IMPROVING REACH & EFFICIENCY OF PDS

Team Details:

School: SJMSOM, IIT Bombay ABHISHEK SAHOO

ANKIT GARG KABIR MAINI

ROHIT MANGAL VINEET BUDHIRAJA

FACTS

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The average level of consumption of PDS grains in India is only 1 kg per person / month.

India has the largest stock of grain in the world besides China, the government spends Rs. 750 billion ($13.6 billion) per year, almost 1 percent of GDP, yet 21% remain undernourished

There are about 5 million Fair Price Shops (FPS) across India.

Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month, while a household above the poverty line is entitled to 15 kg of foodgrain on a monthly basis.

The introduction of rationing in India dates back to the 1940s Bengal famine. this rationing system was revived in the wake of acute food shortage during the early 1960s, prior to the Green Revolution

intended to serve as a safety net for the poor whose number is more than 33 Crores and are nutritionally at risk.

The study says that in Nagaland, 100% of the grain procured ends up in the open market. The figure is 70% for Punjab.

The Planning Commission had the following to say on the PDS system in its 2005 report: 1. “For every Rs 4 spent on the PDS, only Rs 1 reaches the poor” 2. “57% of the PDS food grain does not reach the intended people ”

Corruption, hoarding and mismanagement

Bribes for Inclusion

Food grains rotting

Leakages during transportation

Lack of Awareness about rules & regulations of PDS

PROBLEM STATEMENT

MAJOR PROBLEMS

Out of Stock Food Grains

Exclusion of striving population

Economic viability of Fair Price Shops

Poor quality of available food grains

Overcharge & Undersupply

GENERIC CAUSES

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ISSUES HIGHLIGHTED & PROPOSED SOLUTIONS

SOLUTIONS

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Min Support Price Politics

Low Quality Grain Procurement

Pilferage

Exclusion & Inclusion fiasco

Point of sale blues

SYSTEM INEFFICIENCIES

Random auditing Inspector deputed to check the quality of food grains at source & terminal

Samples of quality food grains for display at the counters of Fair Price Shops (FPSs) for the benefit

of consumers

Distribution of Food Grains on 2 days in a month in a particular village under the supervision of

Special Task force

Bar-coding of grain silos , ERP implementation till state level to avoid grain rotting and last mile

tracking

PROPOSED SOLUTION

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Using Polio Team for Door to door awareness creation about PDS

User friendly & convenient new cards will contain 2D barcodes details of at least two

members of a particular household

Directly routing the food grains required for local consumption from producers to the domestic

market to minimize transportation cost

FPS owners: Additional commission, Door to door delivery, Village mall model

GPS, Mobile Messaging for Truck tracking and avoiding pilferage, Introduce strong Grievance

redressal system

UID based Inclusion, till then to establish identity of card holder issue EPIC(Electoral Photo identity

card )

Spreading Awareness: Display and dissemination of relevant publicity material during local

festivals/ community gatherings

Hoardings in local language for displaying consumer awareness messages; organizing

exhibitions

PROPOSED PDS SUPPLY CHAIN STRUCTURE

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Food corporation

of India

STATE AGENCY

PDS Special Task Force

FAIR PRICE SHOPS (FPS)

Farmers Card Holders

ALTERNATIVE PROPOSED SOLUTIONS

Promoting community cooking activities to minimize losses & attain economies of scale

Provide cooked food or introduce food joints providing food at subsidized rates like in Tamil Nadu

IMPLEMENTATION

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Door to door survey

• should be conducted initially where designated enumerators are assigned to obtain identity details of existing ration card holders.

Cross verification

and digitisation

• Either Election Photo Identity Card (EPIC) cards or UID cards to be used for primary identification with other Id cards like BPL cards, LPG connection cards, Electricity bills as secondary verification to weed out the possibility of bogus cards.

Smart Ration cards

• The photo and biometric details of the beneficiaries is obtained. The new ration cards should contain 2D barcodes that stores crucial information about the card holder including the EPIC of at least two members of a household. Handheld device will capture the info & update regularly in database

SMART CARDS

2 Days

• All FPS would be open 2 days per month. 2 STF persons would monitor the point of sale transactions so that the foodgrains are sold fairly.

Monitoring

• They would check the FPS weighing machines using standard weights. They would monitor that all customers are given their allotted foodgrains in one go at correct price. This practise is being followed in Chattisgarh.

Coverage

• These STF officers would thus cover 26/2=13 FPS per month (assuming 26 working days in a month)

STF DEPLOYMENT

IMPLEMENTATION

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Bar-coding

• All the silos would be barcoded in the warehouse and thus made trackable.

ERP

• The products would be tracked during transportation by ERP system. The quantity of products and the date of delivery at various points would be updated in the ERP system. The products move from the FCI warehouse to one railway station per state. From the railway station, the products are delivered to different warehouses in the state. From the warehouses, it is shipped to all the FPS.

Checks

• At each delivery, the ERP system would be updated indicating the movement of goods. If goods are lying at a station for greater than a week, an automatic mail would be delivered to a central agency. After 4-5 such defaults from an entity, appropriate action would be taken against it.

FOODGRAINS PROTECTION

SHG as FPS

• Giving the licences to not a single individual but to group communities and other self help groups with the consent and trust of the concerned locals, giving interest free loans and support for initial set up, increasing their commissions and incentivise the whole process

GPS

• GPS devices to be installed on PDS trucks that carry the cargo from the warehouse to the FPSs to prevent delays and curb pilferage.

• Movement of trucks are regularly tracked and frequent updates are sent to concerned persons at all stages to maintain transparency.

• SMS are sent to the village headman, beneficiaries and concerned authorities upon the imminent arrival of the trucks at the FPS locations.

• The movement of trucks is monitored by a control room in the district headquarters by a specially trained team of technicians and any deviations from the prescribed routes is promptly escalated to the concerned authorities.

OTHERS

IMPACT

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Criteria

• % Reach= Amount of food grains reaching to the people/Amount of food grains procured by FCI

• Numerator can be calculated by totalling the sales data acquired by the data uploaded by STF officers at the central website from the swipe device.

• Denominator is known.

Scalability

• implementation in 10 districts of a state . evaluate the results of the pilot areas . If good, then across the state and then across the whole country. Due to the humungous scale, it can be carried out in a staggered way over a period of 5 years

Sustainability

• Most of the inputs required are one time investments and require maintenance from time to time. The technical support team can very well handle the maintenance issues of the GPS/ERP/ smart cards. This technology implementation project can be handed over to some IT services giant like Infosys/wipro/TCS etc.

• The current diversion rates in Bihar, Jharkhand, Assam, and Rajasthan are between 85-95% which indicates a complete breakdown of the system in the coming years. However, bringing down the number to around 10% would lead to sustainability of the system.

Appropriate monitoring mechanism

• Flying squad for surprise inspections at FPS stations

• STF

• Grievance redressal mechanism for customers

• GPS tracking by STF’s technology wing

• ERP system to track timely takeoff of grains by STf’s technology team

ESTIMATED COST IMPACT

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Parameters Cost

**Cost of hiring Special Task Force 33,00,00,00,000

Extra Cost Incurred due to increase in Margins of Ration Shop Owners

48,92,25,000

Implementation cost of GPS in trucks

10,92,020

Implementation of CCTV/Wall Camera in warehouses

1,13,10,000

Cost of Smart Card Enablement for every BPL family

32,61,50,000

ERP Implementation in PDS

Zonal offices Infra

6,48,00,000

Payroll(Officers)

9,72,00,000

Warehouse Infra

78,27,600

Payroll(Warehouses)

1,17,00,000

Software Implementation

3,90,00,000

Bar Code Scanner

95,75,60,000

Bar Code Printer

42,90,000

Total Cost

35,01,01,54,620

*OVERALL COSTING ESTIMATES

*Refer Appendix 1 for assumptions and data

**Costing for deployment of Special Task Force Number of FPS 5,00,000

2 STF officers cover 15 FPS

No of officers required 66,667

On an average, officers required per state 2,299

Approx. 2,500

Salary contribution to the STF

Salary per person including TA/DA per annum 5,00,000

Total expenditure on STF 33,33,33,33,333

In Crores Rs 3300 crores

*Refer Appendix 2 for assumptions and data

CHALLENGES

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Initial investment needed on the setting up the required technology and equipping the FPSs with requisite technology

Forming of technical-support teams for addressing technology related glitches that might crop up

ERP implementation across the country is a significant challenge involving initial monetary and operational issues

Setting up a flying squad for regular inspections and hiring of the required personnel/manpower for the proposed PDS Task force for smooth functioning.

Monitoring of FCI procurement at the local levels

APPENDIX

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Sources: http://articles.economictimes.indiatimes.com/2011-12-28/news/30565079_1_storage-capacity-food-grains-godowns http://news.outlookindia.com/items.aspx?artid=557697 (BPL families) http://www.thehindu.com/news/national/multipurpose-smart-card-likely-by-2013/article2506682.ece http://www.snapdeal.com/product/evis-barcode-scanner/1455204?utm_source=earth_feed&utm_campaign=21 http://mumbai.quikr.com/barcode-printer-price-all/barcode-printer-price/x31 http://www.amazon.in/CCTV-S-Video-Computer-Monitor-Converter/dp/B003VJ9R9W/ref=sr_1_4?s=electronics&ie=UTF8&qid=1378401655&sr=1-4&keywords=cctv+camera Appendix 1 Inputs already given Cost per Kg of Wheat and Rice is Rs.3 Quanta per month is 25 Total number of districts 648 Assumptions Margins per kg is Rs 0.5 Average warehouse capacity is 5000 metric tonnes Average number of offices per district is 5 Average cost of computer is 20000 2 Officers per office with average income of Rs 15k Population (No. of families) is 6523000 Average GPS enabled Mobile cost is Rs.2500 Smart Card cost is Rs 50 per family

Assumptions Contd... Standard Truck Capacity is 8 Metric Tonnes(1000Kg/ MetricTonnes) No. of working days in a year is 280 Truck makes 2 trips per day Number of Regional Warehouses are 390(1956900000/5000000) Barcode Scanner cost is Rs.2000 per unit Bar Code Printer cost is Rs.11000 per unit Cost per CCTV Camera is Rs. 2911 (10 units per warehouse) Appendix 2: Assuming an entirely new task force of 66000 is created who are given special training `

Population(No. of Families)

Total Consptn in KPA

Margins for FPS Owner

Inc. in margins- 0.75/Kg Extra Cost

65,23,000

1,95,69,00,000

97,84,50,000

1,46,76,75,000

48,92,25,000

THANKS