Plugging the Leaks of

Public Distribution SystemIIM Lucknow – Team ChangeDgame

Gaurav Singh(PGP28099)|Mirza Intekhab Ali(PGP28098)|Raunak

Agrawal(PGP28063)|Amit Kumar(PGP28079)|Anurag Mohanty(PGP28109)

Public Distribution

System

Indian PDS is world’s largest food distribution system, supplying essential commodities to around 18 million families

Serves two fold goal of guaranteeing a stable selling price for the farmers and providing essential commodities to poor at affordable prices

The state and central government jointly are responsible for functioning of PDS

Problems with existing PDS

Unfair identification of beneficiaries- exclusion of BPL and wrongful inclusion of APL

Problem of leakage during transportation; existence of ghost cards

Issues regarding the viability of FPS due to higher costs, long replenishment time, delays, losses, low commission

Solid PDS will be the backbone of Food

Security. Reports suggest PDS

corruption estimate is around 20747

crores. Massive loss to exchequer.

Most important imperative for

Inclusive growth

Reason for

selecting

Proposed Solution & Concept

Broadly, we propose the following solutions to each of these three issues-

Pre Allocation phase- Use Aadhar cards and latest census data to recognize BPL and APL

Pre Allocation- Apply a strategy similar to rolling out of new Cooking Gas registration; everyone has to renew their ration card- Introduce new ration card book with a unique magnetic swipe card attached

Allocation phase- Implementation of RFID tags;

Allocation phase- Implementation of swipe card reader- EDC machines at each POS

Allocation Phase- Collection of data at district, state and national level- cue can be taken from prevailing primary healthcare system- even in Bihar daily data relayed to Centre

Allocation- Use hub and spoke model for distribution- easy to monitor

Allocation- Reduce intermediaries in distribution

Allocation- Scope for PPP and outsourcing of electronics machine and data collection

Post Allocation phase- Analysis based working capital management and order replenishment

Based on our research, there are three main pain points-

Unfair allocation between BPL and APL- exclusion and inclusion issue; Possibility of exclusion during allocation of disbursement card

Leakage and pilferage problem- Supply chain flaw, Ghost ration cards

Viability of Fair Price Shops

Proposed Solution- Concept & Merits over

prevailing systems, Stakeholders Lack of accountability is the key insight behind the failure of prevailing PDS as per our research

We have developed our solutions around this issue

We will tackle the problem phase wise; integrating the threads in the end

Aadhar based BPL recognition will lead to more inclusion

RFID tags will alert the leakage instantly- will be elaborated later

Swipe card usage will lock in the sales and collection- will be used for analysis and book balancing

Outsourcing to private players will bring more discipline to the system

Analysis based order replenishment will help in better availability of items

The existing system offers none of these advantages

Stakeholders involved at different stages would be-

Central govt.- Analysis of data from all state centers; choosing private players for outsourcing-technical and commercial bidding; post allocation replenishment strategy

State govt.- Identification of BPL based on Aadhar; Planning PPP for FPS; Most importantly implementing collection of POS data from district to State level; implementing replenishment strategies

Private IT/KPO/Data Support/Network Infrastructure provider- All stages

Transporters

Private public shop owners for more accountability

Consumers largely BPL families

Implementation of the solution- Key Steps Inc.

Leveraging govt. infrastructure

Pre Allocation Phase

Increase awareness and importance of swipe card requirement for procurement by families

Strict instructions regarding period after which items will not be provided to BPL after specific date

2 month period deadline for availing the cards; Instill fear of getting caught among all stakeholders

Make Aadhar mandatory for procuring card; Introduce PPP FPS for better accountability; Invite bids for transport

Develop bulk swipe card, EDC machines, RFID cards and sensory devices with Data partners

Allocation Phase

Start with Test-and-control marketing for one state say UP; Issue magnetic swipe card

RFID tags can transmit weight data to sensors at different timestamps; automate programs to match the weight shed given by RFID overtime to the data from POS swipe reader- Gap means leakage at that point

Integrate RFID with GPS if mass unloading in intermediate path to block leakage

Collection of data on a daily basis

Inclusion of professional private players in certain channels in supply chain

Post Allocation Phase

Time-Series Analysis of POS past data- considering cyclicity and seasonality; better replenishment

Use transportation problem simulation for optimization- Optimal usage of govt. warehouses and transport

Allocate as per prediction and storage capacity of target FPS

Outsource data collection to a private player or govt. specialized agency

Cost Benefit Analysis

Items Units Cost

EDC machine 500000(@50$) 150cr

RFID tags(reusable) 300000(@25$) 45cr

Magnetic Cards 200million(@0.05$) 60cr

Items Expenditure

Existing Loss 20747cr

IT support Cost(@10% of Aadhar) 4500cr

Technology Cost 255cr

Net Savings 15992CR

Assuming 1$ = INR 60

We don’t require Aadhar like registration of 1.2 billion people

Financial and Human resources required

• Cost of installing RFID infrastructure, IT infrastructure, EDC machines at each FPS and cost of making and distribution of magnetic cards for BPL households

• Training for FPS shopkeepers on EDC

• Marketing cost for generating awareness

Pre allocation

• Cost of setting up of data centers and cost of optimizing the procurement and distribution of food based on data analysis, cost of movement of goods from one place to another

Allocation

• Incremental cost of using the technology

• Customer support cost for magnetic cards and EDC

• Cost of monitoring teamsPost Allocation

PPP model will be followed, bidding will be done for choosing private partners, performance will be given preference over price

Involving government institutes like NIC,C-DAC

Help of WHO will be garnered Bulk deals will be signed with private partners for RFIDs, Swipe machines,

network infrastructure

Proposed source of funding

Financial and Human resources Propose source of funding

Leakage and pilferage reduction in the system and compared between different districts and states

Reduction in wastage of food

Return on investment and time taken to break even

Return on investment and time taken to break even

% of time food is available in shops on a monthly basis

Criteria For measuring

Impact

Load is divided between different centers working independently to cover their own set of districts

Data collected at different center will help to optimize the allocation of quantities

Viability of FPS can be assessed and monitored

on growing basis

Easier to incorporate changes without affecting

the overall setup

Scalability of solution

Criteria For measuring Impact Scalability of solution Sustainability of solutionAppropriate Monitoring

Mechanism

Test run environment will ensure better control mechanism while testing the viability and necessary changes can be easily accelerated within time

With each shop sharing its data it will become easy to accommodate APL families as well

Targeted awareness campaigns for BPL families

Improved coverage through UID

Break even period and continued improvement can be realized early after few months of disbursement of cards

Sustainability of solution

RFID data monitoring

Monitoring teams across states

Allocation and disbursement data of each shop to monitor

the utilization of food available at each shop

Positive net income for FPS

Number of BPL families covered

Monitoring of requests made by families during stock outs in

shops

Appropriate Monitoring Mechanism

Impact of the solution

Challenges & Mitigation Factors

Federal structure of government is a big impediment in flawless execution

of optimized plan implementation

Bureaucratic interference at ground level

Lack of single window clearance for bidding and project allotment

Data collection issues in far flung areas owing to power crisis

Resistance by existing FPS owners

BPL people selling their swipe cards for small gains

Mitigation Factors

Clear division of work between center and state

Special cross functional committee for project implementation

Looping local players

References

http://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf

http://socialism.in/index.php/aadhar-who-benefits/

http://www.myaadhaarcard.in

http://uidai.gov.in/index.php?option=com_content&view=article&id=141&Itemid=164

http://www.rfidjournal.com/

http://rfid.net/applications/foodsafety

http://www.alibaba.com

Ahluwalia, D (1993): Public Distribution of Food in India– Coverage, Targeting and Leakages,

Food Policy, Vol.18, No.1, (pages 33-54)

Thank You