Need for an Efficient PDS in India

India’s Public Distribution System (PDS) aims to provide essential support to low-income families. However, an estimated 28% of the allocated food still fails to reach the intended beneficiaries, resulting in significant annual losses and underscoring the need for further reform. Despite improvements—leakages have been reduced from 46% to 28% with the implementation of point-of-sale machines—a substantial gap remains. Moreover, the PDS primarily focuses on rice and wheat, often overlooking the critical issue of comprehensive nutritional security.

Public Distribution System

The Public Distribution System (PDS) was initially created to address food scarcity by distributing grains at affordable prices. Over time, it has evolved into a critical policy tool for managing India’s food economy, although it supplements rather than fully satisfies the needs of beneficiaries. Governed by the National Food Security Act (NFSA) of 2013, PDS now provides food security to roughly two-thirds of India’s population, based on the Census 2011 data.

Management Structure
PDS is managed through a joint effort by the Central and State/UT governments. The Central Government, operating through the Food Corporation of India (FCI), handles the procurement, storage, transportation, and bulk allocation of foodgrains to states. State Governments are responsible for local distribution, identifying eligible households, issuing ration cards, and supervising Fair Price Shops (FPSs).

Items Distributed
Currently, PDS primarily distributes wheat, rice, sugar, and kerosene. Some states also offer additional items, such as pulses, edible oils, and salt.

Need for PDS In India

Background of the Public Distribution System (PDS)

The Public Distribution System (PDS) was originally established to mitigate food scarcity by providing grains at affordable rates. Over the years, it has become a key instrument in managing India’s food economy, even though it primarily supplements rather than fully meets beneficiaries’ needs. Under the National Food Security Act (NFSA) of 2013, PDS now aims to provide food security for approximately two-thirds of India’s population, as determined by Census 2011 data.

Management Structure
The PDS operates through a collaborative effort between the Central and State/UT governments. The Central Government, through the Food Corporation of India (FCI), oversees procurement, storage, transportation, and the bulk allocation of foodgrains to states. State Governments are responsible for local distribution, identifying eligible households, issuing ration cards, and managing Fair Price Shops (FPSs).

Distributed Items
Currently, PDS primarily distributes essential items such as wheat, rice, sugar, and kerosene. In addition, some states also provide supplementary items like pulses, edible oils, and salt.

Challenges in the Public Distribution System (PDS)

Leakages and Diversion
A major issue impacting the PDS is the significant leakage of foodgrains, with large quantities diverted to the open market through illegal channels. According to the Household Consumption Expenditure Survey (HCES) 2022-23, around 28% of allocated grains, equivalent to 19.69 million metric tonnes, fail to reach their intended beneficiaries. Despite the implementation of point-of-sale (PoS) devices in 90% of fair price shops, diversion rates remain high in states like Arunachal Pradesh, Nagaland, and Gujarat.

Ghost Beneficiaries and Identity Fraud
The presence of ghost beneficiaries and duplicate ration cards continues to affect the system, even with Aadhaar linkages. In 2021, an RTI query revealed that Odisha’s PDS had over 200,000 ghost beneficiaries. Additionally, over 47 million bogus ration cards were canceled between 2013 and 2021 as Aadhaar integration progressed. This issue is particularly problematic in states with high migration rates, where ration cards of deceased individuals often remain active.

Quality Degradation and Storage Losses
Insufficient storage infrastructure leads to significant quality and quantity losses in foodgrains. India loses around 74 million tonnes of food annually, which is approximately 22% of the country’s foodgrain output or 10% of total foodgrain and horticulture production.

Targeting Errors and Inclusion-Exclusion Issues
Targeting inaccuracies in the PDS lead to the inclusion of non-poor households and the exclusion of genuine beneficiaries. The World Bank (2022) reports that 12.9% of Indians live in extreme poverty, while current PDS coverage under PMGKAY is around 57% of the population. NITI Aayog (2024) reported a substantial decrease in multidimensional poverty, from 29.17% to 11.28% over nine years, highlighting the need for better-targeted food distribution.

Corruption in Fair Price Shops
Malpractices in Fair Price Shops (FPS), such as under-weighing, overcharging, and irregular hours, hinder access to benefits. Under the TPDS (Control) Order, 2015, FPS violations are punishable under the Essential Commodities Act, 1955. Between 2018 and 2020, around 19,410 actions were taken, including license suspensions, cancellations, show-cause notices, and FIRs against FPS operators.

Budget Constraints and Economic Burden
Rising food subsidy costs add pressure on government finances, often with limited efficiency. In the 2024-25 budget, the central government allocated ₹2,05,250 crore for food subsidies. Actual spending in 2023-24 was 7% above the budget estimate, indicating ongoing budgetary strain.

Nutritional Inadequacy
The PDS’s focus on cereals does not address broader nutritional needs. India faces a triple burden of malnutrition: under nutrition, obesity, and micronutrient deficiencies. A report by the Food and Agriculture Organization (2019-2021) indicates that 224.3 million Indians are undernourished. Additionally, UNICEF reports that over 80% of Indian adolescents experience “hidden hunger” due to insufficient micronutrient intake. The HCES 2022-23 data also shows a decline in spending on essential nutrition items like pulses and vegetables compared to 2011-12, underscoring the need for a more nutritionally balanced PDS.

Proposed Reforms to Improve the Public Distribution System (PDS)

• End-to-End Digitalization & Real-Time Monitoring
  Implementing comprehensive digital tracking from procurement to distribution can enhance transparency and efficiency. Using blockchain technology and IoT sensors, stock levels could be updated in real time through a centralized platform connecting FCI warehouses, transport vehicles, and fair price shops (FPS). AI-powered analytics deployed at key storage and distribution points could help detect irregularities and prevent pilferage.
• Smart FPS Transformation
  Converting fair price shops into “smart shops” with digital-first features would modernize distribution. These shops could include dispensing units, biometric authentication, and electronic weighing scales. Integrating digital payment options such as UPI, along with e-KYC updates at the FPS level, would streamline transactions. A QR code-based quality certification for each grain lot, linked to a public quality monitoring dashboard, would further enhance transparency.
• Portable Benefits & Migration Support
  Strengthening the One Nation One Ration Card (ONORC) system could improve access to benefits for migrating beneficiaries. This requires better interstate coordination and standardized protocols, along with a centralized beneficiary database that tracks migration and enables automatic benefit transfers. Additionally, temporary ration card registration at the destination state for seasonal migrants could support those frequently relocating for work.
• Storage Infrastructure Modernization
  Modernizing storage facilities is essential for reducing spoilage and maintaining food quality. Traditional warehouses could be upgraded to modern silos with temperature and humidity control, automated grain quality monitoring through IoT, and AI-powered analytics. A hub-and-spoke model with smaller tech-enabled storage units at local levels could improve accessibility, and public-private partnership (PPP) models could be encouraged for infrastructure development.
• Nutritional Security Integration
  Enhancing nutritional offerings in PDS could improve health outcomes. Selected FPS could serve as nutrition hubs, providing a broader range of food items like pulses, oils, and fortified products. E-Rupee nutrition vouchers for vulnerable groups such as pregnant women and children could address specific dietary needs. Integrating nutrient-rich millets into PDS, following successful models like Karnataka’s and Odisha’s Millet Missions, could help combat malnutrition and micronutrient deficiencies.
• Crisis Response Enhancement
  Developing automated disaster response protocols, including prepositioned stocks and emergency distribution networks with mobile PDS units, would strengthen crisis preparedness. For pandemic-like situations, special protocols could enable rapid beneficiary verification using simplified procedures, ensuring continued food access in times of need

India’s Public Distribution System (PDS) plays a crucial role in advancing key Sustainable Development Goals (SDGs), including No Poverty (SDG 1), Zero Hunger (SDG 2), Good Health and Well-being (SDG 3), and Responsible Consumption and Production (SDG 12). Tackling issues like leakage, inefficiency, and limited nutritional variety in the current system, alongside implementing reforms such as digitalization, infrastructure upgrades, and a focus on nutritional diversity, would enable India to build a more efficient and impactful PDS.

The End of the Blog: Need for an Efficient PDS in India