1. IMPROVING REACH
AND EFFICIENCY OF THE
PUBLIC DISTRIBUTION
SYSTEM
Manthan Topic : Plugging the Leaks
Team Bazzinga Ayush Agrawal, Nishank Varshney, Neeti Pokharna, Ayushi Varshney, Vaibhav Sinha

2. The Government of India benefits nearly 6.5 Crore BPL families and 11.5 Crore APL households by providing them food grains at a
subsidized cost through the PDS Scheme. (Ref. 1)
However, the current Public Distribution System is marred by the problem of leakages at many level.
The most recent study regarding leakages of PDS by Asian Development Bank in 2012, shows that deserving poor receive
only 10% of the intended benefits. (Ref. 2)
Another report by The Hindu claims that the diversion rate of PDS is as high as 85-90 % in states like U.P., Bihar, Rajasthan
and Jharkhand. (Ref. 3)
Due to such high leakages, the Bihar Government ended up spending Rs. 51 per Kg as unintended subsidy cost instead of
their intended cost, which was Rs. 4.52 per Kg. (Ref. 4)
Due to these leakages, India still ranks a poor 65th on the Global Hunger Index. (Ref. 5)
With the passage of Food Security Bill in both the houses of Parliament, it has become very important to design an efficient system
to reduce the leakages in PDS.
Scope of the Problem

3. Cause of the Problem
In this regard, we did a study at the grass-root level and talked to people from Barpar, a remote village in Deoria District of Uttar Pradesh.
From their responses, we realized that the discrepancy takes place at 3 levels:
Some bags of grain do not reach the village they were meant for, from the central warehouse. The transporters
leak some bags of grain at the very starting level.
When the truck arrives from the Central Warehouse to the village, people do not come to know about it.
Days of Opening are not fixed, and there is inadequate information regarding opening of FPS.
Moreover, after opening of the shop, the near and dear ones get preference in getting the Ration.
Some people do not get ration because it gets finished before their turn comes.
(Similar concerns were reported by Ms. Reetika Khera in her Survey (Ref. 6))
Due to the villagers being illiterate, the shopkeeper deceives them in two ways –
i) Measurement Error
ii) Forged Signing
1.
2.
3.

4. Computerized ERP System - Our 3-Tier Strategy
The losses in PDS are attributed to two major factors. 1) Leakages due to ineffective delivery method, and 2) Inclusion Errors.
However, in this Presentation we only suggest methods to improve delivery mechanism, because the reducing inclusion errors is not only
a politically contentious issue, but also, the findings by Asian Development Bank prove that pay-offs to a better delivery mechanism are
much higher than dealing with inclusion errors. (Ref. 2)
Godown level
Transportation
level
Village level
At the FCI Godown, every bag
will be sealed with a barcode on
it, which will be scanned while
loading in the truck.
As soon as the truck arrives at
the Fair Price Shop, an SMS will
be sent to all the beneficiaries
informing them about the stock.
The weighing machine at every
shop will be connected a tablet,
such that it will automatically
enter the amount of grains taken
by the user in the database.
A database will be maintained at the FCI level,
which will have details of amount of grains
transported by them, and which bag is sent to
which shop.
While unloading from the truck, the shopkeeper
will scan the barcode of the bag received, which
will upload the database of the shopkeeper with
the grains received.
A receipt will be printed, which will be signed or
thumb print authenticated by the user.
In the future, UID number of every Ration Card
holder can also be used to ensure that the entitled
user is also the end user.

5. Key Features of our Proposal
Bags will be sealed in such a way that they cannot be opened without breaking barcode tag.
The database maintained at the FCI level, which will have details of how much amount of grains are transported by which
trucks, and which bag is sent to which shop, will be matched with the database of shopkeeper. Transport corporations will
be held responsible for any difference.
As soon as the supply of grains reaches the Fair Price Shop, an automated SMS will be sent to all the beneficiaries,
informing them about the arrival of stock.
Electronic weighing machine attached with tablet (Aakash) will be installed at fair price shops, for auto updating of
sold grains in target consumers account. This way the shopkeeper cannot enter a wrong weight in the database.
A receipt will be printed, which will be signed or thumb print authenticated by the user, which will serve as a proof for
the transaction.
After every purchase, a server generated message will be sent to targeted consumer’s registered mobile number informing
him about the purchase made and quota left. This will alert them in case anyone else takes their quota.
Thus, with the help of an automated supply chain created, the inefficiencies of the system will be removed.

6. User Front
Shop Front
Sr.
No.
Commodity Quantity
(Current
Transaction)
(in Kg)
Monthly
Quota
(in Kg)
Date of
Transaction
Last
Transaction
Date
QuotaUsed
for the
month
(in Kg)
Quota
remaining
(in Kg)
1. Rice 10 30 15/3/2013 1/3/2013 20 10
The user can view his monthly quota, quota used, quota remaining and last transaction.
Sr.
No.
Commodity Maximum
Monthly
Quota.
(in Kg)
Order
Placed
(in Kg)
Quantity
Received
(in Kg)
Date of
receipt
Quantity
Remaining
(in Kg)
Number of
customers
served.
Next
expected
arrival.
1. Rice 700 500 500 2/3/2013 200 100 1/4/2013
Every Shop owner can view the amount of grains received, grains distributed, supplies left,
total number of customers served, order placed and date of next expected arrival.
Database Interface for DifferentStakeholders

7. FCI Front
Government Front
Officers at the FCI will be able to see the areas that are covered by them, list of shopkeepers under them, each shopkeepers quota – the
amount ordered by them and the amount sent to them, stock in Godown, ID no of bags dispatched (destination of each bag) and total
number of consumers served by them.
The government can very easily keep track of total number of shops under system and the number of people being benefitted by this
scheme. A Heat map will also be available for them to assess, which areas are being served well, and which need more attention.
Sr.
No.
Commodity Maximum
Monthly
Quota
Total
Stock
Quantity
Distributed
No. Of
Shops.
ID No.
of bags
dispatched
1. Wheat 1000 1000 900 9 234, 456…
Id no. of commodity Name Quantity (inkg) Shop #
234 Rice 20 698
Sr. No. Commodity GrainSupplied People
Benefitted
Shops
Covered
FCI Godowns
Covered
Villages
benefitted
1. Wheat 10000 600 50 1 35
Database Interface for DifferentStakeholders

8. Sr.
No.
Item Place of Installation Quantity
Required
Single Piece
Market Cost
Cost if Procured
in Bulk
Total Cost Cost per Fair
Price Shop
1. Digital Weighing Machine Godowns + Shops 73,200 2,000 1,500 10,98,00,000 1,500
2. Bar Code Tag Generator + Printer Only Godowns 200 11,000 10,000 20,00,000 30
3. Bar Code Reader Godowns + Shops 73,200 1,000 750 5,49,00,000 750
4. Tablet (Aakash 2) Godowns + Shops 73,200 1,132 1,000 7,32,00,000 1,000
5. Server Space (1MB per Shop) Cloud 70 TB 50,000/TB/Year 50,000 35,00,000 50
6. Trainers & Repairers (Annual Salary) 1 Person per District 75 2,00,000 2,00,000 1,50,00,000 200
 We have calculated this cost, taking figures for Uttar Pradesh, which has 73,004 Fair Price Shops and 200 FCI Godowns (Ref. 7)
 Total Cost per Shop = Rs. 1500+30+750+1000+50+200 = Rs. 3,530
 For 5,05,879 shops across India (Ref. 7) => Total Cost = Rs. 180 Crore Approximately.
 This cost is mainly one time setup cost to provide basic equipment at every Fair Price Shop and FCI Godown.
 The Recurring cost of Server Space and Repair etc. will cost only Rs. 250 per FPS, i.e. 13 Crore Annually for all the Shops across India.
 The Central Government spends nearly 60,000 Crore rupees annually on Food Subsidy. (Ref. 8) With the Food Security Bill, this
expenditure is expected to be manifold. Thus, the Cost of Implementing our solution is even less than 0.3% of the amount spent by
Government on the Food Subsidy, which can easily be funded by the Central Government.
Cost of Implementation

9. Impact and Future Scope
Our Government nearly loses Rs. 24,000 Crore annually, considering the leakage of 40% (Ref. 3, based on NSSO Survey)).
If our Solution is implemented, the Government will save nearly 23,000 Crore Rupees every year, which is equal to the
annual budget allocation for Sarva Shiksha Abhiyan (RTE) (Ref. 9 – Lok Sabha Question)
Our Scheme goes hand-in-hand with the existing Government schemes regarding UID and Aakash.
The Extremely poor people, who cannot afford two square meals a day, and were earlier exploited will now get the
grains, meant for them. This will lead to their social and financial inclusion in the mainstream.
In the time to come, the same system can also be used for efficient disbursal of low cost and high quality seeds, fertilizers
& insecticides to the farmers, without any further investment.

10. References
1. Press Information Bureau - http://pib.nic.in/newsite/erelease.aspx?relid=90797
2. Asia Development Bank - http://www.adb.org/sites/default/files/pub/2010/economics-wp221.pdf
3. http://www.thehindu.com/opinion/lead/pds-leakages-the-plot-thickens/article2351414.ece
4. Planning Commission - http://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf
5. http://www.ifpri.org/book-8018/ourwork/researcharea/global-hunger-index
6. A survey by Prof. Reetika Khera -
http://www.righttofoodindia.org/data/pds/December_2011_revival_of_pds_evidence_explanations_reetika_5_november_2011.
pdf
7. Press Information Bureau - http://pib.nic.in/newsite/erelease.aspx?relid=74180
8. Budget Brief - http://www.academia.edu/913790/Targeted_Public_Distribution_System_GOI_Budget_Briefs_2011-12
9. Lok Sabha Questions - http://164.100.47.132/Annexture/lsq15/13/au2724.htm
10. Images obtained from Google Search.