Highlighting the persistence of leakages in the PDS grains, the study suggests ways to rationalize the system to ensure food and nutritional security.

Key Findings

• PDS Leakage: 28% of allocated grains supplied by Food Corporation of India (FCI) and State Governments fail to reach the intended beneficiaries. 
  • This amounts to a financial loss of about Rs. 69,108 crores.
• Efficacy of recent reforms: Linking ration cards with Aadhaar and installation of PoS machines in 95% of Fair Price Shops (FPS) has increased efficacy of distribution but has not eliminated leakages.  
• Regional variations: States like Bihar and West Bengal have made significant improvements in plugging PDS leakage, however, high leakages persist in North-eastern states of Arunachal Pradesh, Nagaland and Gujarat.
  • One factor for higher leakages, particularly in North-eastern states, is lack of digitalisation of PDS system.

Recommendations

• Effective targeting of beneficiaries: Reducing the coverage of population covered under PDS (from present 57%) to the bottom 15% for free food distribution, while the rest could be given grains at 50% of MSP.
• Shift towards Direct Benefit Transfer (DBT): DBT minimizes leakage, reduces administrative costs, and empower citizens with flexibility in dietary choices.
• Transforming FPS into Nutrition Hubs: A Food Coupon Approach can be implemented in select FPSs to tackle the issue of siphoning off of grains.