UPSC IAS exam preparation - Indian Agriculture and related issues - Lecture 6

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PDS, Buffer stocks &
Food Security Act - Part 1

[हिंदी में पढ़ें ]

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1.0 INTRODUCTION

To ensure that the foodgrains and agricultural production of India is properly monitored, and linked with the food security of Indians through state intervention is one of the key aspects of national policy formulation and implementation. This is so because agriculture is the lifeblood of a majority of Indian population, and the number of poor requiring food help is very high in India. There is no point in targeting bumper agricultural productions of cereals, pulses and other outputs, if their stocking, transportation and distribution at appropriate prices across the States and UTs is not systematic. It is a huge task, by any standards.

It is to the credit of our governments that these crucial activities have been carried out in a professional manner over the years. The activities related to PDS, buffer stocks and Food Security Act are under the Department of Food & Public Distribution, which is one of the two Departments under the Ministry of Consumer Affairs, Food & Public Distribution.

The main functions of this Department are 

1. Formulation and implementation of national policies relating to procurement, movement, storage and distribution of foodgrains
2. Implementation of the Public Distribution System (PDS) with special focus on the poor
3. Provision of storage facilities for the maintenance of central reserves of foodgrains and promotion of scientific storage
4. Formulation of national policies relating to export and import, buffer stocking, quality control and specifications of foodgrains
5. Administration of food subsidies relating to rice, wheat and coarse grains
6. Policy matters relating to sugar and sugarcane sector, fixation of Fair and Remunerative Price (FRP) of sugarcane payable by sugar factories, development and regulation of sugar industry (including training in the field of sugar technology) and sugar supply for PDS
7. Monitoring, price control and supply of edible oils.

The Public Distribution System (PDS) was established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments in India as a system of management of scarcity and for distribution of food grains at affordable prices. Over the years, PDS has become an important part of government's policy for management of food economy and food security in the country. Food is distributed through a network of public distribution shops, also known as Ration Shops established in several states across the country. Food Corporation of India, a Government-owned corporation, procures and maintains the PDS. The PDS is supplemental in nature and is not intended to make available the entire requirement of any of the commodities distributed under it to a household or a section of the society.

PDS is operated under the joint responsibility of both the sentral and the state governments. The central government, through the FCI, has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the state governments. The operational responsibility including allocation within state(s), identification of families below the poverty line (BPL), issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPS) rest with the State Governments. Presently, under the PDS, the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as cloth, exercise books, pulses, salt and tea, etc.

2.0 Evolution of PDS

Evolution of public distribution of grains in India had its origin in the 'rationing' system introduced by the British during the World War II. In 1939, the British introduced  the first structured public distribution of cereals in India through the rationing system - sale of a fixed quantity of ration (rice or wheat) to entitled families (ration card holders) in specified cities/towns. Bombay was the first city where this was introduced. On attaining independence, India was forced to reintroduce it in 1950 in the face of renewed inflationary pressures in the economy immediately after independence.

Creation of the Food Corporation of India and Agricultural Prices Commission in 1965 consolidated the position of PDS. Government was now committed to announce a minimum support price for wheat and paddy and procure of quantities that could not fetch even such minimum prices in the market. The resultant stocks were to be utilized for maintaining distribution through the PDS and a portion of these were used to create and maintain buffer stocks. In fact, if stocks happened to be inadequate for maintaining a certain level of distribution through PDS, government had to resort to imports to honour its charge to PDS consumers. All through the ups and downs of Indian agriculture, PDS was continued as a deliberate social policy of the government with the objectives of:

1. Providing foodgrains and other essential items to vulnerable sections of the society at resonable (subsidised) prices
2. to have a moderating influence on the open market prices of cereals, the distribution of which constitutes a fairly big share of the total marketable surplus, and
3. to attempt socialisation in the matter of distribution of essential commodities.

The PDS seeks to provide to the beneficiaries two cereals, rice and wheat and four essential commodities viz. sugar, edible oil, soft coke and kerosene oil. However, state governments, which actually manage the system at the ground level, are motivated/exhorted to add other essential commodities like pulses, salt, candles, matchboxes, ordinary clothes, school text books/copies and the like. Supply of additional items through PDS is especially relevant in interior areas, which are away from markets and where one or two traditional shopkeepers, who also double up for money-lenders, have the market monopoly. A number of state governments have set up Civil Supplies or Essential Commodities Corporations to buy such additional items directly from the manufacturers and use the existing structure of PDS to arrange for the sale at lower than market rates.

As the national agricultural production grew substantially in the aftermath of Green Revolution, the outreach of PDS was extended to tribal blocks and areas of high incidence of poverty in the 1970s and 1980s.

PDS, till 1992, was a general entitlement scheme for all consumers without any specific target. The Revamped Public Distribution System (RPDS) was launched in June 1992 in 1775 blocks throughout the country. The scale of issue of RPDS was up to 20 kg per card.

The Targeted Public Distribution System (TPDS) was introduced with effect from June 1997.

3.0 FACILITIES PROVIDED UNDER PDS

3.1 Targeted Public Distribution System (TPDS)

The Targeted Public Distribution System (TPDS) is a centrally sponsored scheme to provide subsidised food and fuel to the poor.  Launched in June 1997, TPDS evolved from PDS. While PDS was a general entitlement scheme for all consumers, TPDS was introduced to better direct the food subsidy towards the poor. Below, we highlight the existing TPDS mechanism, challenges in its implementation, reforms proposed to the TPDS and some key features of alternatives to PDS. 

The scheme, when introduced, was intended to benefit about 6 crore poor families for whom a quantity of about 72 lakh tons of food grains was earmarked annually. The identification of the poor under the scheme was done by the States as per State-wise poverty estimates of the Planning Commission for 1993-94 based on the methodology of the "Expert Group on estimation of proportion and number of poor" chaired by Late Prof. Lakdawala. 

The allocation of food grains to the States/UTs was made on the basis of average consumption in the past i.e. average annual off-take of food grains under the PDS during the past ten years at the time of introduction of TPDS.

The number of BPL families has been increased w.e.f. 01.12.2000 by shifting the base to the population projections of the Registrar General as on 01.3.2000 instead of the earlier population projections of 1995. With this increase the total number of BPL families is 652.03 lakh as against 596.23 lakh families originally estimated when TPDS was introduced in June 1997.

The end retail price is fixed by the States/UTs after taking into account margins for wholesalers/retailers, transportations charges, levies, local taxes etc. Under the TPDS, the States were requested to issue food-grains at a difference of not more than 50 paise per kg over and above the CIP for BPL families. Flexibility has been given to States/UTs in the matter of fixing the retail issue prices by removing the restriction of 50 paise per kg over and above the CIP for distribution of food grains under TPDS except with respect to Antyodaya Anna Yojana (AAY) where the end retail price is to be retained at Rs. 2/- a Kg. for wheat and Rs. 3/- a kg for rice.

To work out the population below the poverty line under the TPDS, there was a general consensus at the Food Minister's conference held in August 1996 for adopting the methodology used by the expert group set up by the Planning Commission under the Chairmanship of Late Prof. Lakadawala. The BPL households were determined on the basis of population projections of the Registrar General of India for 1995 and the State wise poverty estimates of the Planning Commission for 1993-94. The total number of BPL households so determined was 596.23 lakh. 

Guidelines for implementing the TPDS were issued in which the State Governments had been advised to identify the BPL families by involving the Gram Panchayats and Nagar Palikas. While doing so, the thrust was to include the really poor and vulnerable sections of the society such as landless agricultural labourers, marginal farmers, rural artisans/ craftsmen such as potters, tappers, weavers, black-smith, carpenters, etc. in the rural areas and slum dwellers and persons earning their livelihood on daily basis in the informal sector like potters, rickshaw-pullers, cart-pullers, fruit and flower sellers on the pavement etc. in urban areas. The Gram Panchayats and Gram-Sabhas were also to be involved in the identification of eligible families. Under the PDS (Control) Order, 2001 and TPDS (Control) Order 2015, State Governments are to formulate suitable guidelines for the identification of BPL while taking care to ensure that the families so identified are really the poorest.

Under the National Food Security Act, 2013 (NFSA) coverage has been delinked from poverty. The TPDS (C) Order, 2015 (TPDS) notified on 20.03.2015 to bring the PDS (C) Order, 2001 in consonance with the NFSA requires the State Government to prepare and notify guidelines for identification of priority households as well as take steps to finalize the list of eligible households i.e. priority households and the Antyodaya Anna Yojana (AAY) households.

3.2 Antyodaya Anna Yojana (AAY)

In order to make TPDS more focused and targeted towards the poorest of the poor category of the population, the "Antyodaya Anna Yojana" (AAY) was launched in December, 2000 for one crore families.

AAY was initially launched in December, 2000 for one crore families to be identified from the Below Poverty Line (BPL) families. Coverage under this scheme has been expanded thrice since then i.e. during 2003- 04, 2004-05 and 2005-06 covering additional 50 lakh households each time. Thus the total coverage under AAY was raised to 2.50 crores AAY families (i.e. 38% of BPL). 

It contemplated providing 25 kg. of foodgrains per month at highly subsidized rates of Rs. 2 per kg. for wheat and Rs. 3 per kg. for rice to each Antodaya family. The total number of families to be covered under this scheme was placed at one crore. AAY is a step in the direction of making TPDS aim at reducing hunger among the poorest segments of the BPL population. A National Sample Survey exercise points towards the fact that about 5 % of the total population in the country sleeps without two square meals a day. This section of the population can be called as "hungry". 

AAY contemplated providing poorest of the poor families food grains at a highly subsidized rate of Rs.2/- per kg for wheat and Rs. 3/- per kg for rice. The States/UTs are required to bear the distribution cost, including margin to dealers and retailers as well as the transportation cost. Thus the entire food subsidy is being passed on to the consumers under the scheme.

In order to identify these households, the guidelines stipulate the following criteria:

1. Landless agriculture laborers, marginal farmers, rural artisans/craftsmen, such as potters, tanners, weavers, blacksmiths, carpenters, slum dwellers, and persons earning their livelihood, on daily basis in the informal sector like porters, coolies, rickshaw pullers, hand cart pullers, fruit and flower sellers, snake charmers, rag pickers, cobblers, destitute and other similar categories irrespective of rural or urban areas.
2. Households headed by widows or terminally ill persons or disabled persons or persons aged 60 years or more with no assured means of subsistence or societal support.
3. Widows or terminally ill persons or disabled persons or persons aged 60 years or more or single women or single men with no family or societal support or assured means of subsistence.
4. All primitive tribal households.

The above guidelines have further been amended to include all eligible BPL families of HIV positive persons in the AAY list on priority against the criteria mentioned in the guidelines for identification of families under AAY within respective ceilings on numbers of AAY families communicated by this Department. 

Up to 2.50 crore families may be covered under the scheme.

4.0 PROCESS IN THE IMPLEMENTATION OF PDS

The Public Distribution System (PDS) in India is implemented through process of procurement, storage, movement, distribution and sale of foodgrains. Mentioned below is an explanation of these various processes.

1. Procurement
2. Storage
3. Movement
4. Distribution
5. Quality Control (QC)

The whole system is not only huge, but very complex. End-to-end computerisation will bring excellent advantage to all.

4.1 Procurement

Existing policy of foodgrains procurement: The Central Government extends price support to paddy, coarse grains and wheat through the FCI and State Agencies. Before the harvest during each Rabi / Kharif Crop season, the Central Government announces the minimum support prices (MSP) (along with specification) for procurement on the basis of the recommendation of the Commission of Agricultural Coasts and Prices (CACP) which along with other factors, takes into consideration the cost of various agricultural inputs and the reasonable margin for the farmers for their produce. To facilitate procurement of food grains, FCI and various State Agencies in consultation with the State Govt. establish a large number of purchase centres at various mandis and key points in such a manner that farmers need not to cover more than 8-10 K.Ms. The number of centres and their locations are decided by the State Governments, based on various parameters, so as to maximize the MSP operations. All the foodgrains conforming to the prescribed specifications offered for sale at these purchase centers are bought at the MSP. The producers have the option to sell their produce to FCI/State Agencies at MSP or in the open market as is advantageous to them. Foodgrains procured by the State Governments and their agencies are ultimately taken over by the FCI for distribution throughout the country.

Objectives of foodgrains procurement by government agencies:

1. The procurement under Price Support is taken up mainly to ensure remunerative prices to the farmers for their produce which works as an incentive for achieving better productions and prevents them from resorting to distress sale below the support price.
2. To service the TPDS and other welfare schemes of the Government so that subsidized foodgrains are supplied to the poor and needy.
3. To ensure foodgrain security by effective market intervention, thereby keeping the prices under check.
4. Building up buffer stocks of foodgrains.

4.1.1 Philosophy and operations

The Government policy of procurement of Food grains has broad objectives of ensuring MSP to the farmers and availability of food grains to the weaker sections at affordable prices. It also ensures effective market intervention thereby keeping the prices under check and also adding to the overall food security of the country. 

1. FCI, the nodal central agency of Government of India, along with other State Agencies undertakes procurement of wheat and paddy under price support scheme. 
2. Coarse grains are procured by State Government Agencies for Central Pool as per the direction issued by Government of India on time to time. 
3. The procurement under Price Support is taken up mainly to ensure remunerative prices to the farmers for their produce which works as an incentive for achieving better production.  
4. Before the harvest during each Rabi / Kharif Crop season, the Government of India announces the minimum support prices (MSP) for procurement on the basis of the recommendation of the Commission of Agricultural Costs and Prices (CACP) which along with other factors, takes into consideration the cost of various agricultural inputs and the reasonable margin for the farmers for their produce. 
5. To facilitate procurement of food grains, FCI and various State Agencies in consultation with the State Government establish a large number of purchase centres at various mandis and key points. 
6. The number of centres and their locations are decided by the State Governments, based on various parameters, so as to maximize the MSP operations. For instance for Wheat procurement more than 20,000 procurement centers were operated during RMS 2015-16 & for Rice procurement more than 44,000 procurement centres were operated. Such extensive & effective price support operations have resulted in sustaining the income of farmers over a period and in providing the required impetus for higher investment in agriculture sector for improved productivity.  
7. Whatever stocks which are brought to the Purchase centers falling within the Government of India's specifications are purchased at the fixed support price. If the farmers get prices better than the support price from other buyers such as traders / millers etc., the farmers are free to sell their produce to them. FCI and the State Government/its agencies ensure that the farmers are not compelled to sell their produce below support price.

4.1.2 Procurement policy and system of FCI

1. The Central Government extends price support to wheat and paddy through FCI and State Agencies. Procurement at MSP is open ended i.e., whatever foodgrains are offered by the farmers ,within the stipulated procurement period and which conforms to the quality specifications prescribed by Government of India, are purchased at MSP (and bonus/incentive ,if any)  by the Government agencies including FCI for central Pool. Some States also declare State bonus on wheat and paddy over and above MSP.  Government agencies undertake MSP operation at mandis/ temporary purchase centres/aggregation points. Location and number of purchase centres to be opened are decided in consultation with /by the State governments.
2. Wheat  procurement FCI undertakes direct procurement in non-DCP states. In the major procuring states like Punjab and Haryana, wheat is mainly procured by state agencies and they preserve the stocks under their custody for which carry -over charges are paid to them. FCI takes over the stocks for dispatch to consuming states as per requirement /movement plan. Payments are made to state govt. /agencies as per cost sheets issued by Governemnt of India after taking over the stocks. In the states like UP and Rajasthan, the wheat procured by state agencies is immediately taken over by FCI for storage /dispatch.  In DCP state like M.P, wheat is procured by the State agencies and only the surplus wheat stocks over & above the State's requirement under TPDS/NSFA and Other Welfare Schemes are taken over by FCI for dispatch to other consuming regions.
3. Rice Procurement Rice is brought through two routes. a) Custom Milled (CMR) and b) Levy rice. CMR is manufactured by milling paddy procured by State govt. /State agencies and FCI. In the states like A.P, Punjab, Haryana, Chhattisgarh, Odisha, MP, Tamilnadu, UP & Bihar paddy is mainly procured by State government /State agencies and the resultant rice is delivered to State Government and FCI by getting the paddy milled from rice millers. In the states like Andhra Pradesh, Telangana, Uttrakhand, UP and West Bengal, rice is also procured in Central Pool through levy route. The rice millers deliver fix portion of their production at the %age imposed under State levy orders issued by the concerned State government with concurrence of Government of India, at notified levy prices fixed by the Government of India However, Government of India has decided to discontinue levy system of rice procurement w.e.f. 1.10.2015. Major responsibility of procurement of wheat and paddy is borne by the State agencies whereas FCI procures almost 70% of total rice procured for Central Pool.  
4. Coarse grains procurement Coarse grains are being procured by the State governments for central pool.  
5. In major wheat and paddy procuring States like Punjab, Haryana & some parts Rajasthan procurement from farmers is undertaken by the FCI/State Agencies through Arhatiyas as per APMC Acts of the concerned State for which commission @ 2.5% of MSP is paid in the States of Punjab & Haryana and @2% in Rajasthan. In other States like MP, Chhattisgarh, UP, Uttrakhand, AP, Tamilnadu, Bihar, Jharkhand, Odisha, West Bengal procurement is made through Co-operative societies and they are paid fixed remunerations at following rates- Wheat: Rs 27.00 per quintal Paddy (Grade 'A'):  Rs 32 per quintal Paddy (Common) : Rs 31.25 per quintal

4.1.3 Centralized and Decentralized procurement systems

Centralized (Non-DCP) procurement system: Under centralized procurement system, the procurement of foodgrains in Central Pool are undertaken either by FCI directly or State Govt. agencies procures the foodgrains and handover the stocks to FCI for storage and subsequent issue against Government of India allocations in the same State or movement of surplus stocks to other States. The cost of the foodgrains procured by State agencies is reimbursed by FCI as per cost-sheets issued by Government of India as soon as the stocks are delivered to FCI.

Decentralized (DCP) Procurement: Under DCP system, the State Government of India/its agencies procure, store and distribute (against Government of India's allocation for TPDS & OWS) rice /wheat/coarse grains within the state. The excess stocks (Rice & wheat) procured by the State /its agencies are handed over to FCI in Central Pool. The expenditure incurred by the State Government on procurement, storage and distribution of DCP stocks are reimbursed by Government of India on the laid down principles. The expenses such as MSP, arhatiya/society commission, administrative charges, mandi labour charges, transportation charges, custody & maintenance charges, interest charges, gunny cost, milling charges and statutory taxes are reimbursed on actual basis.  The cost of excess stocks handed over to FCI is reimbursed by FCI to the State Government/agencies as per Government of India costs sheet.

Different states started this system from different dates.

4.2 Storage

Storage operations are aimed at providing the capacity required for buffer and operational stock of foodgrains to maintain the Public Distribution System. Stocks procured in the markets and purchase centers are first collected in the nearest depot. The FCI has provision for scientific storage of the millions of tons of foodgrains procured by it. Also, in order to provide easy physical access in deficit, remote and inaccessible areas, the FCI has a network of storage depots strategically located all over India in consuming areas. These depots include silos, godowns and an indigenous method developed by FCI, called Cover and Plinth (CAP). Though stocks are generally stored in covered godowns but whenever there is a shortage of space and in time of urgency, stocks of wheat and paddy have to be stored in open and such is known as CAP (Covered and Plinth). CAP storage is a term given to storage of foodgrains in the open with adequate precautions such as rat and damp proof plinths, use of Dunnage and covering of stacks with specially fabricated polythene covers etc. Apart from FCI, there are two other agencies in the public sector which are engaged in building large scale storage/warehousing capacity namely, Central Warehousing Corporation (CWC) and 17 State Warehousing Corporations (SWCs). Over a period of time sizeable scientific storage/warehousing capacity has been developed by these Public Sector agencies and they are implementing plans to increase it further. While the capacity available with FCI is used mainly for storage of food grains, that with CWC and SWCs is used for storage of food grains as well as certain other items. Therefore in addition of FCI owned godowns, storage capacity is also hired by FCI from CWC/SWC and private parties to meet the requirement. 

Besides having own storage capacity, FCI has hired storage capacities from Central Warehousing Corporation, State Warehousing Corporations, State Agencies and Private Parties for short term as well as for guaranteed period under Private Entrepreneurs Guarantee Scheme.   New Godowns are being constructed by FCI mainly through Private Participation under Private Entrepreneurs Guarantee Scheme. FCI is also augmenting and modernizing its storage capacity in the form of silos through Public Private Partnership. Storage Capacity for Central Pool Stocks for the last five years is given in the table. 

4.3 Movement

Ensuring accessibility to food in a country of India's size is a herculean task. The foodgrains are transported from the surplus states to the deficit states. The foodgrain surplus is mainly confined to the northern states; transportation involves long distance throughout the country. Stocks procured in the markets and purchase centers is first collected in the nearest depot and from there dispatched to the recipient states within a limited time. FCI moves about 250 lakh tons of foodgrains over an average distance of 1500 kms. Regularly rice and wheat procured in the northern states is moved to far flung corners like Imphal, Manipur or Kanyakumari in Tamilnadu, and to the higher reaches of the Himalayas in the north. An average of 12,00,000 bags (50 kg.) of foodgrains are transported every day from the producing states to the consuming areas, by rail, road, inland waterways etc. Road transportation is preferred for short distance, being cost effective. The stocks to Kashmir valley, H.P, Manipur, Sikkim, Meghalaya, which don't have rail link are fed by road A&N Islands and Lakhadweep etc. are fed by inland waterways. Thus, by effective planning and management of the transport system FCI regularly moves foodgrain and sugar from the procuring region to the concerning region.

Punjab, Haryana and Madhya Pradesh are the surplus States in terms of wheat procurement vis-à-vis their own consumption. Punjab, Haryana, Andhra Pradesh, Chhattisgarh and Odisha are surplus States in terms of rice procurement vis-à-vis their own consumption. Surplus stocks of wheat and rice available in these States are moved to deficit States to meet the requirements under TPDS and other schemes as well as to create buffer stocks.  40 to 50 million tonnes of foodgrains are transported by FCI across the country in a year. FCI undertakes massive movement operation of foodgrains all over the country encompassing around 2000 FCI depots (owned + hired), 440 rail-heads (owned by Indian Railways and others) and 103 FCI own sidings. 

Movement Plan is prepared on monthly basis keeping in view: 

• Quantity available in surplus regions
• Quantity required by deficit regions
• Likely procurement
• Vacant storage capacity both in consuming as well as procuring regions
• Monthly allotment/ off take of foodgrains 

Mode of Transportation: Around 90% of stocks are moved by rail and rest are moved by road. Inter-State movement by road is mainly undertaken in those parts of the country which are not connected by rail. A small quantity is also moved by ocean vessels to Lakshadweep and A&N Islands as well as through coastal shipping and riverine movement to Kerala/Agartala (Tripura). 

FCI has 103 own Railway sidings, where foodgrain rakes are placed directly at FCI depots. Other than that foodgrain stocks are transported 'to and fro' from the nearest rail-heads of Indian Railways.

FCI has been able to ensure availability of sufficient foodgrain in all States by proper planning. 

Other Initiative in Movement of foodgrains 

1. To supplement the movement through rail, an alternate mode is being explored by undertaking coastal movement to Kerala from Andhra Pradesh. During year 2014-15, around one lakh MT of rice has been moved from Andhra Pradesh to Kerala for the first time through this mode. 
2. In North East, railways is undertaking gauge conversion from Metre gauge to Broad gauge due to which rail movement has been stopped to Tripura as well as some other states of NE and stock is moved to Tripura by road from Board gauge railheads in Assam. To supplement this road movement to Tripura, an alternate route using multimodal mode (riverine route) via Bangladesh has also been explored. Around 20,000 MT has been moved so far from Kolkata/Andhra Pradesh via Bangladesh to Tripura.

4.4 Distribution

Delivery of foodgrains to FCI owned/rented depots: The foodgrains procured from the surplus states/areas are transported to the FCI owned/rented depots in the consuming States/areas. The FCI owned depots are called Food Storage Depots (FSD). In some places where FCI does not own depots, it rents them from CWC/SWC/ARDC or private owners.

According to the PDS Control Order 2001 (Annex Paragraph 4(1)), The Food Corporation of India (FCI) or any other agency designated for the purpose by the Central Government shall ensure physical delivery of foodgrains of fair average quality to State Governments for distribution under the Public Distribution System, as per the allocations made by the Central Government, within two weeks of the receipt of payment from the State Governments and issue of release orders.

Lifting of foodgrains from FCI depots and delivery to FPS

According to the PDS Control Order 2001 (Clause 6),

• State Governments shall, on getting allocation of foodgrains from the Central Government, issue district-wise allocation orders authorizing their agencies or nominees to draw foodgrains from the FCI within ten days of the receipt of allocation orders made by the Government of India
• The designated authority of the State Government shall ensure delivery of one copy of allocation order made to the fair price shop simultaneously to Gram Panchayats or Nagar Palikas or Vigilance Committees or any other body nominated for monitoring the functioning of the fair price shops by the concerned State Government and such order shall specify:-

1. Number of cards and units;
2. Balance in hand; and
3. Allocation made for each month in respect of a fair price shop.

• Gram Panchayats or Nagar Palikas or Vigilance Committees or any other body nominated for monitoring the functioning of the fair price shop by State Governments shall display the stocks of essential commodities allotted during the month to the fair price shops on a notice board outside their office.
• While making monthly allocations to the fair price shops the designated authority of State Governments shall take into account the balance stock, if any, lying undistributed with the fair price shop owners for the subsequent allocations.
• State Governments shall make arrangements for taking delivery of essential commodities issued by the Central Government by their designated agencies or nominees from the FCI depots/godowns and ensure further delivery to the fair price shop within the first week of the month for which allocation is made.
• State Governments shall exercise necessary checks to ensure that full quantity lifted by them reaches their godowns and in turn the fair price shops.
• Fair price shop owners shall take delivery of stocks from authorized nominees of the State Governments to ensure that essential commodities are available at the fair price shop within first week of the month for which the allotment is made.
• The district authority entrusted with the responsibility of implementing the Public Distribution System shall ensure that the stocks allocated to the fair price shops are physically delivered to them by the authorized nominee within the stipulated time.
• The authority or any person authorized by it in this behalf or any other person, who is engaged in the distribution and handling of essential commodities under the Public Distribution System, shall not willfully indulge in substitution or adulteration or diversion or theft of stocks from Central godowns to fair price shop premises or at the premises of the fair price shop.

5.0 the NATIONAL Food security Act (NFSA)

The landmark Food Security Act, 2013 (FSA) gave a legal guarantee of minimum foodgrain availability to needy Indians.

Coverage and entitlement under Targeted Public Distribution System (TPDS): Upto 75% of the rural population and 50% of the urban population will be covered under TPDS, with uniform entitlement of 5 kg per person per month. However, since Antyodaya  Anna Yojana (AAY) households constitute poorest of the poor, and are presently entitled to 35 kg per household per month, entitlement of existing AAY households will be protected at 35 kg per household per month.

State-wise coverage: Corresponding to the all India coverage of 75% and 50% in the rural and urban areas, State-wise coverage is to be determined by the Central Government. Using the NSSO  Household Consumption Survey data Planning Commission has determined the State-wise coverage.

Subsidised prices under TPDS and their revision: Foodgrains under TPDS will be made available at subsidised prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains for a period of three years from the date of commencement of the Act. Thereafter prices will  be suitably linked to Minimum Support Price (MSP).

In case, any State's allocation under the proposed legislation is lower than their current allocation, it will be protected upto the level of average offtake during last three years, at prices to be determined by the Central Government. Existing prices for APL households i.e. Rs. 6.10 per kg for wheat and Rs 8.30 per kg for rice has been determined as issue prices for the additional allocation to protect the average offtake during last three years.

Children's Entitlements: For children in the age group of 6 months to 6 years, the Act guarantees an age-appropriate meal, free of charge, through the local anganwadi. For children aged 6-14 years, one free mid-day meal shall be provided every day (except on school holidays) in all schools run by local bodies, government and government aided schools, up to Class VIII. For children below six months, "exclusive breastfeeding shall be promoted".

Children who suffer from malnutrition will be identified through the local anganwadi and meals will be provided to them free of charge "through the local anganwadi".

Entitlements of Pregnant and Lactating Women: Every pregnant and lactating mother is entitled to a free meal at the local anganwadi (during pregnancy and six months after child birth) as well as maternity benefits of Rs 6,000, in instalments.

[Notes: (1) "Meal" is defined in the Act as "hot cooked meal or ready to eat meal or take home ration, as may be prescribed by the Central Government". All "meals" have to meet nutritional norms specified in Schedule II. (2) The entitlements of women and children are to be delivered by state governments through schemes "in accordance with the guidelines, including cost sharing" to be prescribed by the Central Government. (3) Every school and anganwadi is to have "facilities for cooking meals, drinking water and sanitation". (4) For purposes of issuing ration cards, the eldest woman in the household (not less than 18 years of age) shall be considered head of the household.]

Identification of Eligible Households: The Act does not specify criteria for the identification of households (Priority or Antyodaya) eligible for PDS entitlements. The Central Government is to determine the state-wise coverage of the PDS, in terms of proportion of the rural/urban population. Then numbers of eligible persons will be calculated from Census population figures. The identification of eligible households is left to state governments, subject to the scheme's guidelines for Antyodaya, and subject to guidelines to be "specified" by the state government for Priority households. The lists of eligible households are to be placed in the public domain and "displayed prominently" by state governments.

Food Commissions: The Act provides for the creation of State Food Commissions. Each Commission shall consist of a chairperson, five other members and a member-secretary (including at least two women and one member each from Scheduled Castes and Scheduled Tribes).

The main function of the State Commission is to monitor and evaluate the implementation of the act, give advice to the states governments and their agencies, and inquire into violations of entitlements (either suo motu or on receipt of a complaint, and with "all the powers of a civil court while trying a suit under the Code of Civil Procedure 1908"). State Commissions also have to hear appeals against orders of the District Grievance Redressal Officer and prepare annual reports to be laid before the state legislature.

The State Commission may forward "any case" to a Magistrate having jurisdiction, who shall proceed as if the case has been forwarded under Section 346 of the Code of Criminal Procedure 1973.

Transparency and Grievance Redressal: The Act provides for a two-tier grievance redressal structure, involving the District Grievance Redressal Officer (DGRO) and State Food Commission. State governments must also put in place an internal grievance redressal mechanism which may include call centres, help lines, designation of nodal officers, "or such other mechanisms as may be prescribed".

6.0 Problems of the PDS in India

The PDS in India suffers from the following major structural and operational problems. 

1. Extremely high amount of leakages in the PDS system. Various studies estimate the leakages to be as high as 51%.
2. The selection and identification of beneficiaries in the PDS system suffers from errors of both inclusion and exclusion. Use of Aadhar Cards and direct cash transfers is expected to mitigate this probelm. 
3. There are growing concerns with the quality of foodgrains available in PDS shops. 
4. Large number of bogus cards, hoarding of stock, illegal diversions and numerous malpractices make availaibility of nutritious and wholesome food difficult for the poor thereby destroying the very objective of the PDS system. 
5. The PDS has not been able to expand its reach substantially. 

Due to all these factors the PDS has not been able to achieve its twin objectives of price stabilisation and food security, fully.

6.1 Measures taken to strengthen TPDS

6.1.1 Citizen's Charter

A revised Citizens' Charter has been issued in July, 2007 for adoption and implementation by the State/UT Governments for facilitating its use by citizens as per provisions of Right to Information Act, 2005, in relation to functioning of the TPDS.

6.1.2 PDS (Control) Order, 2001

In order to maintain supplies and securing availability and distribution of essential commodities, Public Distribution System (Control) Order, 2001 has been notified on August 31, 2001. The Order mainly contains provisions with regard to the following issues:-

1. Identification of families below the poverty line;
2. Ration cards;
3. Scale and issue price;
4. Distribution of foodgrains;
5. Licensing;
6. Monitoring.

The Order requires all State Governments/UTs to ensure that the BPL and AAY families identified are really the poorest of the poor. It also requires the State Governments/UTs to get the lists of BPL and AAY families reviewed every year for the purpose of deletion of ineligible families and inclusion of eligible families. It further devolves on the State Governments/UTs to conduct periodical checking of ration cards to weed out ineligible and bogus ration cards. The State Governments/UTs are also to ensure issue of Utilization Certificates confirming that the foodgrains have been lifted and distributed to the intended beneficiaries under the TPDS. An offence committed in violation of the provisions of this Order shall invoke criminal liability under the Essential Commodities Act, 1955. 

6.1.3 Area Officers' Scheme

The Area Officer's Scheme was launched on 21st February, 2000 in the Department of Food and Public Distribution with the objective to provide a mechanism to coordinate with the State Governments and UT Administrations for regular and effective review and monitoring of the TPDS in the States/UTs. Officers of the rank of Deputy Secretary, Director and equivalent are nominated as Area Officers for different States/UTs from time to time. The broad features of the Scheme are as under :-

1. The Area Officer is required to visit two districts of their allotted territories once in a quarter and review the functioning of TPDS as per the instructions/guidelines and a set of questionnaire; 
2. They are also required to submit their visit report within 10 days, clearly bringing out important issues, findings along with recommendations on actionable points;
3. The report of the Area Officers is sent to the Food Secretaries of the concerned States/UTs for taking remedial action towards smooth functioning of TPDS.

 6.1.4 Meetings /Conferences

A meeting of all State and UT Food Secretaries was held under the Chairmanship of Union Food Secretary at Hyderabad on 8.2.2008 to discuss the measures for reforming PDS. The minutes of said meeting were sent to all concerned for taking necessary action thereon.

In November 2015, the Ministry of Consumer Affairs, Food and Public Distribution convened an all-India review of the National FSA rollout status. Key points were - 

1. The conference was attended by the representatives of 33 States/UTs. Secretary (F&PD), CMD (FCI), other senior officers of the Department participated in the discussion along with officers from National Informatics Centre (NIC), Unique Identification Authority of India (UIDAI) and Registrar General of India (RGI). 
2. The PDS is an important scheme to link the Central and State Governments directly to the vulnerable people. In the erstwhile TPDS, three categories - AAY, BPL and APL - were being provided subsidized foodgrains. In 2013, NFSA was enacted to provide food security to 67% of the population in the form of highly subsidized foodgrains at Rs. 2 and 3 per Kg for wheat and rice respectively. The coverage under NFSA has been delinked from poverty estimates. 
3. During the initial one year provided in the Act for identification of beneficiaries (i.e. during 2013-14), only 11 States/UTs started implementation of the Act. Keeping in view the problems faced by some States/UTs in completing the identification process and other preparatory activities, the Government extended the time period upto 30 September, 2015. 
4. Some of the States, in their eagerness to implement the Act missed the spirit of the Act to ensure that the foodgrains reach the intended beneficiary with 100% transparency.
5. It is to be kept in view that right from lifting of foodgrains from FCI depots, the State Governments are responsible to make sure that the foodgrains reach the fair price shops without any leakage and are distributed to the beneficiaries in time.  
6. To ensure all this, they are required to (a) correctly identify the beneficiaries, (b) digitize the beneficiary database and (c) place the same on PDS portal and also to have a robust grievance redressal mechanism. 
7. The Government is providing both technical and financial support to enable the State Governments to computerize TPDS operations. Further, Central Government is also providing assistance in meeting expenditure on intra-State transport and handling of foodgrains and fair price shop dealers' margin. 
8. Though 11 more States/UTs have started implementation of the Act in 2015, 14 States/UTs are yet to roll out NFSA. 
9. There is a need for automation of fair price shops to ensure leakage free distribution of foodgrains to intended beneficiaries. For this, it is essential for the States to properly identify the beneficiaries, digitize the list with Aadhaar seeding. 
10. Except Tamil Nadu (which has its own verion of the PDS running successfully), all the other States/UTs are likely to start implementation of the Act by April, 2016. Tamil Nadu has indicated that computerization of TPDS is likely to be complete by June, 2016 after which implementation of the Act will be taken up. 
11. The progress of end-to-end computerization of TPDS operations and FPS automation was reviewed. TPDS computerization started in December, 2012 and States have done a lot of work under the scheme in the last three years. All India progress in this regard is as under:
    
    
12. During review, it was noted that States are likely to automate about 1.5 lakh FPSs by March, 2016. 
13. For improving the paddy/rice procurement in general, and in the Eastern region in particular, State Governments need to pay special attention to better infrastructural facilities such as more procurement centres, storage, rice milling capacity etc. Also, there is a need to computerize the procurement operations to introduce transparency and to ensure faster payments to farmers through bank accounts.

7.0 OTHER ACTIVITIES UNDER PDS

7.1 Welfare schemes

Apart from supplying food grains under the TPDS, other welfare schemes related to food are also executed by the PDS system. Some of these schemes are -

1. Mid-Day Meal Scheme
2. Wheat Based Nutrition Program (WBNP)
3. Scheme For Supply of Foodgrains to SC/ST/OBC Hostels/Welfare Institutions
4. Annapurna Scheme
5. Sampoorn Gramin Rozgar Yojna (SGRY)
6. National Food For Work Program (NFFWP)
7. Foodgrains To Adolescent Girls, Pregnant And Lactating Mothers (AGPLM)
8. Emergency Feeding Program
9. Village Grain Banks Scheme
10. World Food Program

7.2 Buffer Stocks

In addition to the requirements of wheat and rice under the Targeted PDS, the Central Pool is required to have sufficient stocks of these in order to meet any emergencies like drought/failures of crop, as well as to enable open market intervention in case of price rise. 

7.3 Open Market Sale Scheme (Domestic) OMSS (D)

In addition to providing foodgrains under TPDS, the FCI on the instructions from the Government, has been resorting to sale of foodgrains i.e. wheat and rice, at predetermined prices to the open market from time to time to achieve the objectives as under: 

1. To enhance the supply of foodgrains especially during the lean season and thereby to have a healthy and moderating influence on the open market prices.
2. To offload the excess stocks in the Central pool and to reduce the carrying cost of foodgrains to the extent possible.
3. To save the foodgrains from deterioration in quality and to use foodgrains for human consumption.
4. To release valuable storage space for stocks procured during the ensuing marketing season of wheat/rice.

8.0 Powers under the PDS Control Order 2001

8.1 Penalty

If any person contravenes any provisions of this Order under clauses 3 (Identification ofBPL families), 4 (Issue of Ration cards), 6 (Distribution) and 7 (Licensing), he shall be liable to punishment under Section 7 of the Essential Commodities Act, 1995. 

8.2 Power of search and seizure

• An authority authorized by State Government, shall be competent to inspect or summon such records or documents as may be considered by him necessary for examination and take extracts or copies of any records or documents produced before him.
• If the said authority has reasons to believe on receipt of a complaint or otherwise that there has been any contravention of the provisions of this Order or with a view to securing compliance with this Order, he may enter, inspect or search the fair price shop or any premises relevant to transactions of business of the fair price shop.
• The said authority may also search, seize or remove such books of accounts or stocks of essential commodities where such authority has reason to believe that these have been used or will be used in contravention of the provisions of this order.

1. The authority conducting search and seizure under sub-clause (3) shall inform the State Government or an officer authorized by it in this behalf, the details of the search conducted and the stocks of essential commodities so seized by them under that clause.

• The provisions of section 100 of the Code of Criminal Procedure 1973, relating to search and seizure shall so far as may be, apply to search and seizure under this Order.

9.0 ORGANISATIONAL SETUP FOR THE IMPLEMENTATION OF PDS IN INDIA

The Public Distribution System in India is executed jointly by the Central Government via the FCI and the State Government/Union Territories via their State/UT Agencies. The FCI is a Public Sector Undertaking under the Department of Food and Public Distribution. This Department comes under the Ministry of Consumer Affairs, Food and Public Distribution of the Government of India.

9.1 Department of Food and Public Distribution

The Department of Public Distribution is charged with the prime responsibility of the management of the food economy of the country. The main functions of the Department of Food and Public Distribution are: -

1. Formulation and implementation of national policies relating to procurement, movement, storage and distribution of food grains;
2. Implementation of the Public Distribution System with special focus on the poor;
3. Provision of storage facilities for the maintenance of central reserves of food grains and promotion of scientific storage;
4. Formulation of national policies relating to export and import, buffer stocking, quality control and specifications of food grains;
5. Administration of food subsidies relating to rice, wheat and coarse grains;
6. Fixation of statutory minimum prices of sugarcane payable by sugar factories, development and regulation of industry (including training in the field of sugar technology), fixation of price of levy sugar and its supply to PDS and regulation of supply of free sale sugar, 
7. Supporting industries, the control of which by the Union is declared by Parliament by law to be expedient in public interest, as far as these relate to Vanaspati, Oilseeds, Vegetable Oils, Cakes and Fats; and 
8. Price monitoring of, and inter state-trade and commerce in, and supply and distribution of Vanaspati, Oilseeds, Vegetable Oils, Cakes and Fats.

In discharging its various functions, the Department of Food and Public Distribution has under its administrative control three Public Sector Undertakings, viz, Food Corporation of India (FCI), Central Warehousing Corporation (CWC) and Hindustan Vegetable Oils Corporation Limited (HVOC); two attached offices, namely, Directorate of Sugar and Directorate of Vanaspati, Vegetable Oils and Fats, and subordinate offices, viz., National Sugar Institute, Kanpur; Quality Control Cell Offices located at New Delhi, Bangalore, Bhopal, Bhubneswar, Kolkata, Hyderabad, Lucknowand Pune, Indian Grain Management Research Institute, Hapurand its two Field Stations at Hyderabad & Ludhiana.

9.2 Food Corporation Of India (FCI)

The Food Corporation of India (FCI) is the main agency responsible for the execution of the food policies of Central Government. Primary functions of FCI are:

1. Effective price support operations for safeguarding the interests of the farmers.
2. Distribution of foodgrains throughout the country for public distribution system
3. Maintaining satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security

9.3 Central Warehousing Corporation (CWC)

The Central Warehousing Corporation (CWC) was set up in 1957 under the Agricultural Produce (Development and Warehousing) Corporations Act, 1956. The said Act was subsequently replaced by the Warehousing Corporations Act, 1962(CWC Act, 1962). The function of the CWC are as under:-

1. To acquire and build godowns and warehouses at suitable places in India or abroad as it thinks fit.
2. To run warehouses for the storage of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities offered by individuals cooperative societies and other institutions.
3. To arrange facilities for transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities to and from warehouses
4. To subscribe to the share capital of State Warehousing Corporations.
5. To act as an agent of the Government for the purposes of purchase, sale, storage and distribution of agricultural produce, seeds, manures, fertilizers agricultural implements and notified commodities.
6. To enter into, with the previous approval of the Central Government, Joint Ventures with any Corporation established by or under any Central Act or any State Act or with any Company formed and registered under the Companies Act, 1956 including foreign company or through its subsidiary companies, for carrying out the purpose of this Act.
7. To establish subsidiary companies; and
8. Carry out such other functions as may be prescribed.

9.4 Directorate Of Sugar and Vegetable Oils

The Directorate is responsible for implementation of policies regarding production, distribution and consumption of sugar. and Vegetable Oils. The functions performed by the Directorate includes:

1. calculation / fixation of levy sugar prices under Essential Commodities Act, 1955 and L factor under Sugar (Control) Order, 1956, 
2. administration of buffer stock scheme under SDF rules, 1983 
3. monitoring of Industrial Entrepreneur Memorandum (IEM) issued by the M/o Industry and allied matters, 
4. grant of incentives for new and expansion projects of sugar mills, 
5. import and export of sugar, 
6. quality control of sugar through inspections etc, 
7. issue of release of levy and free sale sugar quota, 
8. monitoring of payment of cane price arrears, 
9. maintenance of statistical data on sugar production, its price situation etc. 

The Directorate is the only specialized organization in the field of Vegetable Oils and Fats and Vanaspati at the Government level (both Central and State). It assists the Ministry in the coordinated management of Vegetable Oils particularly relating to quality control and monitoring of prices. 

9.5 National Sugar Institue (NSI), Kanpur

The NSI, Kanpur is one of the premier Institutes running post graduate level courses in the discipline of Sugar Technology, Sugar Engineering, Alcohol Technology, and also provides operative level training Sugar Boiling Certificate Courses, Sugar Engineering Certificate Courses, Pre harvest cane Maturity Survey Certificate Courses. It is catering the trained technical personal need of the Sugar and fermentation Industry of the country. 

9.6 Quality Control Cells

Eight Quality Control cells are functioning at New Delhi, Bangalore, Bhopal, Bhubaneswar, Kolkata, Lucknow, Pune and Hyderabad under the direct control of Department of Food & Public Distribution. The main objective of these cells is to ensure the quality of foodgrains at the time of procurement storage and distribution. Surprise checks and inspection of procurement centres, food storage depots, rail heads, rice mills & fair price shops are conducted by the officers of these cells to ensure that the quality of foodgrains is conforming to laid down specifications/standards of Government of India. It is also ensured that the guidelines/instructions issued by Government about the proper storage and maintenance of foodgrains are followed by FCI and State agencies. These cells also attend to various complaints received from State Governments, VIPs, media and public about the quality of foodgrains during procurement, storage and distribution. The complaints are referred to either FCI or State Government for investigation or some cases are also investigated by Quality Control Officers directly. 

9.7 Indian Grain Storage Management & Research Institute (IGSMRI)

The IGSMRI, Hapur and its two field stations located at Hyderabad and Ludhiana carried out Research and Development activities on various aspects of storage and preservation of foodgrains both at farm and commercial levels. The IGMRI also conducts apex level long-term as well as short term tailor made specialized training courses on scientific storage and inspection of foodgrains, pest control technology etc. for the benefit of the officers of storage agencies, pest control operators, Foreign Nationals sponsored by FAO, UNDP. The Directorate of Plant Protection Quarantine and Storage, Ministry of Agriculture has recognized the long term training course (LTTC) and specialized short term training courses (STTC) for grant of license to pest control operators. 

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