CHAPTER-II

PUBLIC DISTRIBUTION SYSTEM

Stabilising foodgrain prices and providing food security to poor and vulnerable groups are prime concerns of the public distribution system implemented in Tamil Nadu. To this effect, the State is implementing the universal public distribution system, instead of targeted public distribution system advocated by the Government of India. Under targeted public distribution system, families living below the poverty line are supplied with essential commodities at much lower price than the price at which they are supplied to families above the poverty line. But under the universal public distribution system followed by the Government of Tamil Nadu, no such distinction is made between Below Poverty Line (BPL) and Above Poverty Line (APL) families. All families are supplied with essential commodities at the same rate if they desire to draw rations as per their options. The Government of Tamil Nadu consciously adopts this policy because this system is more effective.

Correct estimation of number of households living below poverty line is an arduous task and in the absence of a widely accepted methodology, such estimation always suffers from inaccuracy. Further, such estimation results in substantial exclusion of genuine Below Poverty Line families who deserve support under Public Distribution System. Poverty is a dynamic phenomenon. Large number of families who may be considered above poverty line at a point of time, but highly vulnerable to income fluctuations, slip below poverty line regularly. The reasons for this are not far to seek. Regional events like droughts, floods, disaster cause large scale shifts of families to BPL category. Local and family events like death of bread winner also cause relapse of families to BPL category. This is a serious concern while planning for providing food security to the poor. In a State like Tamil Nadu, food production is highly dependent on monsoons, frequent droughts or floods which affect large number of potentially vulnerable families. Therefore, targeting a specific segment of population and excluding large number of vulnerable families under public distribution system is unacceptable administratively as well as politically.

Further, Government policy is to ensure that foodgrains price, particularly that of rice is kept at a reasonable level. This could be ensured by providing adequate quantity of foodgrains to families who are below poverty line as well as those vulnerable to income instability. Therefore, Tamil Nadu Government has cautiously examined all the possibilities and has adopted a system of universal Public Distribution System for a quite a long time. This strategy has worked well and even during difficult periods price levels of foodgrains have been kept under control. As a result, starvation deaths and chronic hunger are absent in this State. Following the same logic, Government of Tamil Nadu is implementing Rs.2/- per Kg. rice scheme under Public Distribution System by providing additional subsidy over and above the subsidy offered by the Government of India

Public Distribution System is administered through Civil Supplies Department. At district level, though this department is headed by District Supply Officer, except Chennai where it is headed by Deputy Commissioners, the District Collectors are responsible for coordinating and monitoring implementation of Public Distribution System. The Tamil Nadu Civil Supplies Corporation is a wholesale agency for moving stock from Food Corporation of India to its 210 operational godowns spread all over the State. From these operational godowns, stocks are moved by lead cooperative societies and delivered at the doorsteps of fair price shops. Similarly, sugar is being moved by Tamil Nadu Civil Supplies Corporation from the respective cooperative/ private sugar mills and distributed through its operational godowns. Every year, transport contractors are appointed for movement of goods from Food Corporation of India godowns to Tamil Nadu Civil Supplies Corporation operational godowns. Likewise, cooperatives also engage their own transport contractors through open tender system for moving stocks from Tamil Nadu Civil Supplies Corporation operational godowns to public distribution system outlets. In the case of kerosene, cooperative societies take delivery from storage points of wholesale dealers and transport them in barrels to fair price shops. In the case of kerosene bunks, stocks are moved through tankers. Movement of commodities to fair price shops is arranged through route charts and availability of sufficient stocks in the shops is monitored by District Collectors, officials of Civil Supplies department, Revenue and Cooperative departments. Based on entitlements and after taking into account the closing stock every month, the net allotment is made at the district level and commodities are indented and taken delivery according to the off-take level and storage space in the shops. Thus the availability of 100% entitlement of essential commodities is ensured in all public distribution system outlets and monitored very closely.

Fair Price Shops

In Tamil Nadu, fair price shops are run predominantly by the cooperatives and in a limited number by the Tamil Nadu Civil Supplies Corporation. The uniqueness of the system in Tamil Nadu is that private traders are not allowed to run fair price shops. However, in recent years the Government of Tamil Nadu have permitted the Women Self-help Groups to run fair price shops. As on 29.2.2008, about 678 fair price shops are run in this State by women self help groups. Similarly, village panchayats are also authorized to run fair price shops and necessary guidelines have already been issued by the Rural Development and Panchayat Raj Department. But no panchayat has come forward so far.

It is the endeavour of this Government to see that the public distribution system outlets are located in close proximity to habitations. The Government have ordered to open new fair price shops in such a way that no cardholder walks more than 1.5 KMs. This has ensured establishment of fair price shops in all remote and far-flung areas. If the main shop is having more than 500 cards and the public desires to have a part-time shop, it is permitted even if the number of cards is 150 in the area covered by part-time shop. From 1.4.2007, this Government have opened 492 part-time fair price shops and 72 new shops in order to ensure better access of public distribution system outlets to the public. As on 29.2.2008, the State has 29,592 public distribution system outlets of which 23,521 are full time and 6,071 are part time as indicated below:

Family Cards

Though the Government of India have categorised families as BPL and APL for distribution of foodgrains, no such distinction is made in Tamil Nadu. However, poorest amongst poor families have been identified and issued with Antyodaya Anna Yojana (AAY) cards. The number of families covered under AAY Scheme have been expanded periodically as per the direction of the Government of India, by selecting more and more deserving poorest of poor from out of BPL families. The total number of AAY beneficiaries allotted to Tamil Nadu is 18,64,600. An exercise was carried out to reverify these cardholders and it was found that about 57,489 beneficiaries were not deserving to be classified as AAY and these members are being replaced with eligible families. As on date, the State has 18,07,111 families under AAY. In the case of cards other than AAY, option-based system is followed, wherein rice option cards are printed in green colour and sugar option cards are printed in white colour. There are also honorary cards issued wherein families opt for not drawing any ration. As on 29.2.2008 the details of the family cards in circulation are as follows:

Family cards to transgender:

In India transgender are not being recognized with separate entity for issuing ration cards. As on 20.03.2008 , 219 family cards have been issued for them

The Government have taken all initiatives to simplify the process of issuing ration cards and demystifying the entire process. It is expected that this will ensure that deserving families get ration cards very quickly without any hassle. To achieve this, Government issued orders for decentralizing data entry at Taluk level and card printing and data processing at district level directly under the control of District Collectors and in the case of Chennai city directly under the control of Commissioner of Civil Supplies. From 1.4.2007, the Government has issued 7,36,196 new cards to the eligible families upto 29.2.2008.

As part of the e-services project, a massive programme of updating the online ration card database to carry out corrections and modifications that have taken place over the last 4-5 years, is in progress with support of ELCOT. These corrections are carried out at taluk level and the corrected data is expected to be posted in TNSWAN online. This will ensure that the card database will be dynamic and the information available are on real time basis. Ultimately this system will be effectively put to use for automatic generation of monthly allocation shop wise, so that manual interventions are completely eliminated. The Government also intend to use this updated database for taking up 100% door-to-door verification of the ration cards to eliminate bogus cards in a phased manner.

In addition, to enable introduction of smart cards and electronic billing machines across the State and complete automation of all public distribution system processes in Civil Supplies Department, Tamil Nadu Civil Supplies Corporation and Cooperatives, a project proposal has been prepared and submitted to the Department of Information Technology, Government of India for funding under the World Bank assisted National E-Governance Action Plan (NEGP).

A project to provide online electronic services (e-services) to cardholders over the internet is being implemented from 2007-2008 with a grant of Rs.4.92 crores from the Department of Information Technology, Government of India. The following components have been implemented under the e-Services project:

v Computer hardwares have been supplied to all 205 Taluk Supply Officers and 14 Assistant Commissioner Offices.

v TNSWAN network has been extended to Taluk Supply Officers from the Taluk office point of presence.

v A work-flow based ration card application software is under final stage of development by ELCOT.

v The entire ration card database created in various stages since 2004 has been cleaned up and hosted in the maintenance frame at the State Data Centre at Perungudi set up by ELCOT.

v Online services to ration cardholders will be provided under this project.

v Billing machines, connected to the State Data Centre through GPRS will be installed in all shops as the final step to reduce the drudgery of fair price shop salesmen in having to maintain several registers and provide effective and error-free accounting. As a pilot project, two shops in Chepauk zone have been taken up and the testing is in progress

Scale of supply of commodities

Essential commodities that are supplied under the public distribution system are rice, wheat, sugar and kerosene. Details of commodities supplied under public distribution system, their prices and scale of supply are given in the table below:

Scale of supply of Kerosene

Under the AAY Scheme, Government of India is supplying foodgrains @ Rs.3 per kg. Scale of supply is 35 Kgs. per family. The Government of Tamil Nadu is subsidizing it further and supplying this rice @ Rs.2 per kg.

(i) Rice:

Rice is a staple food of Tamil Nadu. The scheme of supplying of rice at Rs.2/- per kg to all cardholders is under implementation in the State from 3.6.2006. The scheme has enjoyed overwhelming support of the people. The rice is obtained from central pool allotment under the targeted public distribution system through Food Corporation of India. The present monthly allotment of rice by Government of India and the issue price of Food Corporation of India is indicated below:

Monthly requirement of rice under PUBLIC DISTRIBUTION SYSTEM and other welfare schemes including AAY is about 3.00 lakh MTs per month. The Government of Tamil Nadu is fully utilizing allotments made under BPL and AAY quota and for the remaining requirement is utilizing the APL quota. The rice which is obtained from the custom milling of paddy procured under decentralised procurement system by Tamil Nadu Civil Supplies Corporation on behalf of the Government of India is also adjusted against the central pool allotment and utilized in the State under public distribution system. As such the good quality of rice supplied is appreciated by the public. The present monthly offtake of rice, including AAY, under public distribution system is about 2.80 to 2.89 lakh MTs. From 1.4.2007, the quantum of rice distributed under public distribution system upto 29.2.2008 is 30,96,285 MTs.

(ii) Wheat:

The Government of India was allotting 10,000 MTs of wheat every month till May, 2006. This allotment was reduced to 3,783 MTs from June, 2006. The State Government has pursued the matter with the Government of India and is getting an additional adhoc allotment every month to meet the rising demand. However, the Government of Tamil Nadu continue to pursue this matter with the Government of India and is pressing for restoration of the monthly allocation to 10,000 MTs per month on regular basis. From 1.4.2007 about 85,700 MTs of wheat have been distributed under public distribution system upto 29.2.2008. The present monthly average offtake of wheat is about 7,790 MT.

Further, in order to target micro nutrient deficiency, special order has been obtained from the Government of India for converting public distribution system wheat not exceeding 2,500 MTs every month into wheat flour (atta) fortified with Vitamin A, Iron and Folic acid and supply it through public distribution system at cost price. This is also expected to prevent diversion of wheat from public distribution system and ensure that cardholders get fortified atta at a significantly lower price than the market price. These efforts will be continued by the Government and more wheat will be converted into fortified wheat flour and supplied through public distribution system based on public demand.

(iii) Sugar

The Government of India allots levy sugar on monthly basis from various Sugar Mills. Based on this allotment, Tamil Nadu Civil Supplies Corporation is lifting the stock and distributing it through the public distribution system. The present allotment of Government of India is 10,832 MTs. As the Government of India allotment is insufficient to meet the requirements, the State Government is also purchasing non levy sugar from the cooperative federation at open market rates for supply to cardholders. The present monthly average off-take of sugar is around 24,140 MTs. The differential cost between the market rate of non-levy sugar and the issue rate is being met from food subsidy. During this year upto 29.2.2008 about 2,65,600 MTs of sugar has been distributed under public distribution system.

(iv) Kerosene

The Government of India have gradually cut down the monthly allocation of kerosene from 81,108 KLs in the year 2002 to 59,852 KLs in 2008 on the basis of number of LPG connections available.

The Government of Tamil Nadu is bearing the subsidy of the differential cost at the rate of 60 paise per litre with effect from 1.1.2001 in order to avoid passing on this increased cost to consumers. The present retail selling price of kerosene under public distribution system is fixed at Rs.8.40 to Rs.9.00 per litre depending upon the distance from oil supply terminals of oil companies to kerosene wholesale points with effect from 1.3.2002. The Government of Tamil Nadu have revised the kerosene wholesalers’ margin and wholesalers’ transport margin with effect from 23.5.2007 and decided not to increase the retail selling price to cardholders. This additional burden of subsidy is also absorbed by Government of Tamil Nadu. The total subsidy for supply of kerosene under public distribution system works out to Rs 4.29 crores per year.

Massive efforts are being carried out to stamp ration cards which are supplied with LPG connections, so that kerosene saved in this process will be utilized for the purpose of supplying to 42,39,652 cardholders who were issued with ration cards in the last 2 to 3 years but not supplied with kerosene. By mopping up this saving, the Government of Tamil Nadu announced that all these new cards will be supplied with one litre of kerosene every month with effect from Pongal 2008. Further measures taken by stamping and elimination of bogus cards have provided an additional savings with which the Government has ordered to supply one additional litre ie., totally 2 litres per card per month to all these 42,39,652 new cardholders with effect from March, 2008, who were hitherto denied supply of kerosene.

Kerosene is also being sold at public distribution system prices in the open market through 2,286 handcartmen. The Government has taken the initiative to bring them into the main system of distribution by attaching them to specified shops to supply kerosene to specified cards to fulfill the High Court verdict. We hope this process will arrest leakages and will give an additional savings for its distribution to deserving families. The Government is hopeful that further efforts of stamping and card verification and all other measures to control leakages is likely to provide additional savings so that the objective of giving at least 3 litres per card to these newly issued cards will be fulfilled in near future.

To streamline the distribution of kerosene, the Government in its earlier tenure had issued orders to put up kerosene bunks for supplying kerosene to cardholders, wherever possible. A kerosene bunk normally serves about 5,000 to 15,000 cards. Distribution through bunks ensures assured availability of the stock throughout the month, besides ensuring supply to cardholders in correct measure. At present, there are 312 kerosene bunks, of which 269 bunks function under cooperatives and 43 under Tamil Nadu Civil Supplies Corporation. All these kerosene bunks are being computerized with billing machines to prevent leakages.

Food Subsidy

Price of rice supplied in the public distribution system in Tamil Nadu is much lower than the issue price of rice fixed by the Government of India. Therefore, the State Government sanctions subsidy to the Tamil Nadu Civil Supplies Corporation. The details of provisions made towards subsidy from 2003-2008 are given below:

(Rs. in crores)

As the issue price of the rice distributed under public distribution system has been reduced, a provision of Rs.1,950 crores has been made in the Budget Estimate for 2008-2009 to meet the commitment towards food subsidy.