Functioning – Fair Price Shops, FCI, Ration Cards, Aadhar Linking, etc.


  • PDS is operated under the joint responsibility of the Central and the State/UT Governments.
  • The central  government  is  responsible  for  making  available  the  food  grains  needed  for the  PDS  through the  Food  Corporation  of  India  and  providing a  subsidy  to  make  it affordable.
  • The state governments are responsible  for  ensuring  that  beneficiaries can access  commodities  sold  under  the  PDS,  co-ordinating  the  entire  supply  process from  FCI  godowns  to  the  beneficiaries  and  monitoring  PDS
  • Fair price  shops (FPSs)  functioning   under  the   PDS  are  nodal  points   of  immense  importance  since beneficiaries  purchase  subsidised  PDS  goods  through the FPS.
  • The method of  licensing FPSs  and  monitoring  compliance  through  vigilance  committees  and  other  government officials are elaborately discussed in the PDS Control Order 2001 (GOI 2001), issued by the Department of Food and Public Distribution, Government of India.
  • The FCI purchases  food  grains  from  farmers  at the  minimum  support  price  (MSP)  and issues  food  grain  at  a  uniform  central  issue  price  (CIP)  to  all  states.
  • The CIP  is  lower than  the  economic  cost  incurred  by  the  central  government  to  procure  food
  • The main components   of   economic   cost   include   payment   to   growers and costs   for transporting,  handling,  storing  and  distributing  the  grain,  in  addition  to  the  cost  of maintaining the prescribed buffer stock.
  • The difference between the economic cost and the CIP is  the  food  subsidy  borne  by  the  central  government  from  its  annual  non-Plan budget.
  • The states  fix  consumer  end  prices  (CEP)  at  the  FPS  level  at  not  more  than Re.0.50  per  kg  over  the  central  issue  price  (CIP),  particularly  for  the  population  below the poverty line.
  • The states are also free to add to the coverage under the BPL category and meet the subsidy from their own resources.
  • The operational responsibility including allocation within State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
  • Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution.
  • Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.


FCI was formed in 1960’s and was part of larger plan directed toward food security and self-sufficiency. Other major institution was CACP. These two institutions along with MSP regime and Public distribution system were expected to work in tandem. FCI’s responsibility was to procure, Store and discharge grains as per policy of the government. Over the time, as in other cases these institutions too failed to adapt to changing circumstances such as changing demands of economy. As a result FCI now reels under chronic inefficiency through huge wastages, and storage cost of grains keeps on cumulating.

Critical role being played by Food Corporation of India in countering the challenges posed by COVID-19:

  • Notwithstanding its dubious reputation, the FCI has consistently maintained the PDS, a lifeline for vulnerable millions across the country.
  • Currently, in the middle of the COVID-19 pandemic, FCI with its buffer stocks holds the key to warding off a looming crisis of hunger and starvation, especially in regions where lakhs of migrant workers have returned home with little money or food.
  • The FCI has already moved 3 million tonnes (post-lockdown) to States, including Uttar Pradesh, Bihar, West Bengal and Karnataka and those in the Northeast, where demand outstrips State procurement and/or stocks.
  • The FCI has also enabled purchases by States and non-governmental organisations directly from FCI depots, doing away with e-auctions typically conducted for the Open Market Sale Scheme (OMSS).
  • Given the extended lockdown, the FCI is uniquely positioned to move grains across State borders where private sector players continue to face formidable challenges.

Concerns related to FCI

  • FCI’s operations are regarded as expensive and inefficient. There are long-term concerns regarding the costs of food subsidy.
  • The FCI has witnessed mounting debts which currently stands at an estimated ₹55 lakh crore in March 2020, in the form of National Small Saving Funds Loan.
  • FCI faces serious storage problems and is plagued by the issue of shortage of modern storage facilities. In the 1970s and 1980s, poor storage conditions meant a lot of grain was lost to pests, mainly rats.
  • There have been reports of widespread diversion of grains and high leakage losses.
  • FCI has lacked a “pro-active liquidation policy” for excess stocks which leads to market distortion in some instances. The distribution of subsidised grains is sometimes blamed for depressing food prices and affecting farmers.
  • Some experts have argued that given the increasing role of the market economy, the FCI seems to have long outlived its purpose.

Measures needed to revamp FCI

  • Use of Roads for transportation:
    • The FCI has long back recognized the road movement as better suited for emergencies and for remote areas.
    • However, in 2019-2020 (until February) only 24% of the grains moved by road.
    • FCI needs to increase the use of roads more imperatively to move grains with least cost and efforts to the remote areas where the need is greatest
  • Decentralized storage:
    • In the current context, it would be useful for the State government and the FCI to maintain stocks at block headquarters or panchayats in food insecure or remote areas.
  • Fiscal Burden:
    • The centre should release stocks over and above existing allocations under PDS and Pradhan Mantri Garib Kalyan Yojana, but at its own expenses rather than by transferring the fiscal burden to States.
  • Activating Vibrant Network:
    • In many States, there is a vibrant network of self-help groups formed under the National Rural Livelihoods Mission (NRLM) which can be tasked with last mile distribution of food aid other than the PDS.
    • Consultative committees presumably exist already in each State to coordinate with the FCI on such arrangements.
  • First in, First out (FIFO) principle:
    • Typically, the FCI’s guidelines follow a first in, first out principle (FIFO) that mandates that grain that has been procured earlier needs to be distributed first to ensure that older stocks are liquidated, both across years and even within a particular year.
    • It is time for the FCI to suspend this strategy, which will enables movement that costs least time, money and effort.
  • Farmer Producer Organisations (FPOs):
    • The FCI along with the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) has required expertise to manage the logistics to help farmers across the country to reach out to consumers directly.
    • The FCI should consider expanding its role to support FPOs and farmer groups, to move a wider range of commodities including agricultural inputs such as seeds and fertilizers, packing materials

The Shanta Kumar Committee recommendations however was criticized due to suggestions like limiting NFSA, cash subsidy, privatization of FCI despite suggesting useful reforms to reform FCI, PDS. A closer scrutiny in the recommendation is needed today in times of agricultural distress & drought prone years. The FCI needs to overhaul its operations and modernise its storage.


NFSA was enacted with the objective to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity. The objective is to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity.

Salient features of National Food Security Act 2013:

  • Coverage and entitlement under Targeted Public Distribution System (TPDS): The TDPS covers 50% of the urban population and 75% of the rural population, with uniform entitlement of 5 kg per person per month. However, the poorest of the poor households will continue to receive 35 kg per household per month under Antyodaya Anna Yojana (AAY).
  • Subsidised prices under TPDS and their revision: For a period of three years from the date of commencement of the Act, Food grains under TPDS will be made available at subsidised prices of Rs. 3/2/1 per kg for rice, wheat and coarse grains.
  • Identification of Households: The identification of eligible households is to be done by States/UTs under TDPS determined for each State.
  • Nutritional Support to women and children: Children in the age group of 6 months to 14 years and pregnant women and lactating mothers will be entitled to meals as per prescribed nutritional norms under Integrated Child Development Services (ICDS) and Mid-Day Meal (MDM) schemes. Malnourished children up to the age of 6 have been prescribed for higher nutritional norms.
  • Maternity Benefit: Pregnant women and lactating mothers will also be receiving maternity benefit of Rs. 6,000.
  • Women Empowerment: For the purpose of issuing of ration cards, eldest woman of the household of age 18 years or above is to be the head of the household.
  • Grievance Redressal Mechanism: Grievance redressal mechanism available at the District and State levels.
  • Cost of transportation & handling of food grains and FPS Dealers’ margin: the expenditure incurred by the state on transportation of food grains within the State, its handling and FPS dealers’ margin as per norms to be devised for this purpose and assistance to states will be provided by the Central Government to meet the above expenditure.
  • Transparency and Accountability: In order to ensure transparency and accountability, provisions have been made for disclosure of records relating to PDS, social audits and setting up of Vigilance Committees.
  • Food Security Allowance: In case of non-supply of entitled food grains or meals, there is a provision for food security allowance to entitled beneficiaries.
  • Penalty: If the public servant or authority fails to comply with the relief recommended by the District Grievance Redressal Officer, penalty will be imposed by the State Food Commission according to the provision.

The NFSA act marks a watershed in the approach to food security from welfare to a rights-based approach.

  • The National Food Security Act gives statutory backing to the TPDS.
  • This legislation marks a shift in the right to food as a legal right rather than a general entitlement.
  • The Act classifies the population into three categories: excluded (i.e., no entitlement), priority (entitlement), and Antyodaya Anna Yojana (AAY; higher entitlement).
  • It establishes responsibilities for the centre and states and creates a grievance redressal mechanism to address non-delivery of entitlements.
  • Leakages and diversion of subsidised food grains under the TPDS continue to be at unacceptable levels whereas the rollout of the National Food Security Act (NFSA) has led to comparatively better outcomes, going by an NCAER survey.

Way forward to increase the efficiency of NFSA

  • Use of Information Technology right from the time of purchase of food grains till its distribution will help in increasing the overall efficiency of the entire process, while maintaining transparency and curbing corruption.
  • It is imperative that there is a seamless flow of information online between the FCI and States and therefore they need to be integrated so that exact information about how much food grain has been procured from which mandi, which warehouse it is stored in and for how long and when it has been released for distribution can be available.
  • There should also be information about the quality of food grains at the time of purchase, storage conditions in the warehouse, when it is given to PDS shops and when the shops have distributed it to the beneficiaries.
  • Move towards One Nation One Ration Card (RC) which will ensure all beneficiaries especially migrants can access PDS across the nation from any PDS shop of their own choice. This will provide freedom to the beneficiaries as they will not be tied to any one PDS shop and reduce their dependence on shop owners and curtail instances of corruption.
  • Expand the coverage of Integrated Management of PDS (IMPDS) to all the states.

The right to food is a well-established principle of international human rights law. It has evolved to include an obligation for state parties to respect, protect, and fulfil their citizens’ right to food security. As a state party to the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights, India has the obligation to ensure the right to be free from hunger and the right to adequate food. India needs to adopt a policy that brings together diverse issues such as inequality, food diversity, indigenous rights and environmental justice to ensure sustainable food security.


About TPDS

  • The Government of India   revamped the   almost   universal   PDS   and   launched   the Targeted Public Distribution System (TPDS) in 1997 to narrow its coverage to a focused group  of
  • The aim  was  to  provide  food  grains  to a targeted  population below the poverty line (BPL).
  • Identification of BPL families was carried out through the BPL census conducted by the Ministry of Rural Development, Government of India.
  • Food grains were sold to this group at half the economic cost, while people above the poverty line (APL)  were  offered  food  grains  at  economic
  • There was  a  fixed  entitlement  of food  grains  per  month  consisting  of  rice  and  wheat/atta  for  BPL  families, while  there was  no  fixed  entitlement  for  APL
  • The entitlement  for  BPL  families  increased over
  • A supplementary  food  security  scheme  was  launched  in the  year 2000  to cater  to  the  poorest  of  the  poor stratum of  society,  namely,  the  Antyodaya  Anna Yojna(AAY).
  • There was  a  set  of  five  criteria  to  identify  these  families  following  a  Supreme Court  order.  The entitlement  was  fixed  at  35  kg  per  month  per  family covered  under AAY.
  • The scheme  was  expanded  in  two  phases, in  2003  and in 2004,to  increase coverage.

Efficacy of NFSA and TPDS

  • During Covid crisis, the country’s technology-driven PDS swiftly came to the fore by successfully scaling up to distribute almost double the quantity of food grains to more than 80 crore beneficiaries in the country during April to November 2020
  • 100% digitizedration cards/beneficiaries’ data under NFSA in all States/UTs. Details of almost 5 Crore ration Cards covering nearly 80 Crore beneficiaries are available on transparency portals of States/UTs.
  • Nationally, achieved nearly 67% biometrically/Aadhaar authenticateddistribution of monthly allocated foodgrains to States/UTs under NFSA.
  • Under PMGKY, each person who is covered under the National Food Security Act would get an additional ration for free, in addition to already subsidised food grain provided through the Public Distribution System (PDS).
  • The Ministry of Consumer Affairs, Food and Public Distribution reported that an average of 93-94 per cent food grains per month was distributed under NFSA and PMGKAY. So, only 6-7 per cent of food grains was not lifted by eligible or excluded beneficiaries.


  • While the integrated management of PDS through automation of operational fair price shops (FPS) or Aadhaar-seeding of ration cards helps deepen the portability of One Nation One Ration Card (ONORC), reducing targeting (inclusion/exclusion) errors, foodgrains access, and mitigating diversion or leakage should draw attention for an inclusive food safety net.
  • The second dimension is targeting errors by assessing and analysing the per cent of inclusion/exclusion errors in NFSA list.
  • The other dimensions of evaluation are awareness and education on ONORC portability, effectiveness of grievance redress system and social audit, and supply chain and PDS reforms.

Way forward

  • The Food and Civil Supplies Department should keep a vigil on the functioning of FPSs, checking for any diversion of subsidised food grains to the open market.
  • There can be graduated sanction for unscrupulous FPS dealers if they do not extend working hours for a stipulated period and fail to maintain a daily transaction ledger and update stocks/inventories.
  • Data governance should be put in place to increase transparency and accountability of TPDS that can help deepen portability benefits of ONORC and scale up the implementation of integrated management of PDS.
  • States and UTs should allocate food grains to those who are excluded from the TPDS by means of food coupons, cash transfer, and release of surplus stocks from the Central pool in a phased manner.
  • The community kitchen concept must work with the support of civil society organisations to serve the excluded sections.