World’s largest food distribution network – how we feed 10% of the world

World’s largest food distribution network – how we feed 10% of the world

Published on : July 8, 2020

Did you know that the Government of India runs 537,000 Fair Price Shops? India’s Public Distribution System feeds 10% of the world’s population. This is the largest food distribution network in the world, spread across 3.3 million sq km, serving 80.74 Crore people. How does this vast and complex system work?

The National Food Security Act, (NFSA) came into force with effect from July 5, 2013. It marked a paradigm shift in the approach to food security from welfare to a rights-based approach. According to the Act, 75% of rural and 50% of the urban population (overall 2/3rd of the total population at national level) is to be covered by Public Distribution System under two categories:
  • AAY (Antyodaya Anna Yojana) – These are poorest of the poor families. These families are entitled for 35 Kgs of food-grains per household.
  • PHH (Priority House Holds) – States/UTs determine the families eligible for PHH Ration Cards. PHH Ration Card holders are entitled for 5 Kgs of food-grains per person per month at subsidized prices.

Let’s understand the scale through numbers.

State-wise coverage is determined by the Planning Commission (now NITI Aayog) on the basis of the 2011-12 Household Consumption Expenditure survey of NSSO. This is where we stand on target v/s actual coverage:

Some of the large states short on their coverage are:
  • Gujarat (-11.7%)
  • Uttar Pradesh (-10.5%)
  • Bihar (-9.1%)
  • Madhya Pradesh (-6.5%)

Some lag remains, but we are making progress in the right direction – the number of beneficiaries increased from 56 Crore in 2017 to above 80 Crore in 2020, with 8 Crore new ration cards issued.

In the same time period, automation at the Fair Price Shops has increased significantly with over 90% of the shops equipped with ePoS now. Around 93% of the grain distribution is through ePoS and the dominant mode of authentication is Aadhar at 70%.

With better efficiency, transparency and accountability brought in the system by automation, the quantity of food-grain distributed per card per month has gone up significantly whereas some rationalization has happened on the number of beneficiaries per card.

Pradhan Mantri Garib Kalyan Anna Yojana

How did the Public Distribution System perform during the COVID 19 lockdown crisis? In March ‘20, the Government of India announced additional free food supplies for two-thirds of the population as part of its effort to mitigate the impact of COVID lockdown. The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) was to support families through April-May-June using the existing network of Fair Price Shops with additional provision of 5 kg food-grain plus 1 kg pulses per month through April-May-June ’20.

Most large states managed to distribute over 60% of the allocated food-grain, with some exceptions – Punjab, Madhya Pradesh, West Bengal and Tamil Nadu – lagging behind. With the scheme being extended till November ’20 as per the recent announcement, there will be time for these states to catch up and fill the distribution gap.

Infrastructure matters. Having an extensive network of Fair Price Shops (there’s a shop per 6 sq km in India!) and the digital infrastructure by way of ePos and Aadhar based authentication helped in ensuring the food-grain reached every corner of the country within weeks and was distributed. In the absence of a robust and responsive infrastructure, no quick relief measures could have been implemented.

In addition to the infrastructure, we have enough stocks in godowns and enough crops in the fields to provide a sense of food security.

What needs immediate attention now:

  • Ration card portability: ‘One Nation One Ration Card’ scheme will enable ration card holders to receive their entitlement from any FPS across the country irrespective of the state that issued the card. Hardware that’s already put in place such as ePoS, software updates and digital infrastructure such as Aadhar authentication are working together to make this possible by March 2021
  • Balanced nutrition: Mere rice and wheat cannot provide enough nutrition – we have a large scale malnutrition problem that needs to be addressed urgently and holistically. PDS has a role to play by procuring and distributing wider variety of indigenous and nutritious grains.
  • Coverage as planned: Inclusion of all intended beneficiaries is critical and needs to be expedited to ensure that no needy family is left out.
  • Operational issues: Infrastructure in form of ePoS, electricity and internet needed for their working, and reliable ways of authenticating the beneficiaries need to be made robust and fail-proof.
  • Empowering FPS owners: The supply chain and transactions are getting automated leading to better monitoring and efficiency. But the last mile delivery is still in the hands of the Fair Price Shop Owner. Each shop today has about 460 cards associated with it, out of which about 300 transact each month. The shop owners make meagre incomes given the wafer-thin margin that the government allows. 54% of the shops are owned by individuals, 5% by Self Help Groups, 15% by co-operative societies and remaining by Panchayat and others.

Many of the issues highlighted by media and others – lack of motivation, under-distribution, mismanagement and poor treatment of customers – can be addressed to some extent by a well-structured training and development programme supplemented by entrepreneurial training to improve business and income.

If we fix these issues, we provide lifelong benefits of better food security to 10% of the world’s population. It’s a problem worth solving!

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