India’s Public Distribution System (PDS), one of the largest food welfare initiatives in the world, is grappling with massive inefficiencies. A new report by the Indian Council for Research on International Economic Relations (ICRIER) reveals that 28% of subsidized grains meant for the country’s most vulnerable populations are being siphoned off, resulting in an annual loss of ₹69,000 crore.
The report estimates that approximately 20 million tons of rice and wheat—allocated to feed 814 million people under government schemes—are being diverted to the open market or exported.
Where is it going? Likely to the open market or even for exports,” said Ashok Gulati, Infosys Chair Professor at ICRIER and co-author of the policy brief. Despite digital interventions such as point-of-sale (POS) machines introduced in 2016 and Aadhaar-linked ration cards, significant leakages continue.
The report draws on data from the Household Consumption Expenditure Survey (HCES) and Food Corporation of India’s (FCI) monthly off-take figures from August 2022 to July 2023. While the 20 million metric tons of leakage reflect a marked improvement from the 46% wastage reported in 2011–12, the issue remains a critical concern.
Leakages by State
Certain states report higher leakage rates, with Arunachal Pradesh, Nagaland, and Gujarat at the top. Northeastern states, in particular, struggle due to inadequate digital infrastructure. In contrast, states like Bihar and West Bengal have made significant strides. Bihar reduced its leakage from 68.7% in 2011-12 to 19.2% in 2022-23, while West Bengal’s figures dropped from 69.4% to 9% over the same period.
Uttar Pradesh, however, remains the worst offender in absolute terms, with 33% of subsidized grains being diverted. Himachal Pradesh, Uttarakhand, and Maharashtra also face high rates of leakage.
Structural Reforms needed
The report recommends structural reforms to strengthen the PDS. Suggested measures include:
- Better Targeting of Beneficiaries: Ensuring resources reach those most in need.
- Transition to Food Stamps or Cash Transfers: Replacing grain distribution with food vouchers or direct cash transfers to reduce inefficiencies and corruption.
- Enhanced Monitoring Systems: Scaling up digital and blockchain-based tracking to prevent leakages.
“Despite improvements, systemic reforms are necessary to address the root causes of corruption and inefficiencies,” the report emphasizes.
The PDS is crucial for India’s food security, providing subsidized grains to over 800 million people. Yet, its inefficiencies place an immense financial burden on the exchequer and compromise the program’s goal of addressing malnutrition and poverty.
As India ranks among the world’s largest consumers of grains, ensuring the integrity of its distribution system is vital. Experts call for urgent interventions to plug the gaps in one of the country’s most critical welfare programs. Without reforms, the PDS risks continuing to drain resources while failing those it is intended to serve.