1

Understanding and Bringing Greater Efficiency in the

Operations of Jeevika VO-run PDS

(Internship Study)

Submitted by

Avinash Shankar, M.A. (Development Studies)

Azim Premji University, Bangalore

E-mail: avinash.shankar@apu.edu.in, bobby.supaul@gmail.com

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Table of Contents

Title Page Number Acronyms used in the report 3

About BRLPS and Jeevika 4-5 Acknowledgment 6

Abstract 7 Introduction 8-10

Wadhwa Committee Report 9-10 Rational & Context of the Study 10

Locus of the Study 11 Objectives of the Study 11 Methodology & Tools 12

Sampling 12 About VO PDS Covered within the

Study 13

Financial Viability of Jeevika VO PDS 14-30 Food Security & Community

Acceptance 30-36

Findings & Discussion 36-43 Jeevika- Vo-run PDS & Social &

Economic Empowerment of Poor Village Women

40-41

Direct Cash Transfer, National Food Security Ordinance & the future of VO

PDS

42-43

Suggestions & Recommendations 43-45 Limitations & Constraints of the Study 45-46

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List of Acronyms used in the report

AAY Antyodaya Yojana

ACs Area Coordinators

APL Above Poverty Line

BPL Below Poverty Line

BRLP Bihar Rural Livelihood Project

BSFC Bihar State Food Corporation

CCs Community Coordinators

CLF Cluster Level Federation

CIF Community Investment Fund

CRPs Community Resource Persons

DCT Direct Cash Transfer

DPCU District Project Coordination Unit

FPS Fair Price Shops

MO Marketing Officer

NFSO National Food Security Ordinance

PDS Public Distribution System

SDO Sub-Divisional Officer

SHG Self-help groups

SPMU State Project Management Unit

SRLM State Rural Livelihood Mission

TPDS Targeted Public Distribution System

UPDS Universal Public Distribution System

UNDP United Nations Development Program

VO Village Organization

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About Bihar Rural Livelihoods Promotion Society (BRLPS) and the Bihar Rural Livelihoods Project (Jeevika)

BRLPS, the autonomous society under the Department of Finance, Govt. of Bihar, has been designated as State Rural Livelihood Mission (SRLM) by Rural Development Department, Govt. of Bihar to scale up JEEVIKA model in all 534 blocks of 38 districts in Bihar under National Rural Livelihood Mission (NRLM). So far Jeevika, funded by the World Bank, has been able to reach out to 11 lakh rural poor households by organizing them into 90000 women self-help groups (SHGs) under 5700 Village Organizations (VOs) and 57 Cluster Level Federations (CLFs) in merely six years since its inception. These community institutions have generated approximately RS 39 Crores as their own funds and have leveraged Rs 278 Crores from the banks. BRLPS would be organizing, empowering, and promoting livelihoods for nearly 1.5 Crores rural households in coming future. Jeevika VO PDS that I studied during my internship is an attempt to promote livelihood, ensure food security and enhance economic and social empowerment of village women. The objectives of Jeevika are briefly mentioned below

Creating Self-managed

community institutions

of the poorest of the

poor households

Enhancing income

through sustainable

livelihoods

Increasing access to

social protection

including food security

through a greater voice

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Dedicated support Structure of JEEVIKA

Dedicated Society

General Body & Executive

Committee

State Project Management Unit

PD Cum CEO Supported by thematic

experts & Support staff

District Project Coordination Unit (DPCU)

District Project Manager supported by specialists

Block Project Implementation Units (BPIU). A team

consisting of BPM, Area Coordinators (ACs), & Community

Coordinators (CCs)

Cadre of Community Resource Persons (CRPs), Book Keepers, and

Community Mobilizers (CMs)

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Acknowledgement

I extend my sincerest gratitude to Jeevika VO members and book-keepers

who helped me in my study despite their engagement in busy harvesting

season. I am also thankful to employees and staff at SPMU, Patna, DPCU,

Purnea, and BPIU, Banmankhi. My internship would not have been possible

without the guidance and support of State Project Manager (SD) Archana

Tiwari, my mentor Archana Chandola, APU faculty mentor Sankar Dutta,

APU Internship facilitator Rema Devi, Manager (SD, DPCU, Purnea)

Himanshu and Banmankhi Block Project Manager (BPM) Baijnath. I am

grateful to the BRLPS for giving me an opportunity to do the 6-weeks

Internship with Jeevika. It was a great learning experience working with

community and area coordinators, including Gaurav, Bhawani, and Parimal.

This internship experience has helped me in enhancing my knowledge as

development student.

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Abstract

Bihar Rural Livelihood Project, Jeevika, has initiated many livelihood interventions

in farm and non-farm sectors to promote economic and social empowerment of

poor villagers in Bihar. Community institutions like SHGs and VOs have been the

main drivers of such initiatives. Of late, Jeevika has also intervened in many other

areas which not only provide job opportunities, but also transparent delivery of

some government schemes including Mahatma Gandhi National Rural Employment

Guarantee Act (MGNREGA) and Public Distribution System (PDS). Jeevika VO PDS

was envisaged as the step that will ensure greater food security apart from

bringing economic and social empowerment to the members of VOs and SHGs.

When Jeevika VOs started to acquire PDS licenses in late 2011, it was believed

that beneficiaries will benefit from timely distribution of food grains and kerosene

at the price determined by the government. Jeevika VO PDS was also initiated

with the objective of bringing social and economic empowerment of VO members.

In the last two years, many VOs have acquired licenses for running fair price

shops (FPSs). In Purnea district of Bihar, many VOs have acquired PDS licenses

and are running the FPSs very successfully. This internship study was carried out

in the Banmankhi block of Purnea district with the objectives of assessing the

financial viability and community acceptance of five Jeevika VO FPSs functioning

within the block. The study also assessed whether VO PDS ensures greater food

security for beneficiaries. The study finds that Jeevika VO FPSs are financially

viable and addresses the issue of food security in much better way. No only this,

Jeevika VO FPSs have been able to ensure social and economic empowerment of

VO members. The study also identifies certain issues that act as deterrent to

proper functioning of Jeevika VO PDS. Weighing issues, malpractices at

procurement and distribution stage, and the issue of huge amount of VO’s money

stuck with Bihar State Food Corporation (BSFC) seem to be hampering the

profitability. Once these issues are addressed, VO PDS will emerge as one of the

successful interventions that not only ensure food security for VO members and

other beneficiaries, but also bring social and economic empowerment to village

women.

Key Words: Village Organizations, Self-help Groups, Public Distribution System, Fair Price

Shops, Store Issue Orders, Financial Viability, Community Acceptance, Govt. Liasoning, Social

Empowerment, Economic Empowerment, Social Capital

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Introduction:

The availability of food grains is not a sufficient condition to ensure food security to the poor. It

is also necessary that the poor have sufficient means to purchase food. The capacity of the poor

to purchase food can be ensured in two ways – by raising the incomes or supplying food grains at

subsidized prices. While employment generation programmes like MNREGA attempt the first

solution, the PDS is the mechanism for the second option. Under the PDS, essential commodities

to a large number of people are sold through FPSs on a recurring basis throughout the country.

PDS evolved as a major instrument of the Government's economic policy for ensuring

availability of food grains to the public at affordable prices as well as for enhancing the food

security for the poor. It is an important constituent of the strategy for poverty eradication and is

intended to serve as a safety net for the poor. With a network of more than 4.62 lakh FPSs

distributing commodities worth more than Rs 30,000 crore annually to about 160 million

families, the PDS in India is perhaps the largest distribution network of its kind in the world.

This huge network can play a more meaningful role only if it ensures the availability of food to

the poor households.

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. The responsibility for distributing the same to the consumers

through the network of FPSs rests with the State Governments. The operational responsibilities

including allocation within the State, identification of families below poverty line, issue of ration

cards, supervision and monitoring the functioning of FPSs rest with the State

Governments. PDS, till 1992, was a general entitlement scheme for all consumers without any

specific target. The PDS in its original form was widely criticized for its failure to serve the

weaker sections, its urban bias, negligible coverage in the states with the highest concentration of

the rural poor and lack of transparent and accountable arrangements for delivery. Realizing this,

the government streamlined the system by issuing special cards to weaker sections and selling

food grains under PDS to them at specially subsidized prices with effect from June 1997. Now

PDS is available for different categories of beneficiaries like Below Poverty line (BPL) and

Above Poverty Line (APL), Antyodaya (AAY), and Annapurna. The state wise quota is fixed by

the Planning Commission of India on the basis of official poverty line which is adjusted to

growth of population in interim. The poverty line is based on per capita daily Income standard.

Under this Targeted Public Distribution System (TPDS), each poor family was entitled a certain

quantity of food grains per month at specially subsidized prices. This was expected to benefit

about 60 million poor families. The state-wise poverty estimates of the Planning Commission,

based on the methodology of the expert group on the estimation of the proportion and number of

poor chaired by late Prof. Lakdawala, defined the number of poor in each state. The

identification of the poor is done by the states. The emphasis is on including only the really poor

and vulnerable sections of the society such as landless agricultural labourers, marginal farmers,

artisans/craftsmen in the rural areas and slum dwellers and daily wagers in the informal sector in

the urban areas.

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Wadhwa Committee Report & its Impact on PDS Operations: 1

The Central Vigilance Committee on PDS headed by Justice (Rtd.) DP Wadhwa came down

heavily on the PDS in its report submitted in 2007. The Hon’ble Supreme Court of India by order

dated 12.7.2006 in a Writ Petition constituted a committee to be headed by Supreme Court judge

Justice D P Wadhwa so as to look into the maladies affecting the proper functioning of the

Public Distribution System (PDS) and to suggest remedial measures. The SC's direction was

initially given for the Government of Delhi to be followed on an all India basis. The Wadhwa

Committee submitted its report on 21.8.2007. By an order dated 10.1.2008, Hon’ble Court while

accepting the report, directed the committee to do the similar exercise in terms of earlier order

for the entire country. The committee identified many issues hampering the smooth functioning

of PDS in India. The committee found that the whole system of procurement and distribution of

food grains is built on corruption and its benefits to the poor are low. The system lacks

transparency, accountability, monitoring. PDS has not yielded benefits to the extent intended.

This is on account of various reasons viz. collusion between persons involved in PDS supply

chain resulting in leakage and large-scale diversion of food grains.

The committee recommended that delivery systems under the PDS have to be improved so that

the real beneficiary gets its due entitlement at fixed price, fixed quantity, fixed time and

wholesome quality and called for least human intervention and end-to-end automation and

computerization of the complete PDS chain. The committee also recommended the abolition of

APL category. The report offers reasoning that many APL families don’t lift their rations from

FPS, and this food grain is diverted into black market.

The committee also made two recommendations for long-term implementation namely formation

of Civil Supply Corporation, and computerization of PDS operations. In the committee’s own

observation, “Diversion of PDS food grain in black market deprives the genuine beneficiary to

get his allotted quantity of food grain. Choice is thus between a corrupt fair price shop

functioning and State itself taking over the functioning of FPS.” Backed by this thought, the

committee recommended constitution of Civil Supply Corporation in every state. It was

proposed to be an independent body to distribute PDS food grain at FPS level and take over

existing FPS. The committee observed that once the corporation is established, all intermediaries

like wholesalers in some states must be abolished. 2

The committee also recommended several short-term measures also. These include identification

of beneficiaries/inclusion and exclusion errors, storage capacity, transportation of PDS food

grains, viability of FPS, strengthening accountability and monitoring mechanism, allocation of

food grain in accordance with number of members in a family, strengthening vigilance and

enforcement, elimination of bogus and fake ration cards, electronic weighing, and special

1 http://www.im4change.org/news-alert/justice-wadhwa-committee-slams-the-pds-1759.html

2http://www.kartiklokhande.blogspot.in/2013/01/wadhwa-committee-recommends-abolishing.htm

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measures for poorest districts in the country. The committee also proposed a scheme for

providing cooked food to the poorer segments of the society ‘at nominal cost or free’ in

backward districts of the country. The scheme proposed to be called “Dal Bhat Kendra”,

envisaged that community kitchens should be run in selected urban and rural areas at district

headquarters like the Collectorate, city hospitals, bus stops, or cooked food should be provided

through vans in pockets inhabited by poor and vulnerable people. The committee also

recommended that food coupons should be kept with each Gram Panchayat in all poorest and

backward districts to meet any emergency situation.

The Wadhwa Committee report clearly suggested that the PDS was not working the way it was

envisaged and called for certain measures explained above. But many of the recommendations of

the committee were not put into place. The only outcome of the report was that the APL category

was excluded from entitlement of food grains. It also helped in preventing the diversion of food

grains to some extent. But the PDS irregularities cited by the committee still remain apparent and

the govt. has expressed concerns regarding that. Of late, govt. has been mulling whether Direct

Cash Transfer (DCT) scheme can efficiently replace the PDS and overcome the maladies

reported by the Wadhwa Committee. The scheme is intended to replace existing FPSs by directly

transferring certain amount in the beneficiaries’ account so that they could purchase grains from

the open market. The scheme has been implemented on the pilot basis by Delhi government in

the Raghuvir Nagar region. This pilot project has been funded by the United Nations

Development Programme (UNDP). But the implementation of DCT will not be an easy task

owing to issues that will appear at the end of this report. The National Food Security Ordinance

(NFSO) promulgated by the central government recently provides another string to the

discussion surrounding the PDS and greater food security.

Rational & Context of the Study

Despite the shift from Universal Public Distribution System (UPDS) to the TPDS, the objectives

of serving the poor could not be met. PDS dealers were found to be acting out of their own

whims and fancies while distributing the food grains and kerosene. Despite the findings and

recommendations of the Wadhwa Committee report, PDS operations continue to be marred by

operational irregularities and corruption rampant in the system. Bihar Rural Livelihood Project,

Jeevika, that is already involved in many poverty alleviations programs in Bihar through

community institution, has taken an another step toward food security and poverty alleviation by

facilitating its VOs in acquiring licenses for FPSs. Jeevika VO FPSs were envisaged as the

initiative that will ensure greater food security apart from bringing economic and social

empowerment to the members of VOs. It was believed that Jeevika VO FPSs will ensure timely

distribution of food grains and kerosene at the price determined by the government. It will be

interesting to see whether Jeevika VO PDS has been able to cope up with the issues cited by the

Wadhwa Committee report. In the wake of the recent FSO, the successful operations of Jeevika

VO-run PDS may hold key to the implementation of new food security programs. In the last two

years, many Jeevika VOs have acquired licenses for running FPSs. In Purnea district of Bihar,

many VOs have acquired PDS licenses and are running the FPSs very successfully. But this

study will focus primarily on five FPSs being run by different Jeevika VOs under Banmankhi

block of Purnea district.

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Locus of the Study

Purnia district is spread over 3202.31 sq. kms. It is bordered by Araria district in the north,

Katihar and Bhagalpur districts in the South, Madhepura and Saharsa district in the west and

West Dinajpur district of West Bengal and Kishanganj district of Bihar in east. The district is

divided into 4 sub divisions, 14 Blocks, 251 Gram Panchayats, and 1296 villages.

Banmankhi is one of the 14 blocks of Purnea district. The river Kosi and Mahananda and their

tributaries irrigate different parts of the district. Bihar is one of the most backward states of India,

but Purnia lags much behind in terms of state development indicators. The literacy rate of Bihar

is 43.9 per cent – 57.1 per cent for males and 29.6 per cent for females, whereas for Purnia the

overall literacy rate is 31.44 per cent, (males 42.16 per cent and females 19.63 per cent), which is

lower than the state average. The sex ratio of Bihar is 926 females per thousand males and that of

Purnia is slightly lower at 921. The average size of a household in the district is 5.10, which is

comparatively lower than the state average of 6. With a population of 32,73,127, including

16,95,815 males, Purnia is now the 12th most populous district in the state. The population grew

at the rate of 28.66% as against the state's population growth at 25.07%. However, the growth

dipped to 28.66% from 35.39% over the last decade. The district is overwhelmingly dependent

upon agriculture and around 90 per cent of the populations are directly or indirectly engaged in

agriculture related activities. However, contribution from these activities in the household

economy is not more than 20 per cent. A considerable number of people are living below poverty

line. This is the context in which the study was conducted in the Banmankhi block of Purnea to

understand the operational challenges, successes and bottlenecks faced by Jeevika VO PDS.

Objectives of the Study

The study was conducted with following objectives:

Assess the financial viability of VO PDS

Assess the acceptance level of these FPSs within the community

To see whether liasoning with govt. officials can improve the bottlenecks in the

operations of VO-run FPSs.

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Methodology & Tools

The study draws strength from the merits of mixed research design wherein both qualitative and

quantitative data were collected and analyzed to reach the findings. For assessing financial

viability, the study relied on SIO data and sales and stock registers of corresponding months. For

assessing PDS operations and their acceptance within the community, the study relied on

structured questionnaire that was administered to VO PDS beneficiaries and non-VO PDS

beneficiaries. Interviews with book-keepers and office bearers were conducted to assess the

bottlenecks in PDS operations. Direct govt. liasioning with the help of Jeevika officials was

helpful in assessing the effect of continued liasioning on PDS operations.

Sampling

For kerosene, data were obtained and analyzed since the inception of the PDS (October 2011)

and till May 2013. For food grains, data were obtained and analyzed since the inception of the

PDS (October 2011) and till March 2013. For administering questionnaire, random sampling was

done wherein 20 percent of SHG beneficiaries and equal percentage of non-beneficiaries were

randomly chosen from each PDS (Total 151 respondents). One book-keeper from each VO PDS

was selected for interviews along with one office bearer from each VO PDS.

How the Jeevika VO PDS Functions:

Jeevika VO PDS functions in the same way as any other PDS. VO applies for license to run the

FPS. License is generally issued in the name of President of the VO, but it can be issued in the

name of other members as well. There are five office bearers (President, Deputy-President,

Secretary, Deputy-Secretary, and Treasurer) at each VO. At least three office bearers will be

joint signatories for any monetary transaction. They look after the operations of VO PDS. Apart

from this, there is one book-keeper, who manages the accounts of VO PDS. There has to be a

PDS Committee to take care of the issues that may emerge from time to time. Though no such

committee has been formed by any VO PDS covered within the study. Procurement Committee

takes care of the issues of procurement. There is no separate PDS fund for VO PDS and the VOs

use money from other funds like Livelihood Fund, CIF, and Food Security Fund. Each month,

money is deposited in the account of BSFC for procurement of grains and the banks issue the

pay-in slip. Office bearers have to deposit the pay-in slip to marketing officer (MO) of the region

who issues the Store Issue Order (SIO) in the name VO PDS. Once the allotment for concerned

VO PDS comes, officer bearers need to go to BSFC go-downs along with SIO to receive the

procurement. Generally at least three office bearers go to the BSFC go-down for procurement.

The process is same for kerosene procurement, but the procurement site is the kerosene depot

fixed by the Sub-Divisional Officer (SDO). There is additional procurement cost involved like

carriage, loading-unloading etc. After the procurement, food grains and kerosene are distributed

from at the VO FPS. Book-keepers maintain sales register, stock register, and other financial

instruments and the same are audited periodically. The idea behind having VO PDS is to ensure

13

social and economic empowerment of VO members apart from ensuring food security of each

beneficiary.

About VO PDS covered within the Study

So far five VOs under Block Project Implementation Unit (BPIU), Banmankhi have acquired

licenses for running FPS. These Jeevika FPSs are spread across four Panchayats of Banmankhi

block, namely Maharjganj II, Harimuri, Bishanpur Bishta, and Rampur Tilak.

Name of VO PDS Village Panchayat

Radhakrishna Gangaili Maharajganj II

Varsha Dhokardhara Bishanpur Bishta

Puja Rampur Tilak Rampur Tilak

Rupa Rampur Tilak Rampur Tilak

Chandramukhi Harimuri Harimuri

All the four villages are populated largely by scheduled caste and scheduled tribes followed by

other backward classes. These villages are economically backward and largely dependent on

agriculture. The area is known for growing sunflower that is primarily used for manufacturing

cholesterol-free oil. Maize and rice are the other two major crops grown in these regions. It was

harvesting time for both maize and sunflower when the study was conducted.

Beneficiary details of each VO PDS

VO PDS Total Beneficiaries

APL Beneficiaries

BPL Beneficiaries

AAY Beneficiaries

Radhakrishna 549 268 250 31

Varsha 657 281 339 37

Puja 629 245 336 48

Rupa 571 285 254 32

Chandramukhi 617 292 307 18

It is evident that each VO PDS covers significant number of BPL beneficiaries in terms of

percentage. Puja PDS is the one where BPL beneficiaries amount to 53.4% of total beneficiaries

followed by Varsha where 52% of beneficiaries have BPL cards. Puja PDS also has the highest

percentage (7.63%) of AAY beneficiaries followed by Varsha where 5.6 percent of beneficiaries

have AAY cards. The number of beneficiaries reflects that there are significant numbers of BPL

beneficiaries in each PDS. If we combine BPL and AAY beneficiaries, each VO PDS has more

than 50% of BPL+AAY beneficiaries.

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VO members being served by each PDS

Name of VO PDS Total SHG Members SHG Member Beneficiaries

Percentage Coverage

SHG Member Non-beneficiaries

Radhakrishna 173 110 63.58 63

Varsha 141 23 16.31 119

Puja 134 97 72.38 37

Rupa 137 88 64.23 49

Varsha 149 69 46.30 80

Varsha VO PDS is the one where only 23 members out of 141 members are taking benefits from

the VO PDS. It amounts to 16.31% of total VO members. In contrast, Puja PDS has the

maximum coverage (72.38%) of VO members. VO members who are not the beneficiaries are

deprived of advantages of VO PDS. It is ironical that none of the VO PDS under study has 100

percent of member coverage.

Financial Viability of Jeevika VO PDS

Financial viability of VO PDS is necessary to ensure economic empowerment of VO members.

Since accounts of VO PDS FPSs were not maintained properly, it was very difficult to extract

financial data to assess financial viability. This study relied on available data from SIO registers,

stock registers, and sales registers to analyze the financial viability of each PDS. For kerosene,

data were collected from October 2011 till May 2013, whereas for food grains, data were

collected from November 2011 till March 2013. Receipt-payment analysis based on available

data was done to arrive at the profitability of each VO PDS.

15

1509.75

1806.75 1729.75

1570.25

1696.75

1300

1400

1500

1600

1700

1800

1900

Average monthly procurement (In Litre)

Average monthlyprocurement (In Litre)

493382

529475

558569

510662

548694

498606

529212 538582

499143

551994

460000

480000

500000

520000

540000

560000

580000

Payment

Receipt

Kerosene Procurement & Profitability

The study found that procurement of kerosene was regular in almost all VO PDS. The amount of

procurement was based on the number of beneficiaries who were purchasing kerosene regularly

from VO PDS.

When receipt-payment data were analyzed for the entire period, it was found that Radhakrishna

and Chandramukhi gave positive returns, whereas other three VO PDS showed negative results.

Varsha PDS showed negative result that cannot be called significant, but Puja and Rupa VO PDS

were cause for concerns. Puja PDS posted the loss of Rs19987 for the entire period, whereas

Rupa PDS posted the net loss of Rs11519 for the entire period. Office bearers and book-keepers

of Puja and Rupa PDS attributed the loss to the events of drum breaking that according to them

happened on at least three occasions leading to huge loss of kerosene. Apart from this, they also

cited lesser quantity of kerosene that they receive each month as one of the reasons of loss.

Ironically no incidence of kerosene drum breaking was reported by any other VO PDS covered

within the study.

Kerosene: Additional Procurement Cost

5223

-262

-19987

-11519

3300

-25000

-20000

-15000

-10000

-5000

0

5000

10000

Profit/Loss (Kerosene)

Profit/Loss

Receipt & Payment (Kerosene)

November 2011-May 2013

16

Each VO PDS has to bear the additional procurement cost that can be attributed to carriage,

loading-unloading, and filling charges apart from miscellaneous expenses. This procurement cost

is added to payment while doing payment-receipt analysis to arrive at profitability figures of

each VO PDS. The chart below shows the additional procurement cost borne by each VO PDS

toward kerosene procurement.

When the shortage of kerosene (due to various reasons) was analyzed for each PDS, it gave the

results that reflect in following graph.

Each VO PDS is losing some quantity of kerosene each month impacting the profitability. It was

interesting to see how many litres of kerosene VO PDS FPSs are losing each month. Puja and In

1190

1330

1373

1204

1400

1050

1100

1150

1200

1250

1300

1350

1400

1450

Radhakrishna Varsha Puja Rupa Chandramukhi

Additional Procurement Cost (Kerosene)

Additional Procurement Cost

101.75

409.5

1659.75

1186.75

175.76

0

500

1000

1500

2000

Loss of Kerosene for the entire period (In Litres)

Loss of Kerosene for the entire period(In Litres)

17

6778 6044 5573

6756 6005

0

2000

4000

6000

8000

Profit/Loss if Loss and shortage is reduced to zero

Profit/Loss

In terms of monthly loss, Puja and Rapa are losing 83.01 and 59.35 litres of kerosene

respectively, whereas Radhakrishna, Varsha, and Chandramukhi VO PDS are losing 5.08, 20.47,

and 8.78 litres respectively.

It is evident that shortage and loss of kerosene due to various reasons have contributed to the loss

of the VO PDS. Though the gravity of the issue cited by Puja and Rupa PDS is much higher than

the other three VO PDS, it will be interesting to see how the profit/loss figure emerges if the loss

of kerosene is reduced to zero.

5.08 20.47

83.01 59.35

8.78

0

50

100Average monthly loss of kerosene (In Litre)

Average monthly loss ofkerosene (In Litre)

18

The figure above shows that each VO PDS jumps into profit if loss of kerosene is reduced to

zero. The distribution of kerosene through VO PDS could be financially viable if the issue of

kerosene loss is addressed.

Procurement & Distribution of Food Grains & the Financial Viability of VO PDS

Procurement of rice and wheat for BPL and AAY segments are done by each VO PDS coovered within

the study. There were no beneficairies belonging to Annapurna categories in any VO PDS. Procurement

of food grains was not as regular as kerosene hampering food security and profitability of VO PDS. The

most disturbing thing was that procurement of wheat was not done since August 2012. This is the cause

of concern.

AAY Rice: The status of Procurement

None of the PDS reported 100 percent procurement. Varsha PDS was the one that made AAY rice

procurement for maximum number of months during the period. Puja and Rupa PDS again fared very

badly making procutrements for only 6 months. If VO PDS is the livelihood and food security

intervention, the procurement ratio of AAY rice is not the encouraging figure. The following two charts

will show the procurement status both in terms of months and percentage.

12 15

6 6

13

05

101520

AAY Rice Procurement (In Months)

Number of procurementmonths

19

70.58

88.23

35.29 35.29

76.4

0102030405060708090

100

AAY Rice Procurement Percetage

Procurement Percetage

9

11

6 6

8

0

2

4

6

8

10

12Procured Months (AAY Wheat)

Procured Months

There were many reasons cited by office bearers of VO PDS for the irregular procurement of

AAY rice. Since there is no separate PDS fund, VOs sometimes lack money that is needed to

make procurement. Sometimes money is needed for other livelihood interventions that VO

members think are more important than the PDS procurement. Another reason cited by office

bearers is that sometimes Stock Issue Order (SIO) lapses because there is no allotment for longer

period after making the procurement payment. Varsha and Rupa PDS reported at least 2

occasions each when the procurement lapsed because grains were not available in the go-down

for the longer period of time. This is the serious lapse on the part of the government agencies and

needs to be looked into.

AAY Wheat: The status of Procurement

None of the PDS reported 100 percent procurement. Varsha PDS was the one that again made AAY

wheat procurement for maximum number of months during the period. Puja and Rupa PDS again fared

20

very badly making procutrements for only 6 months. If VO PDS is the livelihood and food security

intervention, the procurement ratio of AAY wheat is not the encouraging figure. The following two charts

will show the procurement status both in terms of months and percentage.

Like AAY rice, there were many reasons cited by office bearers of VO PDS for the irregular

procurement of AAY wheat. Since there is no separate PDS fund, VOs sometimes lack money

that is needed to make procurement. Another reason cited by office bearers is government has

not been providing wheat since August 2012. BSFC go-down managers have been saying that

there is temporary interruption in the supply of wheat and the same will be regularized in few

months. Varsha, Rupa, and Radhakrishna VOs reported that SIOs lapsed due to unavailability of

wheat in the go-downs. Since there is no supply of wheat for the past many months, poor SHG

beneficiaries have to purchase wheat from open market at very high prices.

Combined receipt-payment Status of AAY Rice and Wheat.

When receipt-payment data was analyzed to asess the profitability from the sales of AAY wheat and rice,

it was found that only Radhakrishna VO fared well whereas Puja and Rupa VOs again fared very badly.

Against the payment of 28944 for the entirev period, Radhakrishna VO showed the receipt of 34208

(Profit of 5264). In contrast Puja and Rupa VOs reported the loss of 11994 and 11366. Chandramukhi and

Varsha VOs posted the marginal loss of Rs313 and Rs410 respectively. The figure gain shows that Puja

and Rupa VOs have performed very badly. It is puzzling to hear why Puja and Rupa VOs are performing

so badly wheras other VOs are permorming much better. Office bearers of Puja and Rupa VOs cite the

same reason for the loss in terms of AAY rice and wheat. They say that each month they are receiving

53

65

35 35

47

0

10

20

30

40

50

60

70

Procurement Percentrage (AAY Wheat)

Procurement Percentrage

21

28944

49984

37210

29868

19754

34208

49671

25216 18502

20164

0

10000

20000

30000

40000

50000

60000

Payment

Receipt

5264 3687

-11994 -11366

410

-14000

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

Notional Profit/Loss (AAY Rice &Wheat)

Notional Profit/Loss

gunny bags of wheat and rice that contain grains short by at least 7-10kg. Moreover they have received

very poor quality of grains on many occasions for which there are no takers. Since go-down managers are

reluctant to take back the poor quality grains, these grains languish at FPSs and decay over a period of

time. Other VOs have also reported the shortage in gunny bags, but the quantum of shoratge reported by

other VOs is much lesser than the Rupa and Puja VOs. Interestingly none of the other VOs reported poor

quality of grains resulting into losses. It is puzzling to say the least.

Payment-Receipt, Rice & Wheat, AAY (Nov,11-March13)

22

The chart above shows that except Puja and Rupa, remaining three have reported profits from the

procurement and the sales of AAY food grains. In the case of Rupa and Puja VOs, loss would

have been converted into profit if weighing issues and other issues cited by office bearers were

addressed carefully. Other three VOs had also reported weighing issues hampering the profit.

The other valid reason why VO PDS are not showing better results is that significant amount of

every VO PDS money is stuck with Bihar State Food Corporation (BSFC) owing to different

reasons. If those stuck money are settled & adjusted, profitability chart will return positive

numbers in majority of cases. The following chart shows the profitability figure if weighing and

other cited issues would not have emerged. Chart shows that the profits of Radhakrishna,

Varsha, and Chandramukhi VOs would have become greater whereas the losses of Puja and

Rupa PDS would have been converted into profits.

One can easily see how the profit/loss figure changes once the stuck money is settled. It also

shows that stuck money is one of the valid reasons hampering the profitability. If the weighing

issues are also addressed the profit/loss chart will show even more positive figures. In the case of

Puja and Rupa VOs, change would be significant in positive direction. Steps need to be taken to

address the issues of stuck money and weighing losses. Better government liasioning holds some

promise. The issues cited by office bearers of Puja and Rupa VO PDS are not convincing at all.

These issues at Rupa & Puja VOs hint at some irregularities at operational level. The role of

book-keepers in these irregularities cannot be ruled out. Like kerosene, AAY figures of all five

VOs suggest that VO PDS is financially viable if the issues at hand are addressed carefully.

Greater vigilance by Jeevika officials can help in addressing the issues.

7347

9851

2790 3568 3812

0

2000

4000

6000

8000

10000

12000

Profit/Loss (AAY) if the issue of stuck money is addressed

Profit/Loss

23

12 13

8 8

10

0

2

4

6

8

10

12

14

BPL Rice: Number of Procured months

Procured months

BPL Rice: Status of Procurement

None of the PDS reported 100 percent procurement. Varsha PDS was the one that made AAY rice

procurement for maximum number of months (13 months) during the period. Puja and Rupa PDS again

fared very badly making procutrements for only 8 months. Radhakrishna and Chandramukhi PDS have

done compratively well. The procurement ratio of BPL rice is not the encouraging figure. The following

two charts will show the procurement status both in terms of months and percentage.

10387 9851

5253

3700 3812

0

2000

4000

6000

8000

10000

12000

Profit/Loss (AAY) if the issues of stuck money & weighing issues are addressed

Profit/Loss

24

There were many reasons cited by office bearers of VO PDS for the irregular procurement of

BPL rice. Since there is no separate PDS fund, VOs sometimes lack money that is needed to

make procurement. Sometimes money is needed for other livelihood interventions that VO

members think are more important than the PDS procurement. Another reason cited by office

bearers is that sometimes Stock Issue Order (SIO) lapses because there is no allotment for longer

period after making the payment. Varsha and Rupa PDS reported at least 3 occasions each when

the procurement for BPL grains lapsed because grains were not available in the go-down for the

longer period of time. This is the serious lapse on the part of the government agencies and needs

to be looked into.

BPL Wheat: The status of Procurement

None of the PDS reported 100 percent procurement. Varsha PDS was the one that made BPL

wheat procurement for maximum number of months (8 months) during the period. Puja and

Rupa PDS again fared very badly making procurements for only 6 months. The procurement

ratio of BPL wheat is not the encouraging figure. The following two charts will show the

procurement status both in terms of months and percentage. When wheat procurement is seen in

percentage terms, it will become evident that none of the VO managed to procured wheat for

even 50 percent of total procurement months.

Like AAY rice, there were many reasons cited by office bearers of VO PDS for the irregular

procurement of BPL wheat. Since there is no separate PDS fund, VOs sometimes lack money

that is needed to make procurement. Another reason cited by office bearers is government has

not been providing wheat since August 2012. BFSC go-down managers have been saying that

70 77

47 47

59

0

10

20

30

40

50

60

70

80

90

BPL Rice Procurement Percentage

Procured Percentage

25

7

8

7 7

6

0

1

2

3

4

5

6

7

8

9

Number of Procured Months (BPL Wheat)

Procured Months

41

47

41 41

35

0

5

10

15

20

25

30

35

40

45

50

BPL Wheat Procurement in Percentage Terms

Percentage Procurement

there is temporary interruption in the supply of wheat and the same will be regularized in few

months. Varsha, Rupa, and Radhakrishna VOs reported that SIOs lapsed due to unavailability of

wheat in the go-downs. Since there is no supply of wheat for the past many months, poor VO

beneficiaries have to purchase wheat from open market at very high prices.

26

Additional Procurement Cost (Rice & Wheat (BPL+AAY)

VO FPS have also to bear certain additional procurement cost attributed to expenses such as carriage,

loading/unloading and other miscellaneous expenses. The study found that each VO under study has to

bear additional amount toward procurement of food grains for both BPL and AAY categories. The study

also found that every VO PDS procure both AAY and BPL grains at the same time. The chart below will

show the additional procurement amount that each VO PDS has to bear every month toward procurement.

Combined receipt-payment Status of BPL Rice and Wheat.

When receipt-payment data was analyzed to asess the profitability from the sales of BPL wheat

and rice, it was found that none of VO PDS is giving positive results. Against the payment of

497156, Radhakrishna VO PDS shows the receipt of 393218. Against the payment of 652164,

Varsha VO PDS shows the receipt of 598054. Against the payment of 449665, Puja VO PDS

shows the receipt of 348721. Against the payment of 437974, Rupa VO PDS shows the receipt

of 302656. Against the payment of 583551, Chandramukhi VO PDS shows the receipt of

411937. It will be interesting to know why none of the VO PDS has been able to post profits

from the sales of BPL grains. Except the extraordinary case of Rupa and Puja VO PDS, other

VOs are showing losses because huge amount is stuck with BSFC. Once the amount is adjusted

in next few procurments, the VOs will show profits. It gain highlights the negligence on behalf

of the government to provide regular procurement. Apart from hampering profitability, irregular

procurement and the stuck money often lead to huge problems for poor beneficiaries who have to

procure food grains from open market at much higher cost. Moreover it also shows how financial

viability is negated by such negligence.

2180 2100

2203 2220

2350

1950200020502100215022002250230023502400

Average Add. Procurement Cost Per Month (AAY+BPL)

Add. ProcurementCost

27

-103868

-54109

-100884

-135318

-171614

-200000

-180000

-160000

-140000

-120000

-100000

-80000

-60000

-40000

-20000

0

Notional Profit/Loss

Notional Profit/Loss

Payment-receipt (Rice and Wheat, BPL)

Profit & Loss (BPL Rice & Wheat)

The study found that the loss reflected in two charts above are largely due to issues of stuck

money and weighing and related issues highlighted differently by different VOs. The study

497156

652164

449665 437974

583551

393218

598054

348721 302656

411937

0

100000

200000

300000

400000

500000

600000

700000

Payment

Receipt

28

found the same thing in the case of AAY procurement. The following chart shows the

profitability figure if the issue of stuck money is sorted out and the money is adjusted towards

future procurement.

Profit/Loss if the stuck money is adjusted

The chart shows that Varsha and Chandramukhi VOs jumps into profit if the amount is adjusted,

whereas Radhakrishna, Puja and Rupa VOs remain in losses. It clearly shows that profits of

Varsha and Chandramukhi PDS is not greatly marred by weighing issues, whereas weighing

issues look grave in other three cases. The study again tried to figure out the profitability once

the weighing issues are sorted out. It gives the figure that is pleasantly surprising to eyes. All

VOs jumps into profit once the weighing issues and losses incurred on account of that are ruled

out. The chart below shows how the profitability emerges for each PDS if the issues of stuck

money and weight loss are addressed.

-10431

25047

-38103

-26503

10682

-50000

-40000

-30000

-20000

-10000

0

10000

20000

30000

Profit/Loss

Profit/Loss

29

7089

26887

16885

2977

10682

0

5000

10000

15000

20000

25000

30000

Profit/Loss

Profit/Loss

Profit/loss if the of stuck money is settled and weighing issues are addressed in absolute terms

Varsha PDS looks to post maximum profit (Rs26887) whereas Rupa PDS posts minimum profit

(Rs2977). But the bottom line is that each PDS jumps into profit if major issues at hand are

addressed properly.

After analyzing data for kerosene and food grains, the study has found that each VO PDS can be

financially viable if the weighing issues are sorted out. As far as the stuck money is concerned,

those will be adjusted in next few months and it will reflect in profitability numbers once the

amount is adjusted. The chart below shows the overall receipt-payment (both kerosene & grains)

status of each VO PDS as they stand as of now. The chart shows that Varsha VO PDS is ahead

of others in terms of receipt-payment ratio. But it does not mean that Varsha is the best

performing VO PDS because this receipt-payment chart has not taken into account the money

that is stuck with BSFC. In the discussion section, the author of the study will show how

financial viability can be ensured by addressing the two major issues through government

liasoning and proper monitoring by Jeevika fraternity.

30

Overall receipt-payment (both kerosene & food grains) as they stand as of now

Food Security & Community Acceptance VO PDS Vs Non-VO PDS

After analyzing the financial viability of VO PDS, the study tried to explore the acceptance of

VO PDS within the community. Apart from that, the study also tried to find out whether VO

PDS has been able to ensure better food security. A questionnaire was administered to VO

members after dividing them in two categories—those who are receiving grains and kerosene

from VO PDS and those who are receiving the same from non-VO PDS. It is to be noted that not

all VO members are beneficiaries of VO PDS because of their associations with different wards.

0

200000

400000

600000

800000

1000000

1200000

1400000

1019483

1236233

1045445 978504 1151999

926102

1176938

912579 820302

984096

Total Payment

Total Receipt

31

11%

30%

59%

Ration Card Coupons Both

Since VO members belong to different wards, many of them find themselves in the beneficiary

list of non-VO PDS. Though it is unfortunate that not every VO member is taking benefits from

their own PDS, but it helped the study to assess the performance of the VO and non-VO PDS.

After analyzing the answers to the questionnaire, the study finds that the community acceptance

of VO PDS is very encouraging. Apart from this, VO PDS has been able to ensure greater food

security compared to non-VO PDS.

Availability of Ration Cards/Coupons

VO PDS Non-VO PDS

The data clearly suggest that higher number of VO PDS beneficiaries have ration cards

compared to non-VO PDS beneficiaries. In the absence of ration cards, VO members who are

taking benefits from non-VO PDS are being harassed by private dealers. In contrast, VO-

beneficiaries are having no such issues. Even if they don’t have ration card, they receive grains

and kerosene by showing coupons. But private dealers are sometimes harassing beneficiaries

even though they present their coupons.

14%

61%

25%

Ration Card Coupons Both

32

81%

19%

Yes No

93%

7%

Yes No

63%

37%

2.75 Litre 2.5 Litre

35%

65%

2.5 litre 2 Litre

Whether beneficiaries receive kerosene regularly

The same question was asked to both VO PDS beneficiaries and non-beneficiaries. The answers

to the question show that VO PDS are much better than non-VO PDS. While 93 percent of VO

PDS beneficiaries are receiving kerosene regularly, the percentage is as low as 81 percent in the

case of non-VO PDS.

VO PDS Non-VO PDS

Quantity of Kerosene Received

When the question was asked as to how many litres of kerosene VO-PDS and Non-VO PDS

beneficiaries are receiving, the difference was easily visible. While 63% of VO PDS

beneficiaries said that they are receiving allocated quota of 2.75 litres, none of the non-VO PDS

beneficiaries told that they are receiving the allocated quota of 2.75 litres. Majority of non-VO

PDS beneficiaries told that they are receiving only 2 litres of kerosene.

VO PDS Non-VO PDS

33

92%

8%

18 Rs Litre 20 Rs Litre

62% 18%

20%

Yes No Sometimes

0%

59%

41%

Yes No Sometimes

Rate at which beneficiaries are receiving kerosene

The study suggests that while majority of VO PDS beneficiaries (76%) are getting kerosene at

Rs17 per litre, 92 percent of non-VO PDS beneficiaries are receiving kerosene at Rs18 litre.

About 24 percent of the VO PDS beneficiaries are receiving kerosene at Rs 18 per litre. Most

surprisingly in certain cases, non-VO PDS beneficiaries have to pay as much as Rs20 for a litre

of kerosene. The data suggest that VO PDS beneficiaries are getting kerosene at better price in

majority of cases.

VO PDS Non-VO PDS

Whether beneficiaries receive rice regularly

The study found that majority of VO PDS beneficiaries (about 62%) are receiving rice regularly,

while majority of non-VO PDS beneficiaries (about 59%) told that they are not receiving rice

regularly. About 41% of non-VO PDS beneficiaries told that they sometimes receive rice. Again

the data suggest that VO beneficiaries are better placed when it comes to distribution of regular

rice.

VO PDS Non-VO PDS

76%

24%

17 Rs Litre 18 Rs Litre

34

Quantity of rice received

When asked whether beneficiaries receive the allocated quota of rice, 100 percent of BPL VO

PDS beneficiaries told that they were receiving the allocated quota of 15 kg. In contrast only 83

percent of non-VO PDS beneficiaries told that they are receiving the allocated quota of 15 kg.

When the same question was asked to AAY beneficiaries, 62 percent of VO PDS beneficiaries

told that they received the allocated quota of 21 kg. In contrast, only 22 percent of AAY non-VO

PDS beneficiaries told that they were receiving the allocated quota of 21 kg. The data again

suggest better services offered by VO PDS.

Whether beneficiaries receive regular wheat

None of the VO PDS beneficiaries and non-VO PDS beneficiaries was satisfied with the

distribution of wheat. The primary reason for this irregular supply of wheat is that BSFC go-

downs were not receiving wheat since August 2012. When BSFC officials were contacted to

know about the issue, they said that there have been certain issues in procurement and the same

will be sorted out. Due to this irregular supply of wheat, poor beneficiaries have to purchase

wheat from open market at much higher prices. Majority of AAY VO PDS beneficiaries (75%)

told that they were getting the allocated quota of 14 kg (whenever procurement is done), whereas

only 22 percent of AAY non-VO PDS beneficiaries told that they were receiving the allocated

quota of 14 kg.

Whether the functionaries of VO PDS and non-VO PDS behave rudely with beneficiaries

While 33 percent of VO PDS beneficiaries were not satisfied with the behavior of PDS

functionaries, 77 percent of non-VO PDS beneficiaries were grossly dissatisfied with the rude

behavior of non-VO PDS functionaries. There were at least 67 percent of VO PDS beneficiaries

who were satisfied with the behavior. In contrast, there were very few (only 28%) satisfied non-

VO PDS beneficiaries.

How has been the experience of beneficiaries with VO PDS when compared to non-VO PDS.

This question was asked to only VO PDS beneficiaries who were earlier receiving rations and

kerosene from private dealers before Jeevika VO PDS came into existence. Answers given by

the respondents suggest that there has been very high acceptance of VO PDS. About 64 percent

of the beneficiaries told that the experience with Jeevika VO PDS has been good. About 13

percent of the beneficiaries told that experience has been better but they hope for greater

improvement in future. The data clearly hint at higher satisfaction level among beneficiaries.

35

Experience with VO PDS compared to Non-VO PDS

Apart from above questions, respondents were asked other questions as well to assess the

acceptance level. Some of the questions that were asked are listed below.

How many days does it take to receive commodity from PDS after procurement from

BSFC

For how many days FPS remains open during distribution

If beneficiaries are unable to visit FPS during normal distribution days, do they receive

their quota later

For how many hours your FPS remains open during distribution

Do dealers/VO members inform whenever procurement is done

Answers to these questions also suggest that VO PDS are doing much better than the non-VO

PDS. While majority of VO PDS beneficiaries told that it took them maximum of 2 days to

procure grains & kerosene, non-VO PDS beneficiaries told that it took them 4 days to procure

grains and kerosene. While majority of VO PDS beneficiaries reported that PDS shops are open

for at least six days during distribution, non-VO PDS beneficiaries reported that PDS shops are

open for at least 3 days during distribution. Compared to non-VO PDS beneficiaries (6.5%),

higher percentage (27%) of VO beneficiaries reported that they received the missed quota at

some point of time. According to VO PDS beneficiaries, PDS shops remained open for 7 hours

during distribution. In contrast, non-VO PDS beneficiaries reported that PDS shops remain

opened for only 5-6 hours in majority of cases. While 64 percent of VO PDS beneficiaries told

that PDS functionaries informed them about procurement, only 8.3 percent of non-VO

23%

64%

13%

Chart Title

Better Good Better, but needs more improvement

36

beneficiaries said so. Answers to the questionnaire clearly suggest higher acceptance of VO PDS

among beneficiaries. It also suggests that VO PDS better addresses the food security problems.

Findings & Discussion

The study suggests that VO PDS is financially viable and address the food security problems in a

much better way than the non-VO PDS. The study also found some of the major issues faced by

all five VO PDS that are hampering the financially viability and efficacy of VO PDS. Substantial

gap was noticed between payment of money by VO PDS and receipt of SIO and subsequent

procurement. The chart below will show the time lag noticed between receipt of pay-in-slip and

SIO and subsequent procurement. This is the main reason why so much of VO money is locked

with BSFC.

Time difference (Pay-in slip, SIO, and Procurement)

Since larger amount is always locked with BSFC, VO PDS have to forego procurements for few

months in the absence of money. It proves to be one of the biggest obstacles to ensuring food

security. Moreover, VO is also losing the interest of 1 percent that the VO would have received

on the stuck amount. Since there is no separate fund for PDS, VOs are deploying the money of

some other funds toward PDS procurement. Normally the money is used to provide loans to

beneficiaries. If such money is locked with BSFC, VO is losing on two counts—they are not

getting benefits from procurement and secondly VOs are also being deprived of one percent of

41 40

45 47

38

0

5

10

15

20

25

30

35

40

45

50

Difference Bw Payment &SIO

Difference Bw SIO &Procurement

37

interest that the money would have otherwise fetched. The following table will show how much

interest VO is losing due to locked money.

Name of VO PDS Money Locked in BSFC VO Losing Interest each month

Radhakrishna 95520 955.20

Varsha 85320 853.20

Pooja 77565 775.65

Rupa 123749 1237.49

Chandramukhi 185698 1856.98

If the issue of locked money is addressed through government liasoning, it will help VO PDS

achieve greater financial viability. The author of the study tried to address the issue through govt.

liasoning and was quite successful in doing so. The author of the study along with Jeevika

officials of Purnea district held several meetings with marketing officer (MO) Dhanushdhar Jha

and addressed the issue to a greater extent. After several rounds of talks, the stuck money of

every VO has been adjusted and VOs will receive future procurements without making any

payment till all the stuck money is adjusted. The result will show in financial figures in next six

months. MO has also ensured that time lag between payment of money and procurement will be

taken care of soon. In fact the time lag for the month of July has reduced substantially.

The availability of beneficiary list is another issue faced by all VOs. None of the VO PDS has

received updated beneficiary list. In the absence of beneficiary list, it is very difficult to verify

the authencity of people who are procuring the ration and the kerosene. It is very important to

have the updated beneficiary list with each VO PDS, else it will create issues going forward.

There is no roaster for procurement. It leads to waste of time and money for VO PDS

functionaries. In the harvesting season like the one when the study was conducted, PDS

functionaries cannot afford to make several visits to govt. offices to know about procurement.

Every visit made by functionaries to govt. offices leads to loss of income. It needs to be looked

into.

The author of the study tried to address the issues of beneficiary list and procurement roaster

through govt. liasoning. The MO has assured that each VO PDS will soon receive the beneficiary

list and there will be one fixed date of procurement for all VO PDS. In all probability, VO PDS

will be able to do procurement on 20th

of each month. It will save lots of money and time for VO

PDS functionaries. Moreover, VO functionaries can also exert pressure on BSFC go-down

manager to provide food grains in exact quantity. This can be possible because functionaries of

each VO will assemble on procurement date and can raise greater protest if they receive gunny

bags of grains short in quantity. Each VO PDS has submitted fresh application for the issue of

38

beneficiary list and the MO has assured that the list will be provided to each VO PDS. BPIU,

Banmankhi will also receive the beneficiary list.

The study shows that weighing issues at procurement stage is one of the major issues hampering

the profitability of each VO PDS. Rupa and Puja VO PDS have shown that losses are mainly on

account of lesser quantity received from BSFC. Functionaries of Chandramukhi, Radhakrishna,

and Varsha PDS have also raised the issue, but the cases of Rupa and Puja VO PDS are different

and the study finds that book-keepers and office bearers of Puja and Rupa VO PDS are trying to

camouflage the malpractices under the garb of weighing issues. Jeevika officials need to look

into the cases of Rupa and Puja VO PDS to go into the root of the issue so that necessary actions

can be taken against those who are responsible for the malpractices. Nonetheless, the weighing

issue remains the major concern of VO PDS. The study found that even Jeevika officials know

about weighing malpractices hampering the profitability, but they believe that nothing can be

done in this regard. This issue needs to be taken up at the higher level so that the issue can be

VO PDS Weighing issues: The role of BSFC and Shubh Lakshmi Dharma Kanta

The cases of Radhakrishna and Puja VO PDS highlight how BSFC staff are indulging in weighing malpractices with the help of staff of Shubh Lakshmi Dharam Kanta in Banmankhi. First thing is that BSFC go-down managers don’t allow weighing of gunny bags at the go-down. They insist on getting the weight at the nearby dharam kanta. Staff of dharam kanta and BSFC staff have already some agreement to match the weight of grains with the weight that appears on the SIO whenever VO PDS staff take the tractor to dharam kanta for weighing. During the two procurements for Rdhakrishna VO PDS and Puja VO PDS, the study found that dharam kanta weight matched with the weight given on the SIOs of respective PDS. When the author of the study weighed the gunny bags randomly at the distribution centers of both VO PDS, each bag was found to be short by at least by 5-7 kg in the case of Readhakrishna. In the case of Puja VO PDS, randomly selected gunny bags contained grains short by at least 4-6 kg. The table below will help to understand these two cases.

VO PDS

Empty Tractor Weight

Weight of grains as per SIO

Combined Weight (empty tractor +grains)

Weight matches or shows extra quantity

Shortage found in randomly selected bags.

Radhakrishna 2850 7335 10185 10220 5-7 Kg Puja 2840 10080 12920 12922 4-6 kg

39

sorted out at the earliest.

The study earlier highlighted how some of the VO members are not able to take benefits from

their VO PDS. During the study, many VO members urged to take steps so that their names

could be included in the beneficiary list of their respective VO PDS so that advantages could also

accrue to them. This issue arises because beneficiary lists are made by clubbing certain wards

and if the VO members don’t belong to the wards covered by their respective VO PDS, their

names won’t appear in the beneficiary list.

The author of the study along with Jeevika officials tried to address the issue through govt.

liasoning. When the weighing issues were taken up with MO and the BSFC staff and officials,

they were reluctant to believe that such malpractices are happening. The request to weigh gunny

bags at the go-down was also rejected by go-down managers citing feasibility issues. Since this

issue is of paramount importance for successful operations of VO PDS, the same needs to be

taken care of at higher management level. MO has however assured to address the issue of

universal coverage of VO members within their respective VO PDS. It will be done through

ward realignment. The MO has asked for the list of VO beneficiaries to see the ward numbers to

which VO members belong. After sorting the list, VO PDS will cater to the wards to which its

members belong. This ward realignment will ensure the universal coverage of VO members

within their respective VO PDS.

The study also found that book-keepers are not properly trained and PDS accounts are ill

maintained. Only Chandramukhi VO PDS has been able to manage accounts to some extent.

With the distribution of new ration and kerosene coupons recently, new issues have emerged.

Radhakrishna VO PDS has 250 BPL beneficiaries and 31 AAY beneficiaries. But when coupons

were distributed, 200 beneficiaries received BPL coupons whereas 81 beneficiaries got AAY

coupons. It will create huge problems in distribution leading to discontent among beneficiaries.

Problems could be the same with other VO PDS as well once the beneficiaries get their coupons.

Puja and Rupa VO PDS: A cause of concern There is huge problem with Puja and Rupa PDS because they have reported substantial shortage of grains and kerosene hampering the profitability. This needs to be looked into. They reported breaking of kerosene containers. Interestingly no other VO PDS cited this. Huge quantity of rice is lying at both PDS shops owing to quality issues. Nothing has been done for the last 10 months to replace or return the rice. When the author of this study contacted the book-keepers of the concerned VO PDS, he cited an interesting reason for the loss reported by these two PDS. He says that whenever stock of grains and kerosene is

40

left, officer bearers distribute those among themselves. Though it is hard to believe, but still deserves attention if the case is such. Since Puja and Rupa VO PDS are far away from the BPIU, Banmankhi, there is no adequate observance by Jeevika officials.

The findings of the study suggest that Jeevika VO addresses the problem of food security to

greater extent. Beneficiaries have been able to receive adequate quantity of grains and kerosene.

Prices paid by VO PDS beneficiaries are relatively accurate in line with govt. price guidance.

Supply of wheat has been the major issue, but this is not the VO specific problem. The supply of

wheat has been regularized from the month of July 2013. Beneficiaries are satisfied with VO

PDS operations and behavior of VO PDS functionaries. Acceptance of the VO PDS can be

gauged from the fact that non-VO PDS beneficiaries are making several requests for inclusion

within VO PDS. Moreover, due to VO PDS performance in terms of services, VO members are

creating pressure on non-VO PDS dealers for supplying adequate quantity of kerosene and grains

at govt.-determined prices. These findings reached through questionnaire suggest that issues of

food security can be addressed through VO PDS expansion. Moreover, it will also ensure

economic and social empowerment of SHG members. The role of Jeevika VO PDS is going to

be important in future because of the food security ordinance that will come into force very soon.

If the issues at hand are sorted out, Jeevika VO PDS will be the best place to implement new

food security policies.

Jeevika VO-run PDS & Social & Economic Empowerment of Poor Village Women

The PDS initiative by Jeevika has been able to socially empower VO members and has the

potential to bring greater economic empowerment once the issues highlighted by the study are

addressed. How the PDS has led to greater social empowerment of VO members can be gauged

from the fact that VO members who were shying away from common village people are now

interacting with government and bank officials. They know how to transact businesses with

banks. Training sessions held at BPIU, Banmankhi, has helped them attain functional and

signature literacy. Almost each member of the VOs covered within the study has attained

functional and signature literacy. VO members are coming out of villages and interacting with

government officials and staff. The author of the study was pleasantly surprised to see VO

members dealing with official documents. Regular interactions with officials have done their

confidence a whole lot of goods. Capacity building through regular trainings on FPS

management, procurement and distribution has also opened pandora box of job opportunities for

them. Some of VO members, after being trained, are also working in private offices as office

assistants located in Banmankhi block and are earning extra money. Sushila Devi and Geeta

Devi, officer bearers of Rupa and Puja VOs respectively, are also working in two different

offices of non-banking financial companies (NBFCs) as support staff, and are earning additional

money. Resultantly, they are able to fulfill their aspirations of sending their children to well-

41

4.38 4.89

5.32

4.00 4.23

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Net Profit in Percentage

Net Profit inPercentage

known private schools in Purnea. Not only that, the extra income has also helped them raise their

standard of living. It shows that VO PDS intervention has not only socially empowered VO

members, but has also helped them fulfill their aspirations. Moreover, social capital created in

the form of social relationship and community cadres speaks volume of the success of this

intervention.

Apart from socially empowering village women, VO PDS has the potential of generating

significant amount of money if all the operations are streamlined. After analyzing the data from

each PDS, the study found that each VO PDS can generate monthly profit of at least 4-5 percent

that is much higher than the normal interest that VO will gain by loaning the amount to

members. It will significantly add to the pool of funds that can be used for benefiting VO

members in many ways. The data show that Radhakrsihna VO can generate the monthly profit of

Rs2849 on the average investment of Rs65075. The monthly profit translates to yearly profit of

Rs34188 for Radhhakrishna VO. Following charts will show the profits from PDS operations

from each VO both in terms of monthly profit and percentage gains.

Monthly profits from investment

The study shows that PDS operations are financially viable and each VO PDS can gain

substantially from the operations. If the profits are calculated in annual terms, each VO PDS will

post the profit in the range of 32000-52000. This money can be utilized for many livelihood

promotions of VO members and they can fulfill their aspirations.

65075

80819 80924

67965 71001

2849 3956 4302 2717 3002

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

TotalInvestment

Net Profit

42

Direct Cash Transfer (DCT), Food Security Ordinance, & the Future of Jeevika VO-run PDS.

Recently there has been much talk about DCT as one of the solutions to the prevalent

malpractices in PDS. The magnitude of PDS troubles can be gauged from the fact that the

Planning Commission, in an estimate, had once said that 58 per cent of subsidized food grain

does not reach the intended beneficiaries, while another estimate maintains that 36 per cent is

simply siphoned off the supply chain. Those who favor DCT maintain that prevailing PDS

operations are so complex that it is impossible to weed out irregularities and corruption at

different stages of supply and demand chains. The government of Delhi had implemented the

DCT on pilot basis in 2011. The pilot project funded by the UNDP aimed at testing the viability

of giving food subsidy to BPL beneficiaries at the Raghubir Nagar region of New Delhi. The

scheme was inspired by similar such efforts in South America, particularly Brazil's Bolsa

Familia programme, which was fairly successful. Similar cash transfer schemes have been tried

out in other parts of the country in the past decade, notably the centrally funded Dhanalakshmi

programme being implemented in some of the states since 2008, which provides cash to families

against evidence that they have been taking good care of their girl children -immunizing them,

sending them to school and so forth. 3

The question arises whether PDS should be abandoned only due to its deficiencies or corrective

measures need to be taken. The second choice looks more rational because the DCT is not as

simple as it looks. It also comes with many complexities and has the potential to lead to

problems of even higher magnitude. The first issue is that when the amount is transferred to

beneficiaries’ bank accounts, it does not necessarily mean that they will necessarily buy the food

grains from the money. The money could also be utilized for purposes other than buying food

grains. In certain cases, males could have higher control over received money through DCT and

they can use the money for other purposes. The point is that the purpose of food security might

not be addressed through it in some of the cases. It is also important to understand the devaluing

effect of inflation or the role of intra-household dynamics when it comes to cash transfers. DCT

would also lead to issues related to procurement. It is very difficult to understand what would

happen to the agricultural commodities that are procured by the Food Corporation of India (FCI).

There will be huge issue with the procurement that the govt. makes each year. In the absence of

adequate procurement by government, farmers will be inclined not to produce more. It will lead

to inadequate supply of food grains and will also encourage hoarding. These issues combined

together will propel the food grain prices in the market. Consequently, beneficiaries will find

very difficult to purchase food from open market. In the present scenario, DCT approach to food

security looks premature in the context.

Instead of resorting to DCT, existing PDS need to be streamlined so as to make it more

transparent. The accountability factor that is missing presently need to be reinforced. Initiatives

such as Jeevika VO-run PDS have the potential to address the issues of food security in much

better way than the traditional FPSs. The outreach of Jeevika VO PDS to maximum people will

ensure that the objectives of the PDS are met. The acceptability of Jeevika VO PDS among VO

and non-VO beneficiaries is amazing because it holds the promise of greater food security.

3 http://businesstoday.intoday.in/story/cash-transfer-programme-lieu-of-subsidised-foodgrain/1/186383.html

43

In the wake of the NFSO promulgated recently, the role of Jeevika VO-run PDS becomes very

important. Jeevika VO-run PDS has the potential to ensure the fulfillment of the objectives of the

food security ordinance. The NFSO, with a special focus on the needs of the poorest of the poor,

women and children, provides for grievance redressal mechanism and penalty for non-

compliance by public servants or any authority. The NFSO gives right to subsidized food grain

to 67 percent of India’s 1.2 billion people, and promises to ensure food and nutritional security.

Up to 75 percent of the rural population and up to 50 percent of the urban population will have

uniform entitlement of five kg food grain per month, at highly subsidized prices of Rs.3, Rs.2,

Rs.1 per kg for rice, wheat and coarse grains, respectively.

There is a special focus on nutritional support to women and children. Pregnant women and

lactating mothers, besides being entitled to nutritious meals as per the prescribed nutritional

norms, will also receive maternity benefit of at least Rs.6,000 for six months. Children in the age

group of six months to 14 years will be entitled to take home ration or hot cooked food, as per

prescribed nutritional norms. The ordinance also contains provisions for reforms in the Public

Distribution System (PDS) through doorstep delivery of food grain, application of information

and communication technology (ICT) including end-to-end computerization, leveraging

'Aadhaar' for unique identification of beneficiaries, diversification of commodities under the

Targeted PDS (TPDS) for effective implementation of the ordinance. 4

Jeevika VOs can act as the implementation unit of various provisions of the NFSO. The

provisions like nutritional support, doorstep delivery of food grains, and nutritional cooked food

for children can be easily implemented by community institutions like Jeevika VO. Since the

Jeevika project will be expanded in near future, one can expect increase in the outreach of VO

PDS. To sum up, VO PDS looks financial viable and it address the issues of food security to

greater extent. Apart from this, social and economic empowerments of VO members are also

ensured through VO PDS. The acceptance of VO PDS among village community is higher than

the non-VO PDS. Jeevika model of VO PDS has the potential of replicability and scalability of

larger scale especially in the wake of the NFSO. Having said all this, the study still sees certain

scope of improvement suggestions for which appear below.

Suggestions & Recommendations

There is a need to form a full-fledged PDS committee mention of which is

given in VO PDS guidelines. One member of VO PDS has to be made solely accountable for all lapses. There has to be proper coordination between CCs, ACs and VO office

bearers. There has to be separate fund for PDS to ensure continued procurement. It

will ensure food security. Book-keepers should be properly trained to maintain PDS accounts.

4 http://india.nydailynews.com/newsarticle/149b9b96803c65c40cd42bd21c60010e/national-food-security-ordinance-salient-points

44

VOs have to be continuously and regularly trained on FPS management, procurement & distribution of ration/kerosene, accounts/books/records-keeping, financial literacy, regulatory compliances, coupons’ management, handling issues of ration cards/coupons, and problem solving at the field level as well as at the govt. officials level.

There has to be a separate cashbook for PDS for proper accounting. Sales, stock, and cash registers have to be closed on daily basis during

procurement and need to be verified by Jeevika officials occasionally. The study realizes the need to have one CC who will solely look after PDS

operations right from procurement to distribution. It will also work as a vigil and act as a deterrent to any malpractices at VO PDS.

There is no incentive for Jeevika employees for looking after PDS. Jeevika employees’ role in PDS operations are not accounted in their performances and therefore they are least interested in devoting time to PDS. The study suggests Jeevika employees’ contribution toward PDS operation be accounted in their performance appraisal.

There has to be some incentive provision for VO members involved in distribution and procurement. One solution could be to allow associated SHGs to take responsibility of procurement and distribution on rotational basis. Certain percentage of VO PDS profits may go to the SHG that will make procurement and distribution for particular month.

Book-keepers’ role should be limited to accounting and VO members should be properly trained to manage PDS operations. There has not to be any role of book-keepers in distribution. It will ensure fairness in distribution and also lead to reduction in malpractices at distribution level.

Area Coordinators (ACs) should make periodic visit to PDS (It is lacking at the moment)

There is a need to have one electronic weighing machine at each VO. VO members can also carry this on tractor at the time of procurement. It will create some pressure on go-down managers. Moreover, it will also help them easily weigh each bag to find the exact shortage before distribution.

Since VO PDS is a food security intervention, expansion of operations will ensure greater food security, especially in the wake recent food security ordinance that will be implemented soon. Jeevika VO PDS can work wonders as the implementation unit of the new food security ordinance.

VOs have to be in proper communication network with the concerned govt. offices so that members could directly access all kind of updated

45

information in real time and could take appropriate decisions accordingly. There has to be feedback mechanism system too under this communication

network so that in case of any issues /problems, VO members could approach the concerned officials directly and get their grievances redressed.

As the concept of PDS being run by SHGs is totally novel, liaising with concerned govt. offices is the need of the hour. JEEVIKA, in its facilitating role, has to ensure frequent interactions of members with concerned govt. officials so that pragmatism could prevail and the mutual mistrust vanishes. Therefore, workshops have to be conducted on regular basis.

There has to be performance parameters at the FPS level and at the facilitating level for CCs /ACs. For this purpose, a proper monitoring and evaluation system has to be designed and put in place. Based on monitoring & evaluation (M & E) reports, corrective steps could be taken on time. This will help in streamlining PDS running by VOs.

Limitations & Constraints of the Study

Though every care has been taken in collecting financial data, poor upkeep of records by book-

keepers led to enormous delay in data collection. It was difficult to fetch the entire data owing to

unavailability of certain records and poor maintenance of books of records. Due to busy

harvesting season, the author of the study could administer questionnaire to only 20 percent of

beneficiaries instead of 30 percent of beneficiaries. Due to the time constraint and busy

harvesting season, the study could not include non-VO beneficiaries (beneficiaries who are not

the members of VO). The district and block teams are burdened with host of other works under

different themes. PDS occupies just a small part in their roles and responsibilities. Additionally,

this is the most complicated programme of the government where multiple government

offices/departments are involved at different levels of the delivery channel. So, it’s very difficult

to accord priorities to PDS on part of the DPCU and BPIU particularly when they have multiple

tasks in hand. Because of this the author of the study had to face some problems striking co-

ordination with the district/block teams. It’s generally difficult to attend all VO meetings on

scheduled dates. So, the author through the concerned CC/AC convinced members to convene

meetings. However, because of their own pre-scheduled works, VO members often came in very

low numbers to attend meetings. This has the potential to skew the findings of the study. In some

of the meetings, the attendance of members was very thin (35-55%). It’s not easy to catch hold

of govt. officials in their offices because of their busy schedules. This does consume time and

energy. In some cases, the author had to return from the govt. offices without meeting concerned

46

officials. In some cases, the author found that the officials tried try to evade few important

queries. The findings of the study are entirely based on the views of VO members who are taking

benefits either from VO PDS or Non-VO PDS. These limitations and constraints can have some

bearing on the findings of the study.

References:

1. http://bihar.ozg.in/2010/01/public-hearing-on-public-distribution.html 2. http://articles.timesofindia.indiatimes.com/2011-04-19/patna/29446535_1_literacy-rate-

purnia-males 3. http://www.im4change.org/news-alert/justice-wadhwa-committee-slams-the-pds-

1759.html 4. http://www.im4change.org/news-alert/justice-wadhwa-committee-slams-the-pds-

1759.html

5. http://www.kartiklokhande.blogspot.in/2013/01/wadhwa-committee-recommends-abolishing.htm

6. http://businesstoday.intoday.in/story/cash-transfer-programme-lieu-of-subsidised

foodgrain/1/186383.html