Why Public Distribution System failed as Retail Mechanism

Availability of food grains is not a sufficient condition to ensure food security to the poor. In addition to availability of food grains 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.

  • Raise the level of incomes of the poor or
  • Supply food grains to the poor at subsidized prices.

Employment generation programs for the poor try to ensure that the poor have sufficient purchasing power. The Public Distribution System (PDS) tries to supply food grains to the poor at subsidized prices.

There are around 4.62 lakh Fair Price Shops (FPS) distributing annually commodities worth more than Rs 30,000 crore, to about 16 crore families, the PDS in India is perhaps the largest distribution network of its type in the world. The level of food subsidies in India as a proportion of total government expenditure has gone up from a level of about 2.5 percent or below during the beginning of the 1990s to more than 5 percent today.

Central government is responsible for procurement of good and its duty of corresponding state government to ensure the fair distribution.

All is not well with the Public Distribution System in India. There have been numerous scams in which food for the poor have gone into the market, poor people starving to death. Despite efforts by the government efficiency of the PDS is questionable.

Reason for the failure of PDS as a retail mechanism:

  • Lacks of awareness among the poor, the poor were not aware of the quantity and price to pay for the goods this fact helped officers to take undue advantage of the situation and sell the goods in the market.
  • Corrupt officers
  • Mechanism of distribution not foolproof there were many loopholes like it is well known that Fair Price Shop owners declare on paper that they have sold a certain quantity of food to the poor at subsidized prices but actually make a big profit by selling the food at market prices.
  • Inefficiency in the government machinery and thought process, they didn’t come up with innovative ideas and they opposed any changes in the current system.
  • Decision of the government to go on its own not taking private players along.
  • Coming up with a single model for pan India ,India as we all know is so diverse that one model cannot cater to all state and all places there should be flexibility in the structure of PDS
  • Opening store in remote areas incurs huge expenses on the part of government so it should have taken the services of the local store to cut down costs.
  • There are large number of fake ration cards adding to the burden of the government
  • Lack of proper channel of information flow, the correct information rarely reached the top bureaucracy

Despite good intention on the part of government PDS failed in India because they were fundamentally wrong they seemed like they were implemented in hurry (considering the loopholes) without proper market research. In this case it seems that government lacked vision and future insights. Again as every other government machinery it suffered with corruption.