Country Case Study India


Hunger alleviation and poverty eradication are the twin objectives of the Public Distribution System (PDS) in India. The PDS is intended to provide essential goods and services, mainly food items such as rice, wheat, sugar, kerosene etc. to everybody, especially “the poorest of the poor” at reasonable cost contributing to general social welfare. Effectiveness of the PDS largely depends on adequate policy decisions regarding operational and organisational aspects of the system. The Indian social system can be characterised by features of a democratic, secular welfare nation, on the one hand, and by social structures and relationships based on traditional segregation patterns, on the other, with high inequalities in wellbeing and a high number of poor people living among vulnerable communities.

In India, subsidies to the poor have been defined as the unrecovered cost of social and economic services delivered by the government. The PDS plays a pivotal role in the food economy. The British introduced the PDS in 1939 to meet food shortages and famine conditions. The Second World War created scarcity of essential goods, and there was a rapid rise in prices of all the commodities. In order to deal with the supply and distribution of essential commodities, a Food and Price Control Department was established in December 1942 under the British rule. The Bengal Famine (1943) wiped out more than a million people mainly due to erratic distribution of food grains. The price of food grains increased five to six times the normal level while the wages remained stationary. In order to meet the situation, the government formulated a committee (1943), recommended a “Grow more food” campaign, the stoppage of exports and the procurement of food grains to create a central food reserve and distribution of food grains through the Fair Price Shops (FPS) in deficit areas. In 1948, FPS formulated as a part of the overall policy of fighting against price rise. Barring three short-lived attempts at food decontrols (1948, 1953 and 1954), the PDS or rationing has continued to this day. The objectives however, have undergone some significant modifications to suit the changing needs of the times.

Accordingly, rationing was introduced for the first time with the opening of FPS all through the country to ensure an equitable distribution of essential commodities to consumers, at reasonable prices. Before the 1960s, distribution through PDS was generally dependant on imports of food grains. It was expanded in the 1960s as a response to the food shortages of the time and subsequently, the Government of India set up the Agriculture Prices Commission and the Food Corporation of India to improve domestic procurement and storage of food grains for PDS. By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food. In the 1990s, the scheme was revamped to improve access of food grains to people in hilly and inaccessible areas, and to target the poor.

Subsequently, in 1997, the government launched the Targeted Public Distribution System (TPDS) aims to provide subsidised food and fuel to the poor through a network of ration shops. TPDS are procured food grains from farmers, allocated to States and delivered to the ration shop where the beneficiary buys his/her entitlement. The Parliament enacted the National Food Security Act, 2013 and made it as legal entitlements to poor households. The Act illustrates the working of the food supply chain from the farmer to the beneficiary, identifies challenges to implementation of TPDS and discusses alternatives to reform TPDS. It also details the state-wide variations in the implementation of TPDS and discusses changes to the existing system by the Act. The poverty line had been estimated periodically, and remedial actions were targeted with alternative approaches. Development promises and policies mostly focus on financial allotment strategies and population groups targeted, rather than on implementation processes, follow-ups or assessment procedures.

For a long time, the ration shops had paper-based systems using ledgers and ration cards with handwritten entries. However, administration has recently moved on to digitised and automated systems that use Smart-Cards and mobile technology. The technological transformations produce more efficiency and provide new options for social welfare, but, at the same time, imply a risk to re-establish existing inequalities dignified by the allegedly ‘unbiased’ machine.

Presently, the ration distribution system has many drawbacks mostly due to corruption: they consist of in accurate quantity and quality of goods, large waiting time, low processing speed, irregularities in food grains procurement, siphon off tender conditions, biased selection of firms for purchase, material theft etc. Anti-corruption policies and measures try to get hold for remedying this situation.

Furthermore, the current system is based on a minimalistic one-fits-all variable set for allocating resources to individuals, which does not take into account socio-cultural variables on different social contexts on the grass-root level individuals are faced with. For alleviating the existing inequalities and injustices biased by traditional social segregation patterns instead of -re-instantiating them, the technological distribution system should be able to capture the complex and context-sensitive local knowledge variable set to shape the living circumstances of vulnerable populations. Currently, thus, the system is inefficient, which might add to its vulnerability to be exploited by free-riders. What is needed is a holistic model reflecting transparency in PDS.

Sidling anti-corruption measures, the adequate designing of the system through technology can serve as a key driver to social welfare improvement. Incorporating the optimal comprehensive socio-cultural variables may replace manual work, minimise the lacuna in supply and demand, and prevent waste of goods and financial leakages.

The case study

The Indian case study on PDS will develop a sound and holistic approach for efficient, just, accurate, and automated distribution of commodities by civil supply departments to beneficiaries for improving social welfare.

The study has chosen the state of Tamil Nadu for its research. Tamil Nadu State Government is currently a pioneer for an improved PDS based on data analytics and AI. In June 2019, Central Government of India had launched a “One-Nation-One-Ration Card Scheme” that was taken up by the State Government of Tamil Nadu as “Intra-State Probability Scheme” to be implemented in the districts of Tirunelveli and Tuticorin from February 2020 onwards on a pilot basis. Software has been developed; feasibility for the roll-out has been checked. Keeping an eye on socio-cultural variation of districts, the State’s civil supply departments initiated the policies for implementation while trying to identify the challenges across the State. For example, the State announced a 5% additional increase of essential commodities, and entitled holders of “family cards” for facilitating a smooth flow of intra-state portability. Online transactions for distributing essential commodities were enabled for ration cardholders through Smart Cards, so-called “Aadhaar Cards” or by using registered mobile numbers with one-time passwords. Every transaction made is being reflected at the central server of the Tamil Nadu PDS.

Taluks (Adminstrative zones) 08 10
Fair Price Shops (FPS) 789 957
Family Cards 459337 493850
Beneficiaries 1553450 1669658
Aadhaar Card #Registration 1540767 1658128
Mobile # Registration 457766 492671

The case study will focus on this PDS innovation pilot, i.e. on its process, its impact on the consumers, and the spirit of public service. In the piloting process, the case study’s social research will analyse behaviours of and effects on consumers, FPS employees, employees of administration, members of procurement agencies, key informants of NGOs and political stakeholders. Variables such as age, sex, marital status, education qualification, place of residence, community membership, and economic status will be taken into account. Sample and variable justification will be re-considered after a pre-study. The proposed social-science study will use a mixed-methods approach for qualitative and quantitative data analysis: among them participatory observations, key-informant interviews, focus groups, schedules, transact walk etc. Four of the major qualitative research designs will be applied, i.e. phenomenology, ethnography, grounded theory and a dedicated case study concept.

The case study’s technical research will explore the current technological state-of-the-art in the Indian PDS and its development with reference to international benchmarking concerning databases and algorithms used. It will be prototyping one model that showcases the national system considering the current status quo and its AI aspects, and another that implements desirable components as advised by social science research.