Justification note on Public Distribution System

Introduction

The Public distribution system (PDS) is an Indian food Security System established
under the Ministry of Consumer Affairs, Food, and Public Distribution. PDS evolved as a
system of management of scarcity through distribution of food grains at affordable
prices. PDS is operated under the joint responsibility of the Central and the State
Governments. The Central Government, through Food Corporation of India (FCI), has
assumed the responsibility for procurement, storage, transportation and bulk
allocation of food grains to the State Governments. The operational responsibilities
including allocation within the State, identification of eligible families, issue of
Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest
with the State Governments. Under the PDS, presently the commodities namely wheat,
rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some
States/UTs also distribute additional items of mass consumption through the PDS
outlets such as pulses, edible oils, iodized salt, spices, etc.
In September 2013, Parliament enacted the National Food Security Act, 2013. The Act
relies largely on the existing TPDS to deliver food grains as legal entitlements to poor
households. This marks a shift by making the right to food a justiciable right.

How PDS system functions?

The Central and State Governments share responsibilities in order to provide food
grains to the identified beneficiaries. The centre procures food grains from farmers
at a minimum support price (MSP) and sells it to states at central issue prices. It is
responsible for transporting the grains to godowns in each state. States bear the
responsibility of transporting food grains from these godowns to each fair price shop
(ration shop), where the beneficiary buys the food grains at the lower central issue price.
Many states further subsidise the price of food grains before selling it to
beneficiaries.

Issues Associated with PDS System

Identification of beneficiaries
Leakage of food grains
Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted
even if buffer stock is filled, creates a shortage in the open market.
Issues with storage: A serious shortfall in the government’s storage capacity.
Given the increasing procurement and incidents of rotting food grains, the lack of
adequate covered storage is bound to be a cause for concern.
Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus
in food grains, which are water-intensive, has been found to be environmentally
unsustainable.
Organisational Setup
The UP Food and Civil Supply Department work mainly on the directive of GOI for
procurement and distribution of grains (Wheat and Paddy), coal and petroleum products.
The main responsibility of UP Food and Civil Supply Department is vested in Pr. Secy,
Food and Supply. The Headquarter is situated in Jawahar Bhawan, Lucknow with
working control of procurement division, marketing division, accounting division, food
division, transport division. For performing of field work regarding execution of
Targeted Public Distribution System (TPDS) under NFSA, the Regional Food Controllers
and Marketing Officer and at District levels, District Marketing Officers and Chief
Marketing Inspectors and Marketing Inspectors are remained posted. The TPDS grain
(wheat and Rice) distribution under NSFA/GOI scheme for subsidies ration to
beneficiaries through dealers (PDS shops) in 60 districts are managed and controlled by
Regional Food Controllers and Marketing Officers through its office officers/staff apart
from procurement . In remaining 15 districts, distribution to the PDS shops/fair
price shops are performed by UP State Food & Essential Commodities Ltd apart
from procurement on MSP. Coverage of beneficiaries under TPDS is a vital
scheme of GOI/State.

Budget Allotment and Expenditure

Budget allotment and expenditure during five years (2017-18 to 2021-22) for the food
and civil supply department Uttar Pradesh as mentioned in koshwani network is given
below:
YEAR ALLOTMENT (IN LAKH) EXPENDITURE (IN LAKH)
2017-18 905185.7291 944678.5689
2018-19 1186968.054 1184767.556
2019-20 1376607.624 1369842.127
2020-21 573457.52 548329.47
 2021-22
(12/2021) 789812 736044.0

Vulnerable Points need to be audited

• To check whether proper tool is applied for testing of food grain at fair price
shops by any other officer of higher rank to ensure the quantities, qualities
provided by FCI.

• Whether vigilance checks is adequately documented for delivery of food grain

to fair price shop/institutions.

• Whether proper records are maintained by Distribution offices and at fair price
shops.
• Extent of diversion/leakage of food grains across beneficiary categories, i.e.,
APL/BPL/AAY.

• To check whether the policy of GOI/State Government in respect of

inspection/control/vigilance in distribution of food grain at fair price shop are
being adhered to so as to avoid the pilferage of TPDS food grains and
exploitation/deprival of beneficiaries.

• To check Adequacies of provision in agreement with contractor for handling of

food grain and transporters for loss making good.
• Beneficiary-level evaluation across APL/BPL/AAY categories ·

• Average quantity received relative to entitlement and price paid for the
purchases by beneficiaries ·

• Regularity/predictability in receiving PDS items including aspects such as

timely opening of FPS and availability of ration ·

• Access to FPS including distance travelled, transaction time, dealers’ attitude,

etc. ·

• Quality of food grains received from FPS ·

• Grievance registration and redressal, availability of avenues for grievance

registration, assessment of number of grievances received and redressed,
satisfaction of the complainants, etc. ·

• Overall assessment of beneficiary satisfaction with the TPDS including reasons

 for dissatisfaction

• To improve efficiency, accountability, transparency, reduced leakages of food-

grains and enhance knowledge to poor for regarding public delivery service
under PDS in both rural and urban area.
• To examine that to what extent SMS based monitoring scheme has helped to
improve delivery system of PDS.
Feasibility

Keeping in view the expenditure incurred during five years (2017-18 to 2020-
21) on the schemes as mentioned above topic seems suitable for
Thematic/Performance audit.

Sr. Audit Officer

AMG-III (AP)

Dy. Accountant General/AMG-III