Parikrama

Overview of the problem:The PDS System is one of the most ambitious and expansive social projects in the world but it hasn’t livedup to its expectations. There have been a lot of management shortcomings and a lot of challenges that thesystem has had to face in a huge country like India. Here we try to address the broad set of problems thatthe system currently faces in India and form a base for the proposed solution.

PDSProblems

Transportation Costs : Govt. incurs a huge cost on transporting from the FCIprocurement centres to the FPS shops which forms a large proportion of the PDSbudget.

Quality of the Food : The quality of food available at FPS shops is generally criticizedand found to be of unsatisfactory quality.

Only 35 kg. of food: People can only buy ration only once a month. Even if their offtakeis less than the permissible amount they are not able to utilise it.

The FCI procures materials from the famers and sends it to the state government forthe final delivery. There is lot of inefficiency and pilferage that creeps into the system.

FCI has stock of around 60.8 million tonnes in its warehouses whereas the bufferrequirement is 24.3 million tonnes. The problem is that despite so much excess foodthe poor still have to buy food in open markets.

There are a lot of ghost buyers who are not s part of either APL,BPL or AAY but stillenjoy the benefits of FPS.

The FPS shop owners work on a very little profit margin which encourages siphoning offood grains and other malpractices.

People can only buy what is stipulated in their ration cards and are devoid ofother nutritional food necessities. This also limits their consumer freedom.

Heads Proposed Solution

Procurement • Implementation of E-Procurement, Customer Relationship Management atboth state and centre level

Transportation • Maintaining optimum inventory level in the state itself• Building capabilities of target areas towards self sufficiency• Containerization

Storage • Warehousing through PPP model• More Investment• Storage in silos in ad-hoc storage facilities

Food Quality • Building cooperatives or communities within a rural area for conducting socialaudits

• Use of Bar Codes and RFID tags to trace the food grains from FCI to the targetcustomer

• Ensuring consumer freedom

Preventing Leakages • Use of Freedom Cards which is an innovative solution known as “DirectCashless Transfer”

• Use of GPS systems on transportation vehicles to keep a check on any pilferage

InstitutionalInvolvement

• Making the “Rural Integration Program” a mandatory course in variousrelevant curriculums .

IT Integration • Giving the end user prior information before the arrival of ration in Fair PriceShops through mobile SMS or other mediums

• To get real time information at every stage of PDS• To automatically generate digital audit trails

E-Procurement and Customer RelationshipManagement(CRM): E-Procurement is aimed atbringing transparency and plugging leakagesduring the initial stage of procurement. In this thefarmer will submit his/her quotation at thepurchasing centre which will be picked up by FCIfrom the Central Server.CRM aims at smooth flow of information betweenFCI and the state government when the latterpurchases the food grains from the FCI. This canhelp in reducing the cost of the state government.

PROCUREMENT SOLUTIONS

TRANSPORTATION and STORAGE Transportation aims at maintaining optimum inventory levels and minimizing cost. Through IT integration with

FPS shops, the State Govt. will be able to get real time data about the stock level in these shops. The Govt. canthus decide reorder point below which the quantity should be ordered from the FCI. This solves the problemof non availability of food grains and at the same time reducing the inventory levels.

FCI and State Govt. should ensure that the trucks should run at full load capacity to minimize thetransportation cost. This can be achieved by fixing a minimum order quantity (equivalent to truck capacity)and its multiple for every order.

Containerization reduces the expense of transportation and increases itsspeed. It further lowers the labour involved in loading and unloading ofgrains.

The diagram below shows transportation offood grains from FCI godowns to the endcustomer. This is a “Cross-Docking” model tomodify the existing system so that storage costcan be minimised. There would be propercoordination between the central and stategovernment transportation vehicles so thatstorage time can be minimised, delays can bereduced and warehousing cost can bedecreased. The state government can alsominimise the storage of food grains as it candirectly transport to the district’s FPS.

FOOD QUALITY FPS system in India is often criticised for not being able to meet the minimum nutritional requirements of the end

users. The PDS system has introduced a rice-rich diet in the community due to which the incentive of growingalternate crops ( for eg. Millets which acts both as a human as well as cattle food and even grows in Fallow Lands) forthe village farmer has drastically gone down.

The solution aims at providing the poor with essentialnutritional requirements. It is understandable that theserequirements differ geographically. For this, we will developa self sufficiency system in the villages whereby the localfarmers will be encouraged to grow alternate crops likeMillets. A local grain bank will be maintained where allfarmers will deposit their grain and people could withdrawtheir grains as per the requirements. All this will be doneunder the purview of the existing PDS with farmers beinggiven the adequate prices for their produce. This will notonly ensure an adequate supply of food but also foodwhich is nutritional for the villagers and good in quality.

There will be routine check ups by self help groups and other stakeholder communities to keep a check on theration being distributed.

Monthly social audits by self help groups which will consist of 20-30 women per group. This will also help reducethe marginalisation of women in the society

LEAKAGES

Govt. has launched Direct Cash Transfer scheme to provide subsidy to the rural poor. However, various infrastructureconstraints are there which limits the viability of this program. These include opening bank accounts for everyindividual, scale of Aadhaar coverage, etc. We provide a simplified solution for this:

The above flowchart shows how this framework could work. The main component of this whole solution is “freedomcards” by Mastercard which is a prepaid card and doesn’t require any bank account. It provides a cashlessalternative. This freedom card with a unique no. linked to aadhar cards will be allotted to each eligible person in thevillage.• The person could only swipe the card in any government authorized ration stores on POS scaling system already

developed by Essae Teroka and used in Karnataka. This can be integrated with freedom cards and biometricsprovision. Thus, tracking the number of transactions will generate an automatic digital audit trail for tracingquantities in ration stores.

• There will be one centralized account for every gram panchayat from which money will be transferred to thesefreedom cards via wire transfer. This again keeps a track of the funds being allocated.

• A person can check his balance or can block his account if stolen or lost by just a single SMS from any featuredmobile phone.

In above stages no cash changed hands, thus decreasing the vulnerability of the direct cash transfer scheme. It willalso ensure the poor will use the money transferred for food only and not for other things.

INSTITUTIONAL INVOLVEMENT India’s biggest advantage is its demographic dividend. It is the direct involvement of the youth which can really give a

spur to the existing PDS and improve it. We have a plethora of Technical and Management Institutes in the country which produce millions of graduates

every year. The system aims at utilising their potential and knowledge base to develop infrastructure for ourproposed model. The same kind of social integration model has already been implemented in the MBBS coursesacross the country.

India has a huge number of colleges and universities. We propose that the HRD ministry will allocate onevillage/block to institutes in the surrounding areas. It will be the responsibility of the institute to look after thedevelopment of the infrastructure of the allotted area. The solution aims at streamlining the implementation of theproposed model.

MBA graduates: We propose a mandatory two-three week rural integration programme for MBA students wherebythey will be required to visit a village and work in unison with their engineer counterparts and work towardsachieving the desired output of development of infrastructure in the target community/village/block. This will serveas a hands-on experience for the students before they step into the corporate world.

Engineering Graduates: Engineering Graduates will get to employ their technical skills in rural and urban setups inunison with management students. They will be required to be associated for a period of four weeks. They will get apractical experience which is hard to find in engineering institutes these days.

IT SOLUTIONS : Easing, Streamlining and Facilitating

For transportation we plan to employ GPS systems on vehicles transporting food grains from Central Hub to the FPS.This will help the system track the movement of vehicles thereby filtering out any inherent pilferage in the system.

Utilising the same GPS system we plan to build a system where the customer will receive prior information aboutarrival of products at the FPS. Users can then make their buying decisions accordingly.

IT can be effectively utilised for monitoring quality and leakages during transport. We plan to use RFID tags andBarcodes to implement the same. The quality of food grains entered into the system at the dispatch should matchwith the quality at the arrival of the grains otherwise the lot will be rejected. So a particular quality packed in a bagwith a specified barcode will match.

We shall be using the state-of-the-art POS scale devised by EssaeTeroka,Bangalore. The image shows the system currently undermanufacturing. However we shall be using a customised version ofthe same which will have a Freedom Card Swipe machine, in builtprinter(which prints in local language),in built modem along withbiometric verification. The machine will automatically verify whetherthe card belongs to the customer or not. After verification theamount of product weighed against the customer’s name will berecorded on the central server. This will make the authorities knowabout each and every transaction that occurs from the POS Scale.Since there will be real-time updates of data there would be noquestion of shopkeepers trying to swindle the customers.

1) Digitization of already existing procurement centres

No. of procurement Centres in India 14000

Components of digitization PC system

Internet Connectivity

Training of officials

Cost of Digitization

Fixed cost

PC s (including Modems and other accessories) 20000 x 2 = 40000 per centre

= 56 Crores

Training (Centralised)INR 5 Crore (considering 3 person per

procurement centre to be trained

Variable Cost

Internet connectivity (BSNL has high penetration in India) Rs. 150 per month per centre

= INR 21,00,000

2) POS system

Cost of POS system500 Crore (Karnataka spent 20 Crores for 21000

FPS)

3) Silo Cost

Rs. 50000 per Silo of 15000 m3

= INR 12,50,00,000 (Approx 2500 silos for openly stored grains)

COST CENTRES

Government loses out 4197 crores annually (PEO report on TPDS 2003 -04). This is the amount of subsidy which does not reach the BPL people. This huge loss justifies the above investment to be made for improving PDS

REFERENCES

• DDS System• PDS In India: A brief overview by APCR, Karnataka Chapter• Performance Evaluation of Targeted Public Distribution System

(TPDS) by Programme Evaluation Organisation, PlanningCommission, Government of India, New Delhi, March 2005

• Frontline Article “Loud No To Cash” 31 Dec,2011-13 Jan,2012 Issue• “Recipe for Change: Can We Feed the World ?”- AT Kearney Article• Reforming The Public Distribution System : Lessons from Chattisgarh

by Raghav Puri• Civil Society Engagement and India’s Public Distribution System:

Lessons from the Rationing Kruti Samiti in Mumbai by Rob JenkinsBirkbeck College, University of London and Anne Marie Goetz,Institute of Development Studies, University of Sussex,October 2002