Evaluation of Karnataka’s Public Distribution System (PDS)

Overview

India’s Public Distribution System (PDS) is the largest food distribution network in the world and is the Government’s major economic policy for ensuring food security to the poor. But the system is beset with corruption and inefficiency. According to the Planning Commission, 75% of the money spent by the Govt on PDS does not reach the intended beneficiaries. In Sept 2010, the Hon’ble Lok Ayukta of Karnataka appointed Dr R. Balasubramaniam to investigate the irregularities and corruption in Karnataka’s PDS. His study was carried over a period of 10 months, and involved review of records and documents, physical inspection of the supply chain and Fair Price Shops (FPS) across the state, meeting the beneficiaries, officials concerned and elected representatives, and a comparative study of PDS in other states. He submitted his report to the Lok Ayukta in Aug 2011.

Major findings of the study

Karnataka’s PDS is loaded with errors of exclusion of actual Below Poverty Line (BPL) families from the BPL status, inclusion of Above Poverty Line (APL) families into the BPL category, and the prevalence of ghost cards (cards that exist, but whose owners cannot be verified) and excess BPL cards.

The system is plagued by leakages and diversion of food grains.

The monthly economic loss to the Government through PDS is Rs 144.8 crore. This includes

  • Loss due to over-allotment of supplies – Rs 54.4 crore (38%)
  • Loss due to distribution leakage and pilferage – Rs 56.6 crore (39%)
  • Active suspect loss, due to ineligible families drawing rations with subsidies – Rs 24.5 crore (17%)
  • Stolen subsidies loss, that happens due to the FPS owners withholding the subsidy to the consumers – Rs 5.82 crore (4%)
  • Loss during transport – Rs 3.5 crore (2%)

Other problems that came to light were extortion by wholesalers, distribution of low quality products, faulty weighing scales, beneficiaries being charged more and Fair Price Shops not complying with standard operating procedures.

Suggestions given for improvement

The following measures were suggested for improving the efficiency of the system:

  • Cleaning up the cards’ mess – (a) weeding out temporary, inactive and fake cards (b) issue of permanent cards after photo-bio capture (c) complete computerization of cardholders’ database
  • Universalizing the PDS benefits instead of targeting
  • Introducing food coupons and smart cards to prevent misuse of subsidy
  • Computerized inventory management, including GPS tracking of delivery trucks and use of Point of Sale (PoS) devices
  • Strengthen monitoring system and also constitute / empower citizens’ vigilance committees at the FPS level
  • Enhance commission for FPS and allow them to sell other non-food items

The aftermath

The Hon’ble Lok Ayukta accepted Dr.Balu’s report and forwarded it to the Government with his recommendations. It was picked up by both print and electronic media, who gave it extensive coverage. Tough questions were asked to the persons in-charge including the Minister heading the department. Measures were immediately instituted across the State to identify and disable ineligible cards and arrive at a realistic estimate of the beneficiaries. Consultations are going on to introduce changes in inventory management. Monitoring has been tightened at the field level to reduce pilferage and reign in truant FPS owners. Efforts are also being made to educate the consumers about their rights and entitlements.