- Open-ended Procurement: All incoming grains accepted even if buffer stock is filled creating a shortage in the open market.
- The recent implementation of Nation food security act would only increase the quantum of procurement resulting in higher prices for grains.
- The gap between required and existing storage capacity.
- The provision of minimum support price has encouraged farmers to divert land from production of coarse grains that are consumed by poor, to rice and wheat.
- CAG audits have time and again highlighted the Inadequate storage capacity with FCI.
- Food grains rotting or damaging on the CAP or Cover & Plinth storage.
- The storage of foodgrains inculcates high carrying costs on the government.
Allocation of food grains
- Identification of beneficiaries:
- Identification of beneficiaries by the states is not fool proof.
- Lots of errors occur in exclusion and inclusion of Below Poverty Line (BPL) and Above Poverty Line (APL) families in beneficiary data.
- The problem of targeting is compounded by the lack of good quality regular data; no regular official estimates of the actual income of households.
- The true beneficiaries are not getting food grains while those that are ineligible are getting undue benefits.
- The high prevalence of ghost cards, made in the name of non-existent people in several states indicates that grains are diverted from deserving households into the open market.
- Illicit Fair Price shops:
- Part of this leakage occurs at the level of the fair price shops, where some store owners exchange the high-quality goods provided from the government for distribution through the PDS with lesser quality goods from the general stores..
- Leakage and diversion of food grains during transportation.
- Uneven spread of Food production, procurement and distribution. For example: north eastern states are very far from Punjab and Haryana, from where wheat is procured. To transport food grains from Punjab to far flung areas in North east will entail cost and time both.
- Many times, good quality food grains are replaced with poor quality cheap food grains.
- Public distribution system includes only few food grains such as wheat and rice, it does not fulfil the requirement of complete nutrition.
- Fair Price Shop owner gets fake Ration cards and sell the food grains in the open market.