A STUDY ON

EFFECTIVENESS OF PUBLIC DISTRIBUTION SYSTEM

(WITH REFERENCE TO PARAWADA VILLAGE, VISAKHAPATNAM)

A business research report submitted to GITAM Institute of Management,

GITAM UNIVERSITY
In partial fulfilment for the award of the degree of
INTEGRATED MASTER OF BUSINESS ADMINISTRATION
Submitted By
B.Bindusha
(122511643)
Under the esteemed guidance of

GITAM INSTITUTE OF MANAGEMENT

GITAM UNIVERSITY
Visakhapatnam 530 045
(2015-2016)

INTRODUCTION TO PDS
PUBLIC DISTRIBUTION SYSTEMS:
A public distribution shop, also known as fair price shop (FPS), is a part of India's public
distribution system established by Government of India which distributes rations at a
subsidized price to the poor. Locally these are known as "ration shops" and chiefly sell wheat,
rice, kerosene and sugar at a price lower than the market price. Other essential commodities
may also be sold. To buy items one must have a ration card. These shops are operated
throughout the country by joint assistance of central and state government. The items from
these shops are much cheaper but are of average quality. Ration shops are now present in
most localities, villages towns and cities. India has 478000 shops constituting the largest
distribution network in the world.
The introduction of rationing in India dates back to the 1940s Bengal famine. This rationing
system was revived in the wake of acute food shortage during the early 1960s, before the
Green Revolution.
The Benefits of the PDS/ Ration shops can be availed only if the candidate possesses the
following ration cards in Andhra Pradesh:

Pink cards: are issued to those cardholders opting for rice as well as all other
essential commodities. These are basically given to the people below poverty line.

White cards: are issued to cardholders who do not want any commodity under Public
Distribution System. These are given to the people who are above poverty line and
this type of ration cards merely act as an identity proof for the card holder.

Annapurna Yojana: The people who come under this yojana are entitled to get
10 kgs of rice for free from the PDS or ration shops.these include people who are aged
above 60 years and fall below the poverty line.

AAY(Antyodaya Anna Yojana): Under AAY scheme the poorest among the BPL
families are selected and issued AAY ration cards. Households having this card are
issued 35 kgs of rice at the rate of Rs. 3 per kg. The scheme initially targeted the 5%
of the population who couldnt have 2 square meals a day. It now also brings into
consideration BPL households headed by widows, terminally ill persons, disabled
persons or persons above 60 years with assured means of subsistence or societal
support.

PUBLIC DISTRIBUTION SYSTEM IN ANDHRA PRADESH:

Andhra Pradesh State Civil Supplies Corporation Ltd. is a State Agency appointed by
the State Government for lifting of Rice and Wheat from FCI and Levy Sugar from Factories
under PDS. It is the responsibility of the Corporation to undertake transportation, storage and
delivery of the stocks under PDS at the door steps of the Fair Price Shop Dealers.
The transportation of stocks from FCI/Factories to MLS Points is called Stage-I
transportation, which is being undertaken through the District-wise Transport Contractors
appointed separately for food-grains and Levy Sugar.
The transportation from MLS Point to the door step of the F.P. Shop Dealer is called
Stage-II transportation, which is being undertaken through Corporation Vehicles and Stage-II
contractors appointed by the Collectors (CS) on approval of the rates by Head Office.
In some Districts, direct lifting of food-grains is also being undertaken from certain
FCI god owns to FP Shops within a radius of 25 KMs. by avoiding Stage-I transportation and
handling charges.
In Metropolitan areas of Twin Cities, rationed area of Ranga Reddy District,
Vijayawada and Visakhapatnam, FP Shop Dealers themselves are directly lifting the stocks
from MLS Points.

TRANSPORTATION:
There are two stages of transportation of PDS commodities for reaching the stock up
to the door steps of the Fair Price Shop Dealers. Transportation from FCI godowns and
Sugar Factories to MLS Points is known as Stage-I transportation and transportation from
MLS Points to Fair Price Shops is known as Stage-II transportation.

STORAGE:
The Corporation is having 439 Mandal Level Stock Points in the State for storage of
stocks. Out of 439 MLS Points, 29 MLS Points are being handled by GCC and the
remaining 410 MLS Points by the Corporation. As and when the storage space is required,
Corporation is hiring additional godowns in districts.

ALLOCATION AND LIFTING OF RICE:

(Qty. in MTs.)
Below Poverty Line (BPL)

87,674

Above Poverty Line (APL)

1,31,334

Antyodaya Anna Yojana (AAY)

54,524

Additional APL (Addl.APL)

41,414

Social Welfare Institutions

5,772

Annapurna

932

NPNSPE (Mid-day-Meals)

10006

TOTAL

332083

The present requirement of rice under PDS is 3, 24,797MTs. and rice under APL allotment is
being lifted from FCI every month to meet the over and above requirement under PDS.
BELOW POVERTY LINE (BPL):
It is a monthly allotment at Central Issue Price of Rice is Rs.565/- per Qtl. Govt. of
India is presently allotting 87674 MTs. of rice per month against the requirement of 3,
24,797MTs. to the BPL families. The balance quantity over and above BPL allotment is
being met by lifting APL & Addl.APL rice at a cost of Rs.830/- per Qtl. The rice is being
released @ 4 Kgs. per head upto a maximum of 20 Kgs. to each white card-holder @ Rs.1/per Kg.
ABOVE POVERTY LINE (APL):
It is a monthly allotment at Central Issue Price of rice is Rs.830/- per Qtl.
Government of India is allotting 1, 31,334 MTs. per month for releasing to Pink Card-holders
@ Rs.9/- per Kg. as non-subsidy rice. This rice is also meant for releases to Prisons, Govt.
Institutions, under Cyclone, Flood and Natural Calamities at CSC economic cost. But the
entire APL allotment is also being utilized to meet the shortfall of requirement to the BPL
families.
ANTYODAYA ANNA YOJANA (AAY):
It is a monthly allotment and Central Issue Price of Rice is Rs.300/- per Qtl. Govt. of
India is allotting 54524MTs per month, for releases to 15,57,829 families, who are poorest of
the poor as identified by the District Collectors @ 35 Kgs. per month at an end consumer
price of Rs1.00 per Kg.
4

ANNAPURNA SCHEME (AP):

Central Issue Price is at BPL rate i.e. Rs.565/- per Qtl. Govt. of India is allotting 932
MTs. per month for release to 93,200 beneficiaries i.e. Senior Citizens, who are not getting
pension @ 10 Kgs. per head per month at free of cost.
SOCIAL WELFARE INSTITUTIONS (SWI) & SOCIAL WELFARE HOSTELS
(SWH):
Central Issue Price of rice under SWI/SWH is Rs.565/- per Qtl. i.e. at BPL rate. The
rice is being released to meet the requirement of all Hostels, Ashram Schools, Residential
Schools, Residential Junior Colleges of ST, SC & BC categories and other Institutions under
the control of Social Welfare Dept. and also to Homes, Hostels for Physically Handicapped,
Residential Schools for deaf and blind for boys and girls, Handicapped Children, State Home,
Service Home, Children Home, Collegiate Girls Hostels, Crech Centers (to the children of
Agriculture Labour Women) Balwadies, Regional Training Centres, Women Welfare
Branches, Mobile Creches, Women and Child Welfare Centres and Vocational Training
Centres, which are under control of Women Development & Child Welfare Department.
Rice will be supplied @ Rs.400/- per Qtl. to the above Institutions. The normal monthly
allocation made by GOI is 5772.260 MTs. for Social Welfare Institutions, as against the State
requirement of 17,474.992 MTs. of rice for SW Hostels & Institutions.
NATIONAL PROGRAMME OF NUTRITIONAL SUPPORT TO
EDUCATION (NPNSPE) / MID - DAY MEALS SCHEME:

PRIMARY

Govt. of India allotted a quantity of 138232 MTs. of rice under the scheme at free of
cost for Primary & Upper Primary Classes, to meet the requirements under cooked meal
programme for the year 2012-13. Rice is being released to DWCRA women and Self-help
Groups and through Fair Price Shops as allotted by the District Collectors. In respect of
Hyderabad and Visakhapatnam Metropolitan Cities, rice is being released to Nandi
Foundation, an NGO, directly, for supply of cooked meal to the schools. It has been decided
by the Govt. to release the rice stocks from MLS Point to School Point avoiding F.P. shops
point, to ensure proper quality and weighment.
In respect of IX & X classes the state Govt. meets the expenditure of cost and
transport and handling charges.
ALLOTMENT AND LIFTING OF RICE UNDER WHEAT BASED NUTRITION
PROGRAMME (WBNP):
Govt. of India allocated a quantity of 9440 MTs. of rice for 3rd Quarter, i.e. October2012 to December-2012, under the programme for the year 2012-13 at BPL cost, i.e. 565.00
per Qtl. A quantity of 12069 MTs. has been released upto September 2012 for the year 201213 Rice released to 88 Care projects and ICDS Projects of Women Development & Child
Welfare Department during the year. The said rice is being released at Rs.4.00 per Kg. The
scheme is being implemented in 17 districts except Guntur, Prakasam, Anantapur, Kurnool,
Adilabad and Hyderabad Districts. The State Government is reimbursing subsidy for the
differential cost.

RAJIV GANDHI SCHEME FOR EMPOWERMENT OF ADOLSCENT GIRLS

(RGSEAG-SABLA):
Govt. of India allotted 4981.620MTs. of rice FOR 1st Quarter for the year 2012-13 and
a quantity of 4981.610MTs for the 2nd Quarter for the period, Oct12 Dec12, at BPL cost in
7districts of Vishakhapatnam, West Godavari, Chittoor, Ananthapur, Mahabubnagar, Adilabad
and Hyderabad. The scheme is implemented for providing supplementary nutrition for under
nourished adolescent girls. Under the scheme, every adolescent girl should be provided 6
Kgs. of rice for a period of 3 months as per the guidelines of the scheme.
VILLAGE GRAIN BANK SCHEME:
Govt. of India allotted a quantity of 6512 MTs. of rice for the year 2009-10, at free
costas one time grant, for setting up of 1628 Village Grain Banks in 12 districts. The lifting
of entire allocation from FCI has been completed. There is no allotment from 2010 -11
onwards under the scheme.
ALLOTMENT AND LIFTING OF WHEAT:
As the rice is the staple food in the State, the State Government has not Opted for
wheat under BPL and hence there is no allocation under BPL. A quantity of 2754 MTs. of
wheat is being allotted by Govt. of India per month under APL. The wheat is being lifted
from FCI, depending upon the demand and quality of wheat supplied by FCI in the districts.
However GOI have allotted a quantity of 31157 MTs of BPL wheat for the year 2012-2013,
A quantity of 868 MTs. of Spl. Adhoc Additional Wheat is also being allotted at APL rate for
the year 2012-13, which is being also used for conversion of Whole Meal Atta.
WHOLE MEAL ATTA:

The State Government has introduced distribution of Whole Meal Atta in the brand
name of Vijaya through the Public Distribution System to the cardholders upto a
maximum limit of 2 Kgs. per card at Rs.16.50 per Kg. pack. There is no subsidy element
involved in this.
The Corporation is utilizing certain quantity of Wheat from the regular PDS or
additional allotments made by Govt. of India from time to time at various rates and lifting the
same from FCI godowns based on the cost stock available with the corporation and demand
conversion into Whole Meal Atta by the authorized millers appointed by the Corporation
through open Tenders.
The distribution of Wheat Atta is confined to the local demand in the districts. There
are no adverse complaints about the quality of the product. The end beneficiaries price fixed
by the Govt. is much lesser than the open market rates of the branded packed Atta till
October2012.
ALLOTMENT AND LIFTING OF LEVY SUGAR:
Govt. of India has been allotting a quantity of MTs.9731.8 of levy sugar every month
on the sugar mills located within Andhra Pradesh / outside Andhra Pradesh for releases to
BPL families at Rs.13.50 per Kg. The above quantity is being distributed under PDS to the
6

BPL cardholders @ Kg. per card in Urban and Rural areas.CCS allotments for month is
10,838 Mts.

ISSUES OF PDS:

In coverage and public expenditure, it is considered to be the most important food

security network. However, there are several issues pertaining to PDS. These are as
follows:

The food grains supplied by the ration shops are not enough to meet the consumption
needs of the poor or are of inferior quality.

The average level of consumption of PDS grains in India is only 1 kg per person /
month.

The PDS has been criticised for its urban bias and its failure to serve the poorer
sections of the population effectively.

The targeted PDS is costly and gives rise to much corruption in the process of
extricating the poor from those who are less needy.

Today, India has the largest stock of grain in the world besides China, the government
spends Rs. 750 billion ($13.6 billion) per year, almost 1 percent of GDP, yet 21%
remain undernourished.

Distribution of food grains to poor people throughout the country is managed by state
governments. As of date there are about 500,000 Fair Price Shops (FPS) across India.

PRESENT STUDY/ METHODOLOGY

OBJECTIVES OF THE STUDY:

To understand the effectiveness of PDS functioning in Parawada.
To understand the beneficiaries satisfaction of PDS in Parawada.
To understand the drawbacks of PDS units in Parawada.
To provide useful suggestions in order to improve the functioning of PDS in
Parawada.
SCOPE OF THE STUDY:
This study is confined to the public distribution shops and their functioning in the Parawada
village.
LIMITATIONS OF THE STUDY:
Any study based on a questionnaire suffers from the basic limitation of the possibility
of difference between what is recorded and what is the truth. This is because the respondents
may not deliberately report their true preferences, and even if they do, there are bound to be
problems owing to the well-known problems of filters in the communication process.
In addition, to this the other limitations, which limit the validity and reliability of the data, are
as follows:

 This study relates to the Parawada village. Therefore, the conclusions about the
beneficiarys perception levels and post purchase evaluation may not be applicable for
other areas.
In this study, the sample size has been a limitation as not all beneficiaries have been
approached.
Due to lack of awareness among the beneficiaries, in-depth information was
unavailable.

RESEARCH DESIGN
The Research Design adopted in the study is descriptive in nature because the study aims at
describing the situation as it exists at present.
Sample size: The Sample Size of this study is 50.
Population: The Population of this study is confined to residents in Parawada village.
Sampling method: The study involves stratified random sampling method where in the
sample is drawn from population of pink ration card holders.
Sources of data: The Study used both Primary and Secondary data.
Method of data collection: The data was collected by directly handing over questionnaires
to the pink ration card holders of Parawada village and collecting them after being filled.
Primary data: The primary data was collected from the respondents using questionnaire.
Secondary data: The Secondary data was collected from the PDS official websites.
Data analysis method: The Data was collected from the main study and was analyzed using
MS-Excel. Based on the results conclusion were drawn and suggestions were made.
.

DATA ANALYSIS

1. Can you tell us what commodities you are able to buy with your Ration Card monthly
at the PDS outlet? (also mention the price and quantity of these commodities you
normally get from the PDS outlet)

Commodity

Price per
Kg/ Lt

Total amount
(Rs)

No.of.beneficiaries

Rice

Total
quantity
(Kgs/Lts)
925

925

50

Wheat

50

350

50

Atta

50

17

850

50

Pulses

45

90

4050

45

Sugar

25

14

350

50

Kerosene

13

15

195

13

Others

Interpretation:
From the above table it can be clearly seen that Rice is the major food grain which is being
consumed by the people from PDS. It can also be observed that people are almost consuming all the

10

food items which are being made available to them through the PDS. Amongst all, Kerosene is the
only item which is being consumed to very little extent by beneficiaries.

2. How would you describe the quality of the items you received the last time you
bought from PDS?
Quality of goods

Frequency

Poor

29

Average

18

Good

Unclear

Total frequency

50

Quality of goods
6%
Poor
Average
Good
Unclear

36%
58%

11

Interpretation:
From the above table, it can be derived the majority of the beneficiaries feel the quality of the
goods received are poor. However there is people who still feel the quality is average and
only one person has to say that the quality of the items is good.

3. How far is the PDS outlet from your house?

Distance (km)

Frequency

Below 5

5-10

38

11-15

15 and above

Total frequency

50

Distance of PDS
8%

16%
below 5
5 to 10
10 to 15
15 and above

76%

12

Interpretation:
From the above data, it can be observed that majority of the people are living in areas which
are 5 to 10 kms far from the PDS in Parwada village. Only 8 percent of the people are beyond
10 km distance from the PDS. Hence, the distance is not a constraint to majority of the
respondents.

4. Last time when you went to purchase your PDS ration, how long did it take for you to
go to the PDS outlet, obtain your ration, and come back home?

Time (mins)

Frequency

below 20

20 to 30

30

30 to 40

15

40 and above

total respondents

50

Time Taken
4% 6%
below 20
20 to 30
30%

30 to 40
40 and above

60%

13

Interpretation:
From the above data, it can be clearly seen the time taken to obtain the ration is in between
20 to 30 mins for majority of the respondents and for the remaining, it is taking beyond 30
mins time. Only a few are able to get their ration within 20 mins.

5.

How would you describe the attitude of the PDS dealer: helpful, indifferent or
Unhelpful?
Dealer Behavior
Helpful
impatient
careless
unclear
Total frequency

Frequency
7
36
7
0
50

PDS Dealer Behavior

14%

14%

Helpful
impatient
careless
unclear

72%

14

Interpretation:
From the above data, it can be clearly seen that majority of the consumer are not satisfied
with the behaviour of the PDS dealers across Parwada village. They feel that the dealers are
more impatient in nature. Very few find the behaviour of dealers good towards them.

6. How would you describe the importance of the PDS for your familys welfare?

Importance
Very Important
Quiet Important
Not Important
Unclear
Total Frequency

Frequency
15
35
0
0
50

Importance of PDS
30%

Very Important
Quiet
Important
Not Important
Unclear

70%

15

Interpretation:
From the above data it is quite clear that majority of the people are moderately dependent on
the PDS for the welfare of their family. However, there are a good proportion of the people
who feel that PDS is very important for their family welfare. Thus, all the people are
dependent on PDS goods for their family welfare up to certain extent.

7. Are you satisfied with the functioning of the local PDS outlet?
Satisfaction level
Highly satisfied
Reasonably Satisfied
Somewhat
dissatisfied
Very Dissatisfied
Total Frequency

Frequency
3
26
10
11
50

Level of Satisfaction
Highly
satisfied

6%
22%

Reasonably
Satisfied
Somewhat
dissatisfied

20%

52%

16

Very
Dissatisfied

Interpretation:
From the above data, it can be observed that more than 50 percent of the respondents are
satisfied with the Functioning of PDS and remaining half are dissatisfied. Hence the
efficiency of PDS Functioning is only about 50 percent in Parawada as per the respondents
view.

8. How would you rate the overall functioning of the PDS today as compared to 5 years
earlier?
Overall
Functioning
very good
good
bad
worse
unclear
Total frequency

Frequency
3
22
14
11
0
50

Functioning of PDS
6%
very good

22%

good
bad
worse
44%

28%

Interpretation:

17

unclear

As per the above data, the function of the PDS in Parwada is found to be Accurate among 50
percent of respondents and the other half has an opinion that it is bad.

FINDINGS
1.
2.

Rice is the major food grain which is distributed to the people through PDS.
Kerosene is being consumed at a minimum extent as per the survey. This may be due to

3.
4.
5.
6.
7.

the increase of LPG users which severs the same purpose.

The price of the pulses is unaffordable despite of considerable amount of discounts.
The goods being provided are of inferior quality.
The PDS are located well within the reach of people in the village.
Most respondents are dissatisfied with the behaviour of the PDS dealers.
DS is found to be very important for the welfare of the respondents and their family

8.

members.
However, most of the respondents are dissatisfied with the functioning of PDS in their

9.

village.
Only 50 percent of the respondents feel that PDSs have improved in terms of their
functioning as compared to 5 years earlier.

18

SUGGESTIONS
1.

PDS can work on the quality of the goods provided to the people as the present goods

2.
3.

supplied are of inferior quality.

The State Government needs to work on the price of goods being allotted under PDS.
Kerosene can be substituted by LPG because these days people are using on gas

4.

stoves instead of kerosene.

The PDS dealers must be more patient and interested towards the beneficiaries as the

5.

respondents feel their behaviour to be more impatient and careless.

There must be audits a conducted at regular intervals in order to prevent the misuse of

6.

PDS goods.
There must also be proper accounting system in the PDS units to have clear picture of

7.

the amount of goods being provided to the beneficiaries and avoid wastage.
The storage facilities of the PDS goods must be sanitised, to avoid of all the goods.

19

CONCLUSION
Public Distribution Systems have been very helpful to poor and needy people from years.
They have been providing essential subsidies like Rice, wheat, pulses, flour, sugar and
kerosene at a very minimal price. But still there are many loop holes in the system of PDSs
like corruption, lack of quality, lack of proper storage facilities, wastage of goods, dealer
misuses and scams, which need to be looked by the Government in order to make the
schemes effective.

20

BIBLIOGRAPHY
Text Book:
Rural Management by SB Varma, DEEP & DEEP Publications, New Delhi.
Websites:
http://www.apscsc.gov.in/pds.php
https://en.wikipedia.org/wiki/Public_distribution_system
http://economictimes.indiatimes.com/definition/public-distribution-system

21

ANNEXURE
QUESTIONNAIRE
1. Name:
2. Can you tell us what commodities you are able to buy with your Ration Card monthly
at the PDS outlet? (also mention the price and quantity of these commodities you
normally get from the PDS outlet)
Commodity
Price per Kg or
Total Quantity
Total Amt
Lt
(Kg or Lt)
Rice
Wheat
Atta
Pulses
Sugar
Kerosene
Others

3. How would you describe the quality of the items you received the last time you
Bought from PDS?
[1= poor; 2= average; 3= good; 4= unclear]
4. How far is the PDS outlet from your house? (in kms)
5. Last time when you went to purchase your PDS ration, how long did it take for you
to go to the PDS outlet, obtain your ration, and come back home? (In mins)
6. How would you describe the attitude of the PDS dealer: helpful, impatient or
Careless?
[1= Helpful; 2= Impatient; 3= careless; 4= Unclear]
7.

How would you describe the importance of the PDS for your familys welfare?
[1=Very important; 2=Quite important; 3= Not important; 4=Unclear]

8. Are you satisfied with the functioning of the local PDS outlet?
[1=highly satisfied; 2=reasonably satisfied; 3=somewhat dissatisfied;
4=Very dissatisfied; 5= unclear]
9.

How would you rate the overall functioning of the PDS today?
[1=Very Good; 2=Good; 3= Bad; 4=Worse; 5=Unclear]
22

10. Do you have any suggestions for improving the PDS?

23