Government of India (2012 a)
Year Wheat (in quintals) Rice (in quintals) Share (%) in total
FCI subsidy
AAY BPL APL AAY BPL APL Consumer Buffer
2002-03 684.1 469.0 301.0 866.1 600.4 370.5 73.7 26.3
2003-04 718.7 503.7 308.7 936.1 671.1 408.7 85.3 14.7
2004-05 818.9 604.0 409.0 1003.6 738.6 475.1 93.2 6.8
2005-06 831.5 616.5 421.3 1050.7 785.7 520.7 98.2 1.8
2006-07 1014.5 799.4 604.4 1111.6 846.6 581.6 98.0 2.0
2007-08 1148.1 933.7 738.7 1271.4 1006.4 741.4 87.0 13.0
2008-09 1180.6 965.6 770.6 1440.7 1175.7 909.9 88.1 11.9
2009-10 1224.6 1009.6 811.5 1519.5 1254.1 939.0 86.0 14.0
2010-11 1326.4 1111.4 916.4 1702.4 1437.4 1172.4 85.7 14.3
2011-12 1451.9 1236.9 1041.9 1884.2 1619.2 1354.2 90.3 9.7
Table 1.8
23

The Sources of Rising Food Subsidy
Food subsidies are one of the most prominent features of the Indian economy. Because of
its socio-political importance to the economy, the food subsidies have been the subject of
discussions. Recent spike in subsidies in general and food subsidy in particular is a growing
policy challenge for the government. Between 2006-07 and 2011-12 the food subsidy in India
more than tripled and several factors have contributed to this increase. In this section we examine
various factors affecting food subsidy in the country.
Rising Economic Costs
The economic cost of food grains to Food Corporation of India (FCI) is of strategic
importance as it has direct impact on food subsidy. Minimum support price is one of the major
components of economic costs and accounts for about 70 per cent of FCI’s economic cost of
food grains and share of procurement incidentals and distribution costs is about 30percent.
However, FCI has no control on MSP as well as large number of cost items of procurement
incidentals and distribution costs.
Rising Minimum Support Prices
One of the important factors behind rising subsidy is high food prices in domestic and
world markets. Although some of the factors are structural and cyclical but in the short term, a
continuing trend of high and volatile food prices is likely in developing Asia (ADB, 2011). The
minimum support price of paddy (common) increased marginally from Rs. 530 per quintal in
2001-02 to Rs. 570 per quintal in 2005-06, an increase of about 7.54 per cent. In contrast, the
MSP of paddy more than doubled from Rs. 620 in 2006-07 to Rs. 1250 in 2012-13. Almost a
similar trend was observed in case of wheat, where MSP increased by less than 5 percent during
the first half of 2000s but more than doubled (from Rs. 640 to Rs. 1285) between 2005-06 and
2011-12. The average annual growth rate (y-o-y) in MSP increased from 1.2 per cent in the first
half of last decade to 10.6 per cent during 2006-07 to 2012-12 in case of wheat and 1.8 per cent
and 12.1 per cent in case of paddy (common) during the corresponding period. This massive
increase in MSP has led to a rapid rise in food subsidy in the country.
Procurement Incidentals
The procurement incidentals include statutory charges such as market fee, rural
Development/infrastructure development cess and VAT and non-statutory charges like
dami/arhatia commission, mandi labour charges, cost of gunny bags, handling charges, internal
transport and interest charges. Some of these charges are under the control of FCI and in some
cases FCI has no role. Therefore, it is important to examine trends in procurement costs, its
components and their effects on food subsidy. The procurement incidentals in case of wheat
increased from Rs. 134.7 per quintal in 2001-02 to Rs. 171.2 in 2005-05, at an average annual
growth rate of about 7 per cent while it increased at a marginally higher growth rate (9.1%)
during 2006-07 and 2012-13. In case of rice, procurement incidentals increased at an annual
growth rate of 12.3 per cent between 2006-07 and 2012-13.
24

Trends in Minimum Support Price, Procurement Incidentals, Distribution Costs
and Economic Cost of Rice and Wheat: 2001-02 to 2012-13
Year MSP Procurement
Incidental
Distribution Costs Economic Cost
Wheat Paddy Wheat Rice Wheat Rice Wheat Rice
2001-02 610 530 134.7 66.8 126.7 119.6 852.6 1098.0
2002-03 620 550 137.6 61.7 145.5 157.7 884.0 1165.0
2003-04 630 550 138.2 30.7 169.7 214.5 918.7 1236.1
2004-05 630 560 182.7 58.5 222.8 256.5 1019.0 1303.6
2005-06 640 570 171.2 39.1 234.5 272.4 1041.8 1339.7
2006-07 700 620 180.2 193.7 269.4 289.6 1177.8 1391.2
2007-08 850 745 164.0 214.9 244.4 297.8 1311.7 1549.9
2008-09 1000 900 179.6 226.9 245.4 280.8 1380.6 1740.4
2009-10 1080 1000 206.9 288.6 200.4 184.9 1424.6 1820.1
2010-11 1100 1000 212.4 313.1 217.7 223.5 1494.3 1983.1
2011-12 1170 1080 271.8 366.9 252.5 291.3 1651.9 2184.2
2012-13 1285 1250 305.2 383.3 296.3 397.1 1822.2 2418.7
Source: - FCI (2012)
Rs. / Quintal
Table 1.9
25

CHAPTER-2
Public Distribution System: Chhattisgarh
26

CHHATTISGARH AT GLANCE
S.No Description Unit Numbers
1. Geography
Latitude (North) 17.43 to 24.50
Longitude (East ) 80.15 to 84.20
2. Total Area Sq km 135,194.5 (or 52,198.9 sq mi)
3. Area Rank 10th
4. Capital of Chhattisgarh Raipur
5. Came into Existence November 1,2000
6. State Bird Pahari Myna(Hill Mana)
7. State Animal Van Bhainsa (Wild Buffalo)
8. State Tree Sal or Asna
9. Government
Governor Shekhar Dutt
Chief Minister Dr. Raman Singh (BJP)
Legislature Unicameral
Parliamentary Constituency 11 (year 2010)
High Court Chhattisgarh
10. Administrative Setup
Revenue Division Nos. 03
Revenue District Nos 27
Tahsils Nos. 96
Development Blocks/ Janpad Nos. 146
Tribal Development Blocks Nos. 85
Total Villages Nos 20378
Total Towns Nos 97
Municipal Corporation Nos 10
Nagar Panchayat Nos 49
District Panchayat Nos 27
Janpad Panchayat Nos. 146
Gram Panchayat Nos. 9139
Police Station Nos. 263
Lok Sabha Constitution Nos. 11
Rajya Sabha Constitution Nos. 05
11. Official Languages Hindi, Chhattisgarhi
12. HDI 0.516 (Medium)
HDI rank 23rd
(2005)
13. Time Zone IST (UTC + 05.30)
ISO 3166 code IN-CT
14. Population (2011)
Total 25,540,196
Rank 16
Density 190 /km sq (490/sq ml)
15. Website www.chhattisgarh.nic.in
Table 2.1
27

Chhattisgarh District
Municipal Corporation
Ambikapur
Bhilai
Bilaspur
Chirmiri
Durg
Jagdalpur
Korba
Raigarh
Raipur
Rajnandgaon
Chhattisgarh Consist of 27 District
Bastar Division Durg Division Raipur Division Bilaspur Division Surguja Division
Bijapur Kawardha Raipur Bilaspur Koriya
Sukama Rajnandgaon Mahasamund Mugeli Surajpur
Dantewada Balod Dhamtari Korba Surguja
Bastar Durg Baloda Bazar Raigarh Balrampur
Kondagaon Bemetara Gariyaband Janjgir Jashpur
Narayanpur
Kanker
28

2.1 ABOUT CHHATTISGARH:-
Chhattisgarh is a state in Central India. The State was formed on November 1, 2000
by partioning 16 Chhattisgarhi- Speaking southeastern districts of Madhya Pradesh. Raipur is the
Capital of Chhattisgarh, which is the 10th
largest state in India, with an area of 135,120 sqs km
(52,200 sq mi). By population, it ranks as the 16th
most-populated state of nation. It is an
important electricity & steel-producing state of India. Chhattisgarh accounts for 15% of the total
steel produced in the country. Chhattisgarh borders the states of Madhya Pradesh in the
northwest, Maharashtra in the West, Andhra Pradesh in the South, Odisha in the east, Jharkhand
in the northeast & Uttar Pradesh in the north.
Etymology:-
There is a wide array of opinions on the origin of the word ―Chhattisgarh‖. The
name is not very old one & has come into popular usage only in the last few centuries. In ancient
times, this region was called Dakshin kosala (South Kosala).The name Chhattisgarh was
popularized during the Maratha period & was first used in official document in 1795.
In a popular and widely believed that, Chhattisgarh takes its name from the 36
pillars of Chhatishgarhin Devi temple (chhattis means "36" and garh means "pillar"). The old
state had 36 districts, which were: Ratanpur, Vijaypur, Kharound, Maro, Kautgarh, Nawagarh,
Sondhi, Aukhar, Padarbhatta, Semriya, Champa, Lafa, Chhuri, Kenda, Matin, Aparora, Pendra,
Kurkuti-kandri, Raipur, Patan, Simaga, Singarpur, Lavan, Omera, Durg, Saradha, Sirasa,
Menhadi, Khallari, Sirpur, Figeswar, Rajim, Singhangarh, Suvarmar, Tenganagarh and
Akaltara. However, experts do not agree with this explanation, as 36 forts cannot be
archaeologically identified in this region.
British chronicler, J.B. Beglar provides a different explanation of the origins of
the name. According to Beglar, "the real name is 'Chhattisghar' ("chhattis" means "36," and ghar
means "houses") and not Chhattisgarh." According to him, there is "a traditional saying that ages
ago, about the time of Jarasandha (age of Mahabharata), 36 families of chanmars (leather
workers) emigrated southward from Jarasandha's kingdom and established themselves in this
region, which after them is called Chhattisgarh."
Another view, more popular with experts and historians, is that Chhattisgarh is the
corrupted form of Chedisgarh which means Raj or "Empire of the Chedis" (Kalchuri Dynasty).
According to Dr. Shrikant Khilari, the name Chhattisgarh comes from the time of
Guru Ghasidas. Guru Ghasidas, a saint, named Chhattisgarh and the name was officially applied
by the Marathas in 1795.
One more view is that the state acquired the name Chhattisghar because it is
home for 36 tribal clans: Chhattis, which is Hindi for "36," and ghar, which is Hindi for "home."
29

2.2 ECONOMIC PROFILE OF THE CHHATTISGARH
Human Development Indicators (HDIs)
HDI value:-
As of 2011 Chhattisgarh had an HDI value of 0.358, the lowest of any Indian state. The
national average is 0.467 according to 2011 Indian NHDR report.
Standard of living:-
Chhattisgarh has one of the lowest standards of living in India as per the Income Index
(0.127) along with the states of Assam, Bihar, Jharkhand, Madhya Pradesh, Odisha and Rajasthan. These
states have incomes below the national average, with Bihar having the lowest income per capita.
These poor states, despite low absolute incomes, have witnessed high Net State Domestic
Product (NSDP) growth rates especially Bihar, Chhattisgarh, Odisha and Uttarakhand which had growth
rates above 10 per cent per annum during the Tenth Five Year Plan period (2002–7).
Education Index:-
Chhattisgarh has an Education Index of 0.526 according to 2011 NHDR which is higher
than that of states like Bihar, Jharkhand, Uttar Pradesh, Rajasthan which are below the 0.5 mark. Though,
it is lower than the national average of 0.563.
With respect to literacy, the state fared just below the national average. The recent estimates
from Census (2011) also depict a similar picture with the literacy rate of 71 per cent (81.4% Males &
60.5% Females), which is close to the all India literacy rate of 74 per cent.
According to NSS (2007–8), the literacy rate for STs and SCs was better than the
corresponding national average and this is a positive sign.
Among the marginalized groups, STs are at the bottom of the rankings, further
emphasizing the lack of social development in the state. Bastar and Dantewada in south Chhattisgarh are
the most illiterate districts and the drop out ratio is the highest among all the districts. The reason for this
is the extreme poverty in rural areas.
Health Index:-
Health Index of Chhattisgarh is less than 0.49, one of the lowest in the country. The
Health Index is defined in terms of life expectancy at birth since a higher life expectancy at birth reflects
better health outcomes for an individual.
Despite different health related schemes and programmes, the health indicators such as
percentage of women with BMI<18.5, Under Five Mortality Rate and underweight children are poor. This
may be due to the difficulty in accessing the remote areas in the state. The prevalence of female
malnutrition in Chhattisgarh is higher than the national average—half of the ST females are
malnourished. The performance of SCs is a little better than the corresponding national and state average.
The Under Five Mortality Rate among STs is significantly higher than the national average. The
30

percentage of under-weight children in Chhattisgarh is also higher than the national average, further
underlining the appalling health condition of the state‘s population.
Net State Domestic Product (NSDP):-
Chhattisgarh is one of the emerging states with relatively high growth rates of NSDP
(8.2% vs. 7.1% All India over 2002-2008) and per capita NSDP (6.2% vs. 5.4% All India over
2002-2008). The growth rates of the said parameters are above the national averages and thus it
appears that Chhattisgarh is catching up with other states in this respect. However, Chhattisgarh
still has very low levels of per capita income as compared to the other states.
Urbanization:-
The demographic profile shows that about 80 per cent of the total population lived in
rural areas.
Sex ratio:-
The sex ratio in the state is one of the best in India with 991 females per 1,000 males,
as is the child sex-ratio with 964 females per 1,000 males (Census 2011)
Fertility rate:-
Chhattisgarh has a fairly high fertility rate (3.1) as compared to All India (2.6) and the
replacement rate (2.1). Chhattisgarh has rural fertility rate of 3.2 and urban fertility rate of 2.1.
ST population:-
With the exception of the hilly states of the north-east, Chhattisgarh has one of
highest shares of Scheduled Tribe (ST) population within a state, accounting for about 10 per
cent of the STs in India. Scheduled Castes and STs together constitute more than 50 per cent of
the state‘s population. The tribal of Chhattisgarh are an important part of the population and
mainly inhabit the dense forests of Bastar and other districts of south Chhattisgarh.
Poverty:-
The incidence of poverty in Chhattisgarh is very high but is better
than Odisha and Bihar. The estimated poverty ratio in 2004–5 based on uniform reference period
consumption was around 50 per cent, which is approximately double the all India level. The
incidence of poverty in the rural and urban areas is almost the same.
More than half of the rural STs and urban SCs are poor. In general, the proportion of
poor SC and ST households in the state is higher than the state average and their community‘s
respective national averages (except for rural SC households). Given that more than 50 per cent
of the state‘s population comprises STs and SCs, the high incidence of income poverty among
them is a matter of serious concern in the state.
This indicates that the good economic performance in recent years has not percolated
to this socially deprived group, which is reflected in their poor performance in human
development indicators.
31

PUBLIC DISTRIBUTION SYSTEM OF CHHATTISGARH
Structure of Department of Food, Civil Supplies & Consumer Protection
Minister Incharge
Department of Food, Civil
Supplies & Consumer
Protection
Department Secretary
President of Department Commission Office Corporation
Controller
(Measurement
office)
Chhattisgarh State
Warehousing
Corporation
Rajya Upbhokta
Vivadh Pratitoshan
Aayog
Directorate of
Food, Civil Supplies
& Consumer
Protection
Chhattisgarh State
Civil Supplies
Corporation
Chart 2.2
32

Responsibility of Department:-
Basic responsibility of department is the implementation of the Public Distribution
System. Other responsibilities of the department are as follows:-
1. To provide beneficiaries of ration cardholders food, sugar, salt, kerosene etc at appointed
price through fair price shop of Public Distribution System.
2. To make arrangement for the procurement of paddy & maize at declared support price so
that farmer can get fair price for their cultivation.
3. To procure levhi rice.
4. Legal & Budget control related work.
5. To protect the welfare & culture of consumer through Rajya upbhokta vivadh pratitoshan
aayog & District consumer forum.
6. Implementation of the laws & act related to measurement.
7. To maintain the accuracy of equipment used in business, industries & for human
protection.
8. Implementation of right to information in the department.
Effective Acts, Rules & Control orders related to Department
1. Essential Goods Act,1955
2. Public Distribution System (control) order, 2001 by Indian Government.
3. Chhattisgarh Public Distribution System (Control) order, 2004.
4. Chhattisgarh Chawal Adhiprapti (udgrahan) adesh, 2007.
5. Chhatishgarh Kerosene Vayapari Anugyapan Adesh,1979.
6. Chhatisgarh motor spirit & high speed Diesel oil (Anugyapan tatha Niyantran )
Adesh,1980.
7. Chhattisgarh Chor Bazari Nivaran tatha Aavasayak Vastu Adesh.1980.
8. Consumer Protection Act, 1986.
9. Consumer Protection Laws, 1987.
10. Chhattisgarh Aavasayak Vastu Vayapari Adesh, 2009.
11. Kerosene Adesh, 1993.
12. Dravikret petroleum Gas Adesh, 2000.
33

Food, Civil Supplies & Consumer Protection, Directorate
COMMISSIONER
Directorate
Senior Director
Clerks
Associated Director
Sub- Director
Assistant Director
District Office
Food Controller/ Food
Officer
Assistant Food Officer
Food Inspector/
Supervisor
Clerks
Chart 2.3
34

2.3 Fair Price Shop
Consumers are provided with food grains, sugar,kerosene,amrit namak
every month through Fair Price Shops (FPS).For efficient working of public distribution system
it become necessary that fair price shops are runed by those agencies which keep in view the
benefit of ration card holders & worked efficiently. In January 2012, total 10,861 fair price shops
are arunned. Following is the description of Fair Price shop district wise & agency wise:-
S.No District Description of Operating Agencies
Primary
Agriculture
Credit
Government
Agencies
Gram
Panchayat
Mahila
Swa
Sahayata
Samuha
Forest
Protection
Agencies
Urban
Corporat
Ion
Other
Govt.
Agencies
Total
1 Kawardha 150 71 119 1 0 45 386
2 Kanker 57 140 117 8 0 64 386
3 Kondagaon 28 147 73 21 0 7 276
4 Korba 22 272 69 6 1 45 415
5 Koreas 4 163 88 6 0 32 293
6 Gariyaband 232 25 2 0 0 50 309
7 Jashpur 0 397 3 11 10 3 424
8 Janjagir 207 154 225 0 0 35 621
9 Dantewada 31 36 10 0 0 52 129
10 Durg 18 40 221 1 1 297 578
11 Dhamtari 192 31 46 0 0 27 296
12 Narayanpur 11 48 12 1 0 4 76
13 Bametara 146 105 73 0 0 27 351
14 Balrampur 33 223 59 21 0 10 346
15 Balodabazar 373 109 21 0 0 12 515
16 Bastar 25 159 140 5 0 32 361
17 Baloda 55 181 70 20 0 88 414
18 Bilaspur 158 205 215 10 0 160 748
19 Bijapur 13 72 31 1 0 40 157
20 Mangeli 33 204 54 4 0 19 314
21 Mahasamun 404 0 6 0 0 15 425
22 Rajnandgoan 293 166 259 3 0 41 762
23 Raigarh 5 451 261 12 6 36 771
24 Raipur 240 102 39 0 0 214 595
25 Sukama 56 38 20 4 0 21 139
26 Sarguja 83 212 52 12 0 12 371
27 Surajpur 69 264 54 7 1 8 403
Grand Total 2938 4015 2339 154 19 1396 10861
Table 2.4
Number Of Fair Price Shop in State
35

2.4 Ration Cards
Ration Cards are provided to the consumers to get the essential goods to through Fair
Price Shop (FPS). In rural areas Gram Panchayat has the power to issue the APL ration card & in
urban areas Nagar Nigam/Nagar Palika/Nagar Panchayat has the power to issue the APL ration
card. Member authorized by the collector has the power to issue ration cards under these
schemes: - Mukhyamantri Khadyan Sahayata Yojana, BPL, Antyodaya Anna Yojana, and
Annapurna Yojana.
Under Public Distribution system & Mukhyamantri Khadyan Yojana ration cards are
provided to families living below poverty line in year 2007(urban),2002(rural), year 1997-98 &
1991on the basis of survey list of BPL. Along with this 10kg saffron ration card is issued to the
beneficiaries of Rastiya Virdhavastha Pension Yojana & Samajik Suraksha Pension Yojana
under Mukhyamantri khadyan Yojana & green colour ration card is issued to Nih. Sktjin.
Position of 33.54 lakh ration card issued to the BPL & poor and needy beneficiaries in January
2012 is as follows:-
Ration Card Of Public Distribution
System
Ration Card of Mukhyamantri
khadyan Yojana
Below
Poverty
Line
(BPL)
(Yellow)
Below
Poverty
Line
(BPL)
(Grey)
Antyodaya
Anna
Yojana
(AAY)
(Red)
Annapurna
(Violet)
Saffron 10 Kg
Saffron
Grey Nih.
Sktjin
(Green)
615981 500381 781349 19965 597671 150292 656390 32523
Table 2.5
36

Basis of eligibility of beneficiaries of different ration cards issued under Public Distribution
System & Mukhyamantri khadyan Yojana is as follows :-
1. BPL (yellow) Ration Card :-
All Schedule caste & schedule tribe families which are included in
BPL survey in 1997 (urban areas) & 2002-03 (rural areas).
2. Antyodaya (red) Ration card :-
Extremely poor family, previously issued ration card to Antyodaya
families is maintained.
3. Annapurna (violet) Ration card :-
An old illiterate beneficiary, previously issued ration cards to
Annapurna beneficiaries is maintained.
4. Saffron Ration Card :-
Schedule caste & schedule tribe families which are included in BPL
survey, year 1991 & 1997-98 whose name are not included in BPL survey 1997(urban) &
in BPL Survey2002-03 (rural).Along with this ST & SC families which are included in
BPL survey 2007(urban).
5. Grey Ration Card :-
Schedule caste & schedule tribe families which are included in
BPL survey, year 1991 & 1997-98 & ST SC families included in BPL survey in 2007
(urban) and 2002-03(rural) which are not the beneficiaries of Antyodaya & Annapurna
Yojana.Along with this family of specific backward tribes which are not included in
Antyodaya Anna Yojana.
6. 10 Kg Saffron Ration Card :-
Beneficiaries of Samajik Suraksha Pension Yojana & Rastiya Vridhavastha Pension
Yojana which are not provided with ration cards of BPL Scheme, Antyodaya Yojana &
Annapurna Yojana.
7. Green Ration Card :-
Green colour ration card are issued to Nih. Sktjin identified by State Government.
37

2.5Public Distribution System Beneficiaries Register
Excel sheet book 1
38

2.6 Eligibility for Ration Card Material
Indian Government has decided to give 35 kg of grains to families under BPL Scheme &
Antyodaya Anna Yojana . Indian Government has determined 18.76 lakh numbers of BPL families in
Chhattisgarh.7.19 lakh most poor antyodaya families are also included in BPL families. In this way non
antyodaya BPL families are 11.56 lakh in state & these families are provided with 35 kg grains at
subsidized rate. Central Government allocates 40.744 metric tones of food grains to State Government.
For Antyodaya Anna Yojana families 25,162 metric tones rice is allocated every month.
In Financial Year 2011-12 fixed allocation of 10360 tones rice & 15000 tones wheat is
underway. Eligibility of ration card material for ration card beneficiaries under BPL Scheme, Antyodaya
Anna Yojana, Annapurna Yojana & Mukhyamantri Khadayan Sahayata Yojana are as follows :-
A) Public Distribution System
S. No Name of
Scheme
Eligibility of Food Material under Scheme
1. B.P.L Food Grain Sugar Amrit Salt Kerosene
35 kg per
month per
ration card
Per Ration
Card 1.30
Kilogram
Free 02 kg
Amrit salt per
month per
Ration Card
03 litre per
month per
ration card
2. Antyodaya
Anna Yojana
35 kg per
month per
ration card
3. Annapurna
Yojana
10 kg per
month per
ration card
4. A.P.L 35 kg per
month per
ration card
Niranka Niranka
B) Mukhyamantri Khadayan Sahayata Yojana
S. No Ration Card Eligibility of Food Material Under the Scheme
Food Grains Sugar Amrit namak kerosene
1 Grey colour
Ration Card
35 kg per
month per
Ration Card
1.30 kg per
Ration card
Free 2 kg
Amrit Namak
per month per
Ration card
3 litre per
month per
Ration card2 Saffron Colour
Ration Card
35 kg per
month per
Ration Card
3 10 Kg Saffron
colour Ration
card
10 kg per
month per
Ration card
4 Green Colour
Ration Card
10 kg per
month per
Ration card
Table 2.6
Table 2.7
39

2.7 Supply System of Ration Material
For Implementation of Public Distribution System in Chhattisgarh 11 base depots are governing of Indian
Food Corporation. State government authorized agencies, Chhattisgarh State civil supplies Corporation
Limited
Description of State Supply centre governed by Chhattisgarh State Civil Supplies Corporation are as
follows :-
S.No District No. of Supply
Centre
Place of Supply Centre
1 Raipur 06 Abhanpur, Aarang,Kharora,Dharsewa,Nevra,Raipur
2 Dhamtari 03 Dhamtari, Kurudh,Sehawa
3 Mahasamund 05 Mahasamund,Baghbahra,Basana,Saraipali,Pethora
4 Durg 04 Durg, Hathkhoja,Borai,Patan
5 Rajnandgaon 07 Rajnandgaon,Dogargad,Kheragad,Mohla,Maanpur,
Churiya, chawki
6 Kawardha 02 Kawardha, Padariya
7 Bilaspur 07 Bilaspur,Kargi road, Pandra road,Bilha,Marvahi,
Takhatpur,Jairamnagar
8 Raigarh 07 Raigarh,Baramkela,Dharamjaigarh,Ghargoadha,Kharsia,
Saranggad,Laylunga
9 Jashpur 04 Jashpur, Bagicha,Kunkuri,Pathalgaon
10 Sargunja 04 Ambikapur, Sitapur,Lakhanpur,Udaypur
11 Korea 04 Baikunthpur, Janakpur,Chirmiri,Mahendragad
12 Janjgir 06 Champa,Akaltara,Dabhara,Naela,
13 Korba 03 Katghora,Korba,Pali
14 Kanker 07 Aamabeda,Antagath,Bhanupratappur,Charama,Kanker,
Naharpur,Pankhajur
15 Dantewada 02 Dantewada,Gedama
16 Bijapur 03 Bijapur,Bhopal patnam,Bohramgad
17 Bastar 02 Jagdalpur,Karpavanda
18 Narayanpur 02 Narayanpur,Orcha
19 Kondagaon 07 Keshkal, Kondagaon,Badedongar,Mardapal,Mungapadar,
Shyampur,Makadi
20 Gariyabandh 04 Gariyabandh,Devbhog,Rajim,Manpur
21 Balodabazar 04 Kasdol,Balodabazar,Belaigad,Bhatapara
22 Bemetara 02 Bemetara, Saza
23 Mungeli 02 Lormi, Mungeli
24 Baloda 04 Dandelohara, Donadi,Balod,Gunderdehi
25 Surajpur 03 Surajpur,Vishrampur,Pratappur
26 Balrampur 04 Kusami, Ramanujaganj,Sanawal
27 Sukam 02 Sukama,Kota
Total 110
Table 2.8
40

2.8 Consumer Price:-
State Government receives monthly allocation of wheat/rice/sugar/kerosene oil from central
government under Public Distribution system. Distribution of amrit namak under public distribution
system is made by state own resources. Consumer rates of ration material under public distribution
system are as follows:-
S. No. Goods Rates for
Saffron, 10kg
Saffron ,Green
& Grey,
Mukhya Mantri
Khadayan
Sahayata
Yojana & BPL
(Yellow),
Annapurna
(violet)
Rates for
Antyodaya
(red) Ration
card
holders
Rates for APL
(White) Ration
card holders
1 2 3 4 5
1 Wheat 2.00 - 8.50
2 Rice 2.00 1.00 11.50
3 Sugar 13.50 13.50 -
4 Amrit Salt Free Free -
5 Kerosene Minimum Rs
14.42 to Maximum
Rs16.02
Minimum Rs
14.42 to Maximum
Rs16.02
Minimum Rs
14.42 to Maximum
Rs16.02
Monthly allocation of Ration Material by Indian Government under Public Distribution System
Food A.P.L B.P.L Antyodaya Annapurna
1 2 3 4 5
Wheat 15000 2610 - -
Rice 10360 37864 25162 178
Sugar - 4512
Kerosene 15544
Rupees per kg/liter
Quantity in tones/in Kilolitre
Table 2.9
Table 2.10
41

1.1 Public Distribution System: Introduction
DISTRIBUTION is a crucial function of marketing. It provides a vital link between
the producers & customers by making available goods & services. The distribution system
encompasses all movements starting from the shipment of raw material to the delivery of the
finished product to the consumer. The distribution system undertaken by the government or any
public agency is termed as ―Public Distribution System‖ (PDS). A PDS is the whole or a part of
the distribution system in principle owned & controlled by the public authorities on behalf of the
general public & run by them for the good of the general public or a specific group thereof.
―Public Distribution‖ is an aspect of the demand & supply management. Its aim is to
meet the basic needs of the vulnerable sections of the community who cannot afford to depend
upon the market forces to obtain their supplies. Public distribution is direct ―State Intervention in
public affairs ―. Public Distribution by its very nature encompasses generally items of mass
consumption such as food grains, sugar, kerosene, controlled cloth, washing soap, tea, coffee,
match boxes, soft coke, candle, exercise notebooks etc.
Public distribution of essential commodities has become the main feature of the
developing economies. All the countries in the 3rd
world are facing the scarcity of essential
commodities & hence it has become the responsibility of the government to provide these
commodities to their citizens at reasonable prices in time. The whole of the distribution system in
the socialist countries assumes the role of PDS. In case of mixed economies, only that part of the
distribution system could be called PDS which is owned by the public authorities.
The concept of Public Distribution System in India has some specific connotations. It
is a not a system of distribution under public ownership as in the case of many socialist
countries, nor is it an independent system of consumer cooperation of the type found in the
Scandinavian countries. The Public Distribution System in India is a retailing system supervised
& guided by the state.
The basic objective of the strategy of the Public Distribution System in India, as in
many other countries, is to supply food grains & other essential commodities to the poor &
disadvantageous sections at fair prices. The Strategy has been to effect the distribution of the
food grains & other essential commodities through a system of partial rationing. This takes the
form of the sale of essential commodities through a Fair Price Shops at a price lower than the
ruling market price. Ideally, such a policy is a directed towards providing the essential
commodities for the weaker sections. But it implies that the government procures sufficient
amount of the marketed surplus from the producers & traders through the system of compulsory
levy & other procurement policies.
2

2.9 Departmental Schemes
1. Mukhyamantri Kanyadan Sahayata Yojana :-
Under public distribution system, the central government has
accepted the number of families living below poverty line (BPL) in Chhattisgarh as 18.75
lakh families. Allocation of food grains by central government to state government is
done on basis of this statistics. In the financial year 2006-07, 23 lakh poor families are
provided with food grains at subsidized rate, in this 7.19 lakh families of Antyodaya
Anna Yojana also included. State government was facing problem in allocating 35 kg
food grains to each families in the financial year 2006-07. State government had appealed
central government to increase the quantity of food grains for allocation but it was not
accepted by the central government. State government decided to provide food grains to
needy & poor families at their own expenditure at subsidized rate & from April,7
―Mokhyamantri khadann Sahayata Yojana‖ get started. Targeted Beneficiaries of this
scheme are as follows:-
a) All the families included in BPL survey in year 2002(rural) & 2007(urban) except
the beneficiaries of Antyodaya Anna Yojana.
b) All the ration card beneficiaries families which are included in 1991 & 1997 year
in BPL survey, & whose names are not included in year 2002(rural) 2007 (urban)
BPL Survey.
c) Beneficiaries of Rashtiya Virdhavastha Pension Yojana & Samajik Surakhsa
Yojana Which didn‘t get the BPL ration card, Antyodaya Anna Yojana or
Annapurna Yojana ration card.
d) State Nih-saktajan identified by State government.
Poor families of state get foodgrains at subsidized rates, when the Mukhyamantri
Khaddya Sahayata Yojana come into force in April,2007.
2. B.P.L Yojana:-
Indian Government have accepted the number of families under state
BPL scheme as 11.56 lakh & for this 37864 metric tone rice, 2610 metric tone wheat &
total 40474 metric tone food grain is allocated per month.
Details of food grains distributed till 15 February 2012 under BPL
Scheme in financial year is as follows:-
BPL Wheat BPL Rice
Allocation Off take Allocation Off take
31320 28710 454368 453468
3. Antyodaya Anna Yojana:-
This scheme come into force from March 2001.Under this scheme very
poor families get 35 kg rice per month at the rate of Rs 1 per kg per family. State
Government is allocated with 25,162 metric tone rice by Central Government. All
Quantity in Metric tone
tonnetotonne
42

contingent expenditure & payable commission to shops is bear by the state government &
in the year 2012-13 budget amount is of 44.80 cr. Details of food grain allocated &
distributed on February 15,2012 under Antyodaya Anna Yojana is as follows:-
4. Annapurna Yojana:-
This scheme come into force in Oct,2001.Under this scheme old
person who are of age 65 years or more, who are eligible for pension scheme but not getting
benefit of it are provided with 10 kg rice per month free of cost. Total numbers of
beneficiaries under this scheme are 19,965. All contingent expenditure & transportation
expenditure is beard by the state government. Details of food grains allocated & distributed
till February 15,2012 under Annapurna Yojana is as follows:-
5. Food Supplies to welfare organizations:-
Under this scheme female student living in hostels & ashram govern by ST SC development
department are provided with 15 kg food grains per month. After getting permission from
Central government, Annapurna dal-bhat Kendra is getting rice at BPL consumer price.
Central Government is allocating 3800 metric tone food grain per month under this scheme.
Details of food grains allocated & distributed till February 15, 2012 is as follows:-
Wheat Rice
Allocation Off take Allocation Off take
1157 1157 33615 27229
6. Distribution of Sugar:-
State Government get allocation of 4512 metric tone sugar from
central government .State government has decided to give sugar to ration card beneficiaries
at the rate of Rs 1.30 kg. Details of sugar allocated & distributed till February 15, 2012 is as
follows:-
Allocation Distribution
50562 50562
7. Distribution of Kerosene:-
Under Public Distribution System State government is getting allocation
of 15,544 kilolitre kerosene from Central government.
301944 290535
2407 2082
Quantity in Metric
tone
43

Schemes by Central Government under Targeted Public
Distribution System
S.No Scheme Group Scheme Name
1 TPDS APL
2 BPL
3 AAY
4 APL Additional (Allocation dated on 02/08/2010)
5 BPL Additional (Allocation dated 07/09/2010 valid upto
30/06/2010)
30/09/2011)
31/03/2011)
8 APL Additional (Allocation dated 30/06/2011 valid upto
31/03/2012)
9 Allocation for 150 District (01-Aug-2011)
10 Allocation for 174 District @ AAY rate (10-Oct-2011)
11 Allocation for 174 District @ BPY rate (10-Oct-2011)
12 APL Additional (12/03/2012)
13 Additional Allocation for the Poorest Districts @ BPL
rate.
14 BPL Additional Allocation date 02/07/2012.
15 Additional Allocation for Poorest Districts @ AAY rate.
16 OMSS (Domestic) (through
FCI)
Sale to State/UT Govt. (Retail Sale)- From FCI Depot
17 Sale to State/UT Govt. (Retail Sale)- From State
Agencies Depots
18 Bulk Sale through Open Tender – From FCI Depots
19 Bulk Sale through Open Tender- From State Agencies
Depots
20 Small (Private) Traders upto 9 MT/Person/Depot/Day-
From FCI Depot
21 Small (Private) Traders upto 9 MT/Person/Depot/Day-
From State Agencies Depot
22 Other Welfare Schemes Annapurna
23 World Food Programme
24 Wheat based Nutrition Programme
25 SC/ST/OBC Hostel
26 EFP
27 NPAG/SABLA
28 Welfare Inst. & Hostels
29 Relief
30 Defence
Table 2.11
44

Source : pdsportal.nic.in/Files/IISFM_Schemes.pdfs
31 Village Gramin Bank Scheme
S.No Scheme Group Scheme Name
32 Bhutan
33 BSF/CRPF
34 Mid Day Meal – Primary Standard
35 Mid Day Meal – Upper Primary Standard
36 Welfare Institutions Scheme – Addl. Allocation for CSR
37 Export Export
38 Tender Sale (Sound) excluding
OMSS (Domestic)
Tender Sale (Sound) excluding OMSS (Domestic)
39 Adhoc Additional Allocation Special Allocation @ 8.45/11.85 per kg (Allocation date
06/01/2011
40 Special Allocation @ 8.45/11.85 per Kg.(Allocation date
06/01/2011
41 Additional @ Economic Cost
42 Additional @ MSP Derived Rate
43 Additional @ APL Rate
44 Additional @ BPL Rate
45 Additional @ Free of Cost
45

Revolution in PDS in Chhattisgarh : Core PDS
46

2.10 INTRODUCTION:-
COREPDS is FPS automation introducing mechanical authentication of
beneficiary at the time of service delivery to check proxy issues and empowering beneficiary
with the right to chose FPS by offering portability of FPS, to improve service delivery. In
COREPDS, FPS‘ are equipped with a POS device with GPRS connectivity. Each BPL
beneficiary is provided with a Smart Ration Card (SRC). APL beneficiaries have been registered
with their mobile numbers. PDS commodities are delivered to BPL beneficiary with Smart Card
authentication and to APL beneficiary with OTP (One Time Pin) authentication. They can now
go to go to any FPS to claim their entitlements. Portability introduced fear of losing customer in
FPS‘ and competition among FPS‘, giving a reason to improve service delivery, in terms of not
only quality and quantity of commodities but in the behavior and treatment with the beneficiaries
at FPS. COREPDS is designed for biometric authentication of the beneficiary using either the
Aadhaar infrastructure or Rashtriya Swasthya Beema Yojana (RSBY) biometrics. COREPDS
has been operational in 151 FPS‘ of Raipur city. COREPDS is predominantly online system but
allows a limited offline.
Objective:
1) To improve Service Delivery:- Primary purpose of the initiative is to improve service
delivery at FPS in terms of quality of the commodities, quantity of commodities and
behavior of FPS sales person with beneficiaries.
2) To reduce Diversion:- To check diversion of PDS commodities by checking proxy
issues. Diversion in PDS Supply chain at any stage (while procuring, storage, at the time
of movement from warehouse to FPS or at FPS) is possible only when proxy issues can
be recorded in the system.
Target Group:
End users of COREPDS are about 1.5 lakh Ration car
Geographical Reach within India:
COREPDS has been operational in 151 FPSs of Raipur City.
Geographical Reach outside India: Yes
Date From which the Project became Operational: 1-3-2012
Is the Project still operational? Yes
47

Innovations of programme/project/initiative:
1.Portability:
Portability of FPSs in PDS is first time being offered in COREPDS in the country‘s
PDS history. Other FPS automation models being tried in other States do not offer
portability, leaving no reason for improvement in service at FPS.
2. One Time Pin (OTP):
The penetration of mobile telephony is increasing every day in the country.
Authentication of a beneficiary can easily be done sending a One Time Pin to the
beneficiary‘s registered mobile phone number. The beneficiary is then required to provide
the OTP sent to her at the time of transaction. The OTP provided by the beneficiary is then
confirmed from the data available at the server through the POS device. COREPDS uses this
type of authentication for issue of commodities to APL beneficiaries.
3. RSBY smart card as a Smart Ration card:
COREPDS is designed to use RSBY cards as Smart Ration Cards. This will be the
first successful experiment in the country that provides for a synthesis between the efforts of
two departments of the government to provide services to common beneficiaries through the
same instrument (RSBY smart card). It also leads to significant savings for the government
on account of time and money required to duplicate the efforts in absence of the synthesis. 64
K RSBY cards are being issued by Health department from Sep 15th 2012.
Key achievements of the programme/project/initiative:
1.Reduced waiting time for service delivery: Due to equal distribution of beneficiaries
in all nearby FPS‘ the average waiting time has reduced to half an hour from 2 to 3 hours before
implementation of CORE PDS
2.Reduction in diversion: Mechanical authentication at the time of delivery completely
checks the record of proxy issues and thus reduced diversion. Scheme % of sales declared by
FPS earlier Actual % of sales in Aug 2012 BPL 99.5 % 95 % APL 50 % 20 % Kerosene 100%
75%.
3.Behavioral change in behavior of FPS personnel: The portability offered in
48

COREPDS creates fear of losing customers which brought a drastic change in behavior of FPS
personnel dealing with the beneficiaries.
4. Reduced number of trips of beneficiaries to take different commodities: In
COREPDS, a beneficiary is able to get all the commodities at one time. Even when one
commodity is not available in an FPS the beneficiary can take the same from nearby FPS. This
has lead to a drastic reduction in the number of trips of the beneficiary to take commodities to 2
trips as the beneficiaries generally do not take kerosene with other food grains even when it is
available. Average trips in august 2012 is 1.8 .
5. Churning effect (Beneficiaries who have taken commodities from other FPS using their
new empowerment to chose) – 14 %
Key challenges faced while implementing the programme/project/initiative
and how they were overcome
1. Implementation of CORE PDS acts against the interest of many FPS‘ Agencies. It is not wise
to assume that FPS will sincerely try to implement COREPDS. Some FPS‘ may try to see
technology fails and genuine beneficiaries do not get their ration and technology be blamed for
that. Mitigation Strategy Portability is the mitigation strategy. When one FPS says that the POS
is not working, beneficiary can go to a near by FPS. FPS that cannot run COREPDS loses its
business to other FPS.
2 Distribution of smart cards could not be completed. A few people have lost their Smart cards
and it takes a few days to re-issue a duplicate card. As a result, a few genuine beneficiaries do
not have smart cards. Mitigation Strategy Allow issue with FPS card when Beneficiary Smart
card is not available from the attached FPS
3. Unreliable connectivity. Online transactions are not possible for a few hours. Mitigation
Strategy COREPDS by design is an online system. But it allows a limited offline issues also in
case of connectivity failure.
4. Maintenance of POS devices. Continuation of business in case of POS failure. Mitigation
Strategy Sufficient buffer stock of POS devices for immediate replacement in case POS failure.
49

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