MINDSPUNCH
- 1. MANTHAN TOPIC: Plugging the Leaks: Improving reach and efficiency of the Public Distribution System Ration Card cum debit card : A solution to all the problems of PDS Team Members SIBTAIN DEHLI WALA, GAURANG AGRAWAL, SAKSHAM SINGH TOMAR, ASHISH PANDEY, MRINAL BHARADWAJ MINDS PUNCHPresented by:
- 2. What is PDS? India’s Public Distribution System (PDS) with a network of 4.78 Lakh Fair Price Shops (FPS) is perhaps the largest retail system of its type in the world. Since 1951 public distribution of food grains has been retained as deliberate social policy by India with the objectives of: (i) Providing food grains and other essential items to vulnerable sections of the society at reasonable (subsidized) prices (ii) To put an indirect check on the open market prices of various items and (iii) To attempt socialization in the matter of distribution of essential commodities PDS is an important constituent of the strategy for poverty eradication and is intended to serve as a safety net for the poor whose number is more than 33 Crores and are nutritionally at risk. PDS is operated under the joint responsibility of the Central and the State Governments. The Central Government has taken the responsibility for procurement, storage, transportation and bulk allocation of food grains, etc.
- 3. What ails PDS? The Planning Commission had the following to say on the PDS system in its 2005 report. “For every Rs 4 spent on the PDS, only Rs 1 reaches the poor” “57% of the PDS foodgrain does not reach the intended people ” 1. Availability Users often do not get their rightful entitlement in terms of quantity. What's meant for them is diverted to the open market. This happens at the beginning of the chain itself. 2. Timing Ration shops do not open every day. Nor do they keep regular hours. The objective would appear to be to limit access to people and divert grain and other produce to the open market. 3. Overcharge and Undersupply This is a common practice adopted by most people that run ration shops. They charge people more than the mandated rates, and they often under-weigh the commodities. 4. Bribes People have to pay bribes for small things, such as getting a ration card in the first place, adding or deleting the name of a family member, or changing the address mentioned in it. 5. Indifference The staff at ration shops doesn't know the meaning of the term customer service in most cases. People are harassed and have to make multiple visits. 6. Role of middleman The supply offices are lorded over by middlemen and touts. Procedures are made to appear so complicated that people usually end up using middlemen for small tasks too.
- 4. Corruption data in PDS
- 5. The solution to the problems of PDS is the use of ration card cum debit card Government should issue each family with a ration card cum debit card. 1. The card will have general information about the family like- • Annual income of the family , which in turn will help in dividing them in above poverty line or below poverty line. • Number of members in the family and basic details of the family like address, educational qualification ,etc. 2. As a debit card the card will serve following purpose- • It will eliminate the use of cash to buy materials from ration shop. • People will be able to buy commodities from any ration shop. • Government will be able to moniter the amount of ration going to the people. • Government will also be able to moniter the rates at which “ration” is going to the people.
- 6. Detailed working and advantages of the card 1. Issue of card • Government will issue ration card cum debit card to each family in India . 2. Installation of debit card machine at each ration shop and its working: • Debit card machines will be installed at all ration shops. • The machine will be customised to transfer information to central government. • Database regarding the total purchase of each family , rate at which food grain is being provided etc. • As their will be a central database maintaining information regarding purchase, families will be able to buy food grains from any ration shop in India. • The amount of food grains allocated to each families will also not exceed.
- 7. Continued 3. Deposit of money for the use of card: • Each card will have a unique card number, which will empower the people to deposit money in their debit card from any nationalised bank. 4. Reduction of corruption: • As their will be a central database maintaining the amount of grain sold , person running ration shop will not be able to black market the goods. • People running ration shops will also not be able to sell goods at a higher price to the families as the rate will be fixed by government through a software centrally and the machine installed at each shop will be updated automatically, person maintaining the shop will just have to enter the amount of each commodity and the bill will be printed .
- 8. Cost of the total operation Cost of issuing ration card cum debit cards to families Cost of making a debit card =15 rupees Total number of families in India=192,671,808 Cost of manufacture of cards=2891 crore rupees Cost of installation of machines in each shop Cost of making one machine=3000 rupees Total number of ration shops=505879 Total cost of installation=152 crore rupees Other miscellane ous costs Other costs include transporting of machines, hiring of workers to install machines, hiring people to train common people on how to use the machine and the card etc will be 50-60 crores.
- 9. Challenges and Risks • 1st challenge will be that government do not see this model viable due to such high cost • People will not be able to adapt to such a technology. • Failure and technical problems arising in the machines installed and the cards issued. Mitigation factors • Every year Indian pay more than 15000crores in bribes and implementation of this scheme will require about 3000crores and it will reduce corruption so approval from the government should be easy. • If volunteers are trained efficiently then common people can be effectively trained. • Company manufacturing cards and machines should be asked to give warranty on their manufactured machines and cards.
- 10. Appendix • Pib.nic.in • www.alibaba.com • www.wikipedia.com • www.mint.com • www.dfi.wa.gov • Blogs.lse.ac.uk • Papers.ssrn.com Refernces