Assessment of Home Delivery Model of Public

Distribution System in India

Kartik Trivedi

MPA

SPEA

Indiana University, Bloomington

Glossary

• PDS – Public Distribution System

• TPDS – Targeted Public Distribution Sytem

• GoMP – Government of Madhya Pradesh

• BPL – Below Poverty Line

• AAY – Aantyodaya Families

• APL – Above Poverty Line

• PRI – Panchayati Raj Institution (Local self

governance institutions)

Mandla

Mandla

• Population – 894236

• Literacy – 60%

• Janpad Panchayat – 9

• Gram Panchayat – 472

• Schedule Tribe –

57.23%

• Villages – 1247

• Area – 8771 sq km

Introduction to PDS system

• Food and nutrition security program

• Distributed through fair price shops

• Instrument for Governments Economic Policy

• Largest distribution network of its kind with

500,000 fair price shops catering to 330 million

people

• Operated under joint responsibilities by National

and State governments

RoleNational Government

• Procurement

• Allocation

• Storage

• Price Decisions

• Economic planning

State Government• BPL and AAY

identification

• Distribution and

supervision

• Providing Ration Cards

• Operational

responsibilities

• State level storage

WFP Allocation

In MT

Targeted PDS

• Initiated in 1997 to focus on poor

• Introduced to target 60,000,000 BPL beneficiaries

• Transitory support from state government for APL

support (food subsidy)

• AAY support introduced from 2000

• First expansion of AAY in 2003-2004 (23% of BPL)

• Second expansion of AAY in 2004-2005 (31% of

BPL)

Central Issue Price

Commodity

APL BPL AAY

Wheat 8.30 Rs/kg

5.65 Rs/kg

3.00 Rs/kg

Rice 6.10 Rs/kg

4.15 Rs/kg

2.00 Rs/kg

• Removed urban bias as

most of the BPL and AAY

families reside in rural

areas.

• CIP not revised since 2000

• Catering to 25,000,000 AAY

families

• Still based on 1993 poverty

estimation even though

poverty has been reduced

• 15 Million AAY ration cards

issued in Madhya Pradesh

Allocation for MP

In MT

Problems Associated with PDS

• Poor targeting

• Leakages

• Black marketeering

• Urban bias (rural consumers prefer

consuming their own produce)

• Dependence on fine grains

Description of Mandla Scheme

• Pilot project in 37 panchayats

• 3 month ration in standard size 50kg

bags.

• FPS is brought literally to the door

steps

• Weighed in front of beneficiary

Advantages

• One time distribution

• Transparency in distribution

• Better spread

• Sustainable

• Lower corruption

• Time saving

• Gender advantages

Categorical Assessment

• Time Reduction

– Distribution van comes at Gram

Panchayat level

– Villagers from same village benefits

most

– Based on survey, significant conclusion

could not be drawn

• Money Availability

– 54% of the AAY cardholders depend on daily wages for the

collection of money to purchase their ration

– 47%of the AAY cardholders depend on money borrowed from the

friends and relatives

– BPL cardholders this ratio has increased to around 65% , may be

because of improper targeting

– 33.5% of the respondents opined that they require more money

– 81.6% of the respondents opined that it was difficult for them to

arrange the money

– 1.4% of the respondents expressed the fear of the theft of the ration

Categorical Assessment

Categorical Assessment

• Wage Loss

– 18.9% of the respondents opined that they

lost their ½ day wages

– 37.7% of the people lost the wages for a day

– 33.5% of the respondents reported no loss

in the wages as other members of the

family brought the ration

• Dependency on other sources

– 77.4% of the respondents fulfill their demand from the

retail shops

– 45.7% of the people said that the ration lasts for 1-2

months

– 43.4% 0f them said that the ration lasts for 2-3 months

– 7.1% of them borrowed from the other beneficiaries

– 13.2% of the people depends on their own production

Categorical Assessment

Categorical Assessment

• Number of Dependents

Old v/s New

• 84.9% of the respondents favored the new

system

• 9.4% of the respondents found the old system

better than the new system

• 55.7% of the respondents in new system and 9%

in the old system found that the salesman did

not work properly

•

Final Analysis• PDS acts as a nutritional backup and as price stabilizer

• Theoretically designed to cater the needs of all the BPL and AAY people

in country

• The price difference offered between the subsidy and the market makes

the distribution process ripe for corruption

• FPS is not perfect substitute to that available in open-market due to its

poor quality

• Until the buying power of AAY and BPL increases, plugging the leakages

is the only viable option to reduce the subsidy bill for the government

• Reduction in storage costs for the government

• Problem in assessing chronic and acute poor

• ‘Spread’ is still the problem

THANKSSlides can be found at kattak.wordpress.com