Case studies

Computerization of Targeted PUBLIC DISTRIBUTION SYSTEM

Central Government and 4 Pilot States: AP, Assam, Chattisgarh and Delhi
The Targeted Public Distribution System (TPDS) is an important policy instrument aimed at reducing poverty by formulating a mechanism for delivery of the minimum requirement of food grains. This supply of food grains is made available at highly subsidised rates to BPL (Below Poverty Line) households. It was launched in 1997 following limited success of the universal PDS system. The primary aim was to keep the budgetary consumer subsidy in check. It was done through sale of food grains to APL (Above Poverty Line) households at economic cost and confining the budgetary food subsidy to about 65 million identified BPL families. 

The supply of the requisite quantity of food grains for distribution at subsidised rates comes from the central pool but the success of TPDS in terms of meeting its stated objectives depends largely on the ability of state governments in genuinely identifying the poor families and putting in place an effective and efficient delivery system. 

The efficacy of the delivery system was significantly low as reported by an evaluation conducted by the Planning Commission (2005), ORGMARG (2005) and NCAER (2007-08). The evaluation revealed that only around 42% of subsidised grains issued from the central pool reached the target group, the remaining being siphoned off the supply chain through leakages and diversions. The report suggested that performance of TPDS can be considerably improved if efforts are made towards streamlining the BPL identification survey and making the delivery system more effective and transparent.

Even the Finance Minister had highlighted his concern on TPDS performance by stating that “the next concern is the deeply flawed distribution system”. The evaluation study on TPDS by the Programme Evaluation Organisation (PEO) has found, inter alia, that taking into account all the inefficiencies of PDS, Government of India (GoI) spends Rs. 3.65 to transfer Re. 1 to the poor. About 58 per cent of subsidised grains do not reach the target group, of which a little over 36 per cent is siphoned off the supply chain.

Taking insights from the PEO report, the Finance Minister’s speech and research reports from NCAER, ORG MARG and IIPA, the Department of Food & Public Distribution, Ministry of Consumer Affairs, Food & Public Distribution, GoI, initiated a project to improve the efficiency of the TPDS delivery system with the help of Information and Communication Technology (ICT) tools and applying industry-standard supply chain management practices. The project has been named “Computerisation of Targeted Public Distribution System”.

Goal of the project:
The goal of the TPDS computerization project is “to use Information and Communication Technology to make the TPDS program more efficient, effective and transparent and to bring accountability in the system”

Envisaged improvements in TPDS: 
The envisaged TPDS system would have the following main features: