2019

## Demand For Grants 2019-20 Analysis Food And Public Distribution

The Ministry of Consumer Affairs, Food and Public Distribution has two Departments: (i) Food and Public Distribution, and (ii) Consumer Affairs. The Ministry received the second highest budgetary allocation among all the ministries in 2019-20.1 
Department of Consumer Affairs is responsible for spreading awareness among consumers about their rights, protecting their interests, implementing standards, and preventing black marketing.2  In 2019-20, the Department has been allocated Rs 2,272 crore, which is 28% higher than the revised estimate of 2018-19.3 
Department of Food and Public Distribution is responsible for ensuring food security through procurement, storage, and distribution of food grains, and for regulating sugar sector.4  In 2019- 20, the Department has been allocated Rs 1,92,240 crore, which is 99% of the Ministry's allocation.5 Allocation to this Department accounts for 6.9% of the budget of the central government. This note examines the allocations to the Department of Food and Public Distribution.  It also looks at the broad issues in the sector, along with key observations and recommendations made by expert committees over the years. 

## Overview Of Finances

% change 
in 2019-20 
Department 
2017-18 
Actuals 
2018-19 
Revised 
2019-20 
Budgeted 
over 
2018-19 
Food & Public Distribution 
1,05,864  1,77,874  1,92,240  
8.1% 
Consumer Affairs 
3,713  
1,782  
2,272  
27.5% 
Total 
1,09,578  1,79,655  1,94,513  
8.3% 

Sources:  Expenditure Budget, Union Budget 2019-20; PRS. 

In 2019-20, allocation to the Department of Food and Public Distribution has increased by Rs 14,366 crore (8.1%) over the previous year's estimated expenditure.  Further, the allocation in 2019-20 is Rs 86,376 crore (82%) higher than the actual expenditure made by the Department in 2017-18. Unlike the previous years, the Department's actual expenditure in 2016-17 and 2017-18 was lower than the budget allocation it received (Figure 1). The Department spent 70% of the budget allocation in 2017-18, while the rest 30% (Rs 44,640 crore) remained unspent.  Similarly, 18% of the allocation (Rs 25,005 crore) remained unspent in 2016-17. 

Food subsidy is the largest component of the 
Department's expenditure.  It accounts for 96% of 
the allocation to the Department in 2019-20 (details 
of other expenditure heads are given in Annexure).5 

The subsidy is given to the Food Corporation of 
India (FCI) and states for procuring food grains 
from farmers at government notified prices and 
selling them at lower subsidised prices (known as 
Central Issue Prices) under the National Food 
Security Act, 2013.5  The Act mandates coverage 
of 75% of the population in rural areas and 50% in 
urban areas, and currently covers 81 crore people.6,7 

The subsidy also covers the storage cost incurred 
by FCI in maintaining buffer stocks in order to 
ensure food security in the country.5  Table 2 shows 
the expenditure on food subsidy during 2009-20. 

% of union 
Year 
Food 
subsidy 
% increase over 
previous year 
budget 
2009-10 
58,443 
34% 
5.7% 
2010-11 
63,844 
9% 
5.3% 
2011-12 
72,822 
14% 
5.6% 
2012-13 
85,000 
17% 
6.0% 
2013-14 
92,000 
8% 
5.9% 
2014-15 
1,17,671 
28% 
7.1% 
2015-16 
1,39,419 
18% 
7.8% 
2016-17 
1,10,173 
- 21% 
5.6% 
2017-18 
1,00,282 
- 9% 
4.7% 
2018-19 
1,71,298 
71% 
7.0% 
2019-20 
1,84,220 
8% 
6.6% 

Note:  Figures for the years 2018-19 and 2019-20 are estimates. Sources:  Expenditure Budget, Union Budgets (2011-20); PRS. 

The central government's expenditure on food subsidy as a percentage of its total budget increased from 5.7% in 2009-10 to 7.8% in 2015-16.  The Standing Committee on Food, Consumer Affairs and Public Distribution (2016-17) noted that the reasons for the increase in food subsidy include: (i) increase in the procurement cost of food grains, (ii) non-revision of the Central Issue Prices since 2002, and (iii) implementation of the National Food Security Act, 2013 in all states.8 In 2016-17 and 2017-18, the share of union budget spent on food subsidy decreased to 5.6% and 4.7%, respectively.  The decrease came on account of a shortfall in spending by the Department, as 18% (in 2016-17) and 31% (in 2017-18) of the amount allocated for food subsidy at the beginning of the year remained unspent.  The Standing Committee (2017-18) noted the gap between the funds required for food subsidy and the funds actually spent by the Department for the same.9 

## Components Of Food Subsidy

Expenditure on food subsidy can be classified under three heads (break-up in Table 3): 

 
Subsidy to FCI:  The Food Corporation of 
India (FCI) receives subsidy for procuring food grains from farmers at government notified prices and selling them at lower subsidised prices.  It also receives subsidy for the storage cost incurred in maintaining buffer stocks. 
 
Subsidy to states:  Under the decentralised 
procurement scheme, states may choose to undertake the operations of procurement, storage, and distribution on behalf of FCI, for which they are provided with subsidy. 
 
Sugar subsidy:  Sugar subsidy is provided for 
giving one kg of sugar per month at subsidised 
rates to families covered under the Antyodaya Anna Yojana (i.e. poorest of the poor families). 

% change in 
2019-20 over 
Subsidy 
2017-18  
Actuals 
2018-19  
Revised 
2019-20 
Budgeted 
2018-19 
Subsidy to FCI 
61,982 1,40,098 
1,51,000 
7.8% 
38,000 
31,000 
33,000 
6.5% 
Subsidy to states (decentralised procurement) Sugar subsidy 
300 
200 
220 
10.0% 
Total 
1,00,282 1,71,298 
1,84,220 
7.5% 

Sources:  Demand no. 15, Department of Food and Public Distribution, Expenditure Budget, Union Budget 2019-20; PRS. 

Over the years, the major part of the food subsidy has been going to FCI (82% of the estimated food subsidy in 2019-20).  However, subsidy given to FCI by the Department has decreased from Rs 1.12 lakh crore in 2015-16 to Rs 78,335 crore in 2016- 17, and further to Rs 61,982 crore in 2017-18. 

## Issues

In this section, we examine some issues with: (i) 
the provision and budget of food subsidy, (ii) its 
delivery through the Public Distribution System 
(PDS) and challenges, and (iii) sugarcane dues, and 
discuss alternative subsidy systems proposed by 
various committees and experts over the years. 

## Budget For Food Subsidy

The central government provides food subsidy to 
FCI as reimbursement of the loss it incurs in its 
procurement, storage, and distribution operations.  
The CAG (2019) observed that when the budget for 
food subsidy is not sufficient to clear the dues of 
FCI, such dues are carried over to the next year.10  
This carryover amount increased from Rs 23,427 
crore in 2011-12 to Rs 81,303 crore in 2016-17.  
Note that subsidy given to FCI by the Department 
decreased from Rs 1.12 lakh crore in 2015-16 to Rs 
78,335 crore in 2016-17 (24% shortfall in spending 
as compared to the budget estimates for the year). 

Sources:  Food Corporation of India; CAG of India; PRS. 

Due to the delay in payment of subsidy dues, FCI 
borrows money from various sources for funding 
its operations.  The CAG observed that the central 
government has adopted this off-budget method of 
financing the subsidy dues, thereby deferring the 
payment to FCI.10  This understates a particular 
year's expenditure by keeping deferred expenditure 
off the budget, and prevents transparent depiction 
of fiscal indicators.10  Further, when FCI uses such 
borrowings, the Department is required to provide, 
in addition to subsidy dues, additional funds for 
payment of interest on these borrowings. 

## Provision Of Food Subsidy

The Targeted Public Distribution System, through 
which food grains are distributed at subsidised 
prices, sought to provide food security to people 
below the poverty line.  Over the years, while the 
spending on food subsidy has increased, the ratio of 
people below the poverty line has decreased from 
54.9% in 1973-74 to 21.9% in 2011-12 (Table 4). 

| Year    | Poverty ratio (in %)    |   No. of Poor (in crore)  |
|---------|-------------------------|---------------------------|
| 1973-74 | 54.9%                   |                      32.1 |
| 1977-78 | 51.3%                   |                      32.9 |
| 1983-84 | 44.5%                   |                      32.3 |
| 1987-88 | 38.9%                   |                      30.7 |
| 1993-94 | 36.0%                   |                      32   |
| 2004-05 | 27.5%                   |                      30.2 |
| 2011-12 | 21.9%                   |                      26.9 |

Note:  Figures from 1973-74 to 2004-05 have been computed using the Lakdawala methodology, and figures for 2011-12 have been computed using the Tendulkar methodology. Sources:  Planning Commission; PRS. 

A similar trend can also be seen in the proportion of undernourished persons in India, which reduced from 23.7% in 1990 to 15.2% in 2014 (Table 5). 

Number of 
Year 
Proportion of 
population 
undernourished (in %) 
undernourished 
persons (in crore) 
1990-92 
23.7% 
21.0 
2000-02 
17.5% 
18.6 
2005-07 
20.5% 
23.4 
2010-12 
15.6% 
19.0 
2014-16 
15.2% 
19.5 

Note:  Figures for 2014-16 are provisional estimates. Sources:  Food and Agriculture Organisation, 2015: Table 5.14, Chapter 5, Volume II, Economic Survey 2015-16; PRS. 

Nutritional balance:  The National Food Security Act, 2013 guarantees five kg of food grains per person per month to entitled beneficiaries at subsidised prices.  Further, Antyodaya Anna Yojana households, which constitute the poorest of the poor, are entitled to 35 kg per household per month at subsidised prices.  Presently, the food items provided by the central government for distribution under PDS are rice, wheat, and sugar.11 As can be seen in Figure 3 and Figure 4, there has been a change in the pattern of nutritional intake among people in both rural and urban areas (details given in Tables 9 and 10 in the Annexure). 

Sources:  Nutritional intake in India (2011-12), NSSO; PRS.   

Although cereals or food grains contain only 10% 
protein, their share as a percentage of the total 
protein intake has been over 50% in both rural and 
urban areas.12  However, other foods such as meat 
and pulses contain more than 20% protein but 
contribute to only 15% of the total protein intake of 
the country.12 

The share of cereals in calorie intake has reduced 
by 10% in rural areas and 7% in urban areas, 
whereas that of milk, eggs, fish, and meat has 
increased (Table 9).12  This indicates a reduced 
preference for wheat and rice, and a rise in 
preference towards other protein-rich food items.  
The National Food Security Act, 2013 requires the 
central and state governments to undertake steps to 
diversify commodities distributed under PDS.6 

Imbalance in farm production:  Minimum 
Support Price (MSP) is the price at which the 
government agencies purchase farmers' produce of 
certain notified crops.  Typically, MSP is higher 
than the market price and seeks to incentivise 
farmers to grow crops on which the support is 
offered.  Food grains utilised for PDS are procured 
at MSP or, in some cases, at higher prices by states 
under decentralised procurement.  Since wheat and 
rice (paddy) are the food grains distributed in PDS, 
procurement of wheat and paddy by the central and 
state governments is significantly higher than other 
crops'.  Thus, procurement at MSP has become 
restricted to wheat and paddy (Figure 5).13,14,15 

Ministry of Agriculture and Farmers' Welfare; PRS. 

This skews the production of crops in favour of wheat and paddy, and does not offer an incentive for farmers to produce other items such as pulses.16  

## Revision Of Central Issue Price (Cip)

Under the National Food Security Act, 2013, food subsidy is given to beneficiaries at the CIP, which was last revised in 2002.  CIP for wheat and rice can be found in Table 6.   

Table 6: Central Issue Price (Rs/Kg) 
Commodity 
AAY 
BPL 
APL 
Rice 
3.00 
5.65 
7.95 
Wheat 
2.00 
4.15 
6.10 

Note: AAY-Antyodaya Anna Yojana, BPL-Below Poverty Line, APL-Above Poverty Line. Sources: TPDS, Department of Food and Public Distribution. 

In comparison to the CIP, the economic cost (including procurement, stocking, distribution) for wheat is Rs 24/kg and for rice is Rs 33/kg as of February 2018.17  Food subsidy is calculated as the difference between the economic cost of procuring food grains, and their CIP. While the economic cost for rice has increased from Rs 1,098/quintal (approximately Rs 11/Kg) in 2001-02 to Rs 3,310 /quintal in 2018-19, and of wheat, from Rs 853/quintal to Rs 2,446/quintal over the same period, the CIP has not been revised.17  This has led to an increasing gap between the economic cost and CIP, leading to an increase in expenditure on food subsidy.24  Trends in economic cost, CIP and subsidies for wheat and rice can be found in Figure 6 and Figure 7 below. 

In 2017-18, the Ministry had stated that increasing 
the CIP could be one of the measures to bridge the 
gap between the funds it requires, and the funds it 
is actually allocated.  Details related to the 
procurement of food grains, off-take and stock can 
be found in of the Annexure. 

## Delivery Of Food Subsidy

Leakages in PDS:  Leakages refer to food grains 
not reaching intended beneficiaries.  According to 
2011 data, leakages in PDS were estimated to be 
46.7% (see Table 11).Error! Bookmark not defined.,18   

Leakages may be of three types: (i) pilferage or 
damage during transportation of food grains, (ii) 
diversion to non-beneficiaries at fair price shops 
through issue of ghost cards, and (iii) exclusion of 
people entitled to food grains but who are not on 
the beneficiary list.19,20  Studies have shown that 
targeting mechanisms such as TPDS are prone to 
large exclusion and inclusion errors.21   

Exclusion errors occur when entitled beneficiaries 
do not get food grains.   It refers to the percentage 
of poor households that are entitled to but do not 
have PDS cards.  As seen in Figure 8, exclusion 
errors declined from 55% in 2004-05 to 41% in 
2011-12.   

Inclusion errors occur when those that are 
ineligible get undue benefits.  Inclusion errors 
increased from 29% in 2004-05 to 37% in 2011-12.    

Declining exclusion errors and increasing inclusion 
errors are due to two reasons.  First, increase in the 
coverage of TPDS has reduced the proportion of 
poor who do not have access to PDS cards.  
Second, despite a decline in poverty rate, non-poor 
are still identified as poor by the government thus 
allowing them to continue using their PDS cards.22  

 
Sources:  Evaluation study on the role of PDS in shaping households and nutritional security in India, Niti Aayog, December 2016; PRS. 

Note that under NFSA, states are responsible for 
identification of beneficiaries.  In 2016, the 
Comptroller and Auditor General (CAG) found that 
this process had not been completed by the states, 
and 49% of the beneficiaries were yet to be 
identified.23   

Alternative subsidy systems:  Over the years, several solutions that have been suggested include: (i) DBT of food subsidy, and (ii) end to end computerisation of the entire system.Error! Bookmark not defined.,42   
The NFSA states that the centre and states should introduce schemes for cash transfers to beneficiaries.6  Various experts and bodies have also suggested replacing TPDS with a Direct Benefit Transfer (DBT) system.24,25  Advantages and disadvantages of these methods of delivering benefits have been discussed below. 

 
TPDS:  TPDS assures beneficiaries that they 
would receive food grains, and insulates them against inflation and price volatility.  Further, food grains are delivered through fair price shops in villages, which are easy to access.26,27 

However, high leakages have been witnessed 
in the system, both during transportation and 
distribution.  These include pilferage and 
errors of inclusion and exclusion from the 
beneficiary list.  In addition, it has also been 
argued that the distribution of wheat and rice 
may cause an imbalance in the nutritional 
intake.6  Beneficiaries have also reported 
receiving poor quality food grains as part of 
the system.   

 
Cash Transfers:  Cash transfers seek to 
increase the choices available with a beneficiary, and provide financial assistance. It has been argued that the costs of DBT may be lesser than TPDS, owing to lesser costs incurred on transport and storage.  These transfers may also be undertaken electronically.26,27  

On the other hand, it has been argued that cash 
received as part of DBT may be spent on non-
food items.  Further, such a system may expose 
beneficiaries to inflation.  In this regard, one 
may also consider the low penetration and 
access to banking in rural areas.28 

In 2015, the Department released two notifications: The Cash Transfer of Food Subsidy Rules and The Food Security (Assistance to State Governments) Rules.29,30   As per these notifications, the central government offers state governments two choices for reforming their respective PDS machinery: (i) replacing the existing PDS with DBT, or (ii) Fair Price Shop automation, which involves installation of Point of Sale devices, for authentication of beneficiaries and electronic capturing of transactions. So far, more than 2.9 lakh (54%) Fair Price Shops have been automated across the country.31  Details regarding the status of computerisation of PDS can be found in Table  of the Annexure.   

The High-Level Committee on Restructuring of 
FCI in 2015 had suggested that switching to DBT 
for food subsidy would reduce the food subsidy bill 
of the government by more than Rs 30,000 crore.32  
While making this recommendation, the Committee 
illustrated this by taking the case of subsidy given 
on rice (Table 7).  It assumed that as part of DBT, 
the government would transfer Rs 22/Kg for rice to 
a beneficiary. 

| 1. CIP                                     | Rs 3/Kg    |
|--------------------------------------------|------------|
| 2. MSP                                     | Rs 20/Kg   |
| 3. Subsidy (3=2-1)                         | Rs 17/Kg   |
| Rs 27/Kg                                   |            |
| 4.Cost to government                       |            |
| (Subsidy + Costs on procurement, storage   |            |
| and distribution)                          |            |
| 5. Cash subsidy to beneficiaries           | Rs 22/Kg   |
| 6. Government saving (6=5-4)               | Rs 5/Kg    |
| 7. Increase in beneficiary benefit (7=5-3) | Rs 5/Kg    |

Sources: High Level Committee Report on Reorienting FCI, January 2015; PRS. 

Aadhaar: The Committee had also recommended 
the introduction of biometrics and Aadhaar to plug 
leakages in PDS.  Such transfers could be linked to 
Jan Dhan account, and be indexed to inflation.32  As 
of December 2017, 119 crore Aadhaar cards had 
been issued, covering 98% of the population.33 

In February 2017, the Ministry made it mandatory 
for beneficiaries under NFSA to use Aadhaar as 
proof of identification for receiving food grains.34  
This is expected to facilitate the removal of bogus 
ration cards, check leakages and ensure better 
delivery of food grains.Error! Bookmark not defined.,35,36   

Note that as of July 2017, while 100% ration cards 
had been digitised, the seeding of these cards with 
Aadhaar was at 79%.37   For details related to 
deleted ration cards due to detection of bogus, fake, 
and duplicate cards, see Table 13 of the Annexure. 

## Current Challenges In Pds

Storage:  The Department allocates funds for the 
construction of godowns to increase storage 
capacity.  This includes allocations for the 
Warehousing Development and Regulatory 
Authority (WADA).  In 2018-19, Rs 60 crore has 
been allocated for storage and godowns, and Rs 
eight crore has been allocated to WADA. 

As of December 2017, the total storage capacity in 
the country is 725 lakh tonnes, of which 359 lakh 
tonnes is with the FCI and 366 lakh tonnes is with 
the state agencies.38  The total stock of food grains 
in the country as of July 2017 was 555 lakh tonnes.   

The CAG in its performance audit found that the 
available storage capacity in states was inadequate 
for the allocated quantity of food grains.39  For 
example, as of October 2015, of the 233 godowns 
sanctioned for construction in Maharashtra, only 93 
had been completed.  In Assam, although the 

storage capacity was enough for the state's allocation, the conditions of the godowns were found to be too damp for storage.  Some of the storage in Jharkhand was also found to be unfit, either because of its remote location or the damaged condition of the godowns. The CAG also noted that in four of the last five years, the stock of food grains in the central pool had been higher than the storage capacity available with the FCI (see Figure 9).28  
Sources: CAG Performance Audit on Preparedness for Implementation of National Food Security Act, 2013; PRS. 

As seen in Figure , it was only in 2015 that the stock of food grains was lower than the storage capacity.  According to the CAG, this was owing to an increase in procurement under Decentralised Procurement (DCP), and less food grains in the central pool.28  Under DCP, the state governments undertake procurement, storage and distribution of food grains on behalf of the central government. The states are reimbursed by the centre for the expenditure incurred by them.40 The Standing Committee on Food, Consumer Affairs and Public Distribution has recommended increasing the procurement undertaken by states, and reducing the expenditure on centralised procurement by the FCI.**Error! Bookmark not defined.** They noted that this would drastically reduce the transportation cost borne by the government as states would distribute the food grains to the targeted population within their respective states. As on December 2017, only 17 states have adopted decentralised procurement.41 Note that during 2018-19, while the food subsidy given to FCI has increased by 35% over the revised estimates of 2017-18, the allocation to states for DCP reduced by 18%.3 
Fair Price Shops:  It has been observed by various experts and the Ministry that the margins on which the Fair Price Shops operate are low.42  Further, in the absence of economic viability, there may be cases where the dealer resorts to unfair practices. In order to make these shops viable, some states have taken steps such as: 

 
Chhattisgarh provided seed capital of Rs 75,000 to each fair price shop free of any interest for 20 years.  It also increased the commission on food grains from Rs 8/quintal 
to Rs 30/quintal. 
 
States such as Assam and Delhi have permitted the sale of non-PDS items at these fair price shops.  Such items include oil, potatoes, onion, tea, and mobile recharge coupons. 

## Sugarcane Dues

The Department is also responsible for formulation of policies and regulations for the sugar sector. 

In 2019-20, Rs 2,602 crore has been allocated for 
providing assistance to sugar mills through various 
measures, which is 97% higher than the revised 
estimate of 2018-19.  These measures include: (i) 
direct assistance to mills for clearing sugarcane 
dues of farmers, (ii) reimbursing the mills for 
maintaining buffer stocks, (iii) facilitating exports, 
and (iv) improving ethanol production capacity.  
The assistance is being provided with the aim of 
improving the liquidity of sugar mills in order to 
facilitate payment of sugarcane dues of farmers.43,44 

Note that as on June 25, 2019, payment of 
sugarcane dues of Rs 17,840 crore is pending with 
sugar mills for the 2018-19 season.45  State-wise 
details of dues for the 2018-19 season are given in 
Table 16 of the Annexure. 

These sugarcane dues accumulate due to delay in 
payments to farmers for their produce.  In years of 
surplus production, the sugar prices fall impacting 
the sale of sugar and liquidity of mills.46  As a 
result, mills are unable to pay farmers leading to 
delay in payments and accumulation of dues.  Note 
that sugar mills are obligated to purchase sugarcane 
from all farmers within their specified area at a 
price fixed by the government.  Conversely, 
farmers are bound to sell to the respective mills.   

Rationalisation of sugarcane pricing has been 
recommended as one of the steps for improving the 
efficiency of the sugar industry.  The central 
government fixes the Fair and Remunerative Price 
(FRP) for sugarcane, which is the minimum price 
that must be paid by sugar mills to farmers.47  The 
FRP is fixed based on the recommendations of the 
Commission for Agricultural Costs and Prices 
(CACP).  It is recommended taking into 
consideration: (i) the cost of production, (ii) rate of 
recovery of sugar, (iii) availability of sugar to 
consumers at a fair price, (iv) returns to farmers 
from alternative crops and the general trend of 
prices of agricultural commodities, (v) realisation 
from sale of by-products, and (vi) reasonable 
margins for farmers on account of risks and profits. 

State governments can also intervene in sugarcane 
pricing by announcing a State Advised Price 

(SAP).  SAPs are usually much higher than the FRP.  This creates a distortion in the industry as SAP is neither linked to sugar recovery nor it takes into account domestic and global prices and other relevant parameters.  As a result, when sugar prices are low, mill owners are unable to pay farmers resulting in delayed payment and accumulation of 

## 

1 Ministry-wise Summary of Budget Provisions, Union Budget 2019-20, https://www.indiabudget.gov.in/doc/eb/sumsbe.pdf. 2 About DCA, Department of Consumer Affairs, https://consumeraffairs.nic.in/about-us/about-dca. 3 Demand No. 14, Department of Consumer Affairs, Expenditure Budget, Union Budget 2019-20, https://www.indiabudget.gov.in/doc/eb/sbe14.pdf. 4 Introduction, Department of Food and Public Distribution, https://dfpd.gov.in/index.htm. 5 Demand No. 15, Department of Food and Public Distribution, Expenditure Budget, Union Budget 2019-20, https://www.indiabudget.gov.in/doc/eb/sbe15.pdf. 6 The National Food Security Act, 2013, Ministry of Consumer Affairs, Food and Public Distribution, http://www.egazette.nic.in/WriteReadData/2013/E_29_2013_42 9.pdf. 7 Lok Sabha Unstarred Question No. 1378, Ministry of Consumer Affairs, Food and Public Distribution, December 18, 2018, http://164.100.24.220/loksabhaquestions/annex/16/AU1378.pdf. 8 Report no. 15, Standing Committee on Food, Consumer Affairs and Public Distribution: 'Demands for Grants (2017-18), Department of Food and Public Distribution', Lok Sabha, March 
2017, http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff airs%20&%20Public%20Distribution/16_Food_Consumer_Affa irs_And_Public_Distribution_15.pdf. 

9 Report no. 20, Standing Committee on Food, Consumer Affairs and Public Distribution: 'Demands for Grants (2018-19), Department of Food and Public Distribution', Lok Sabha, March 
2018, http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff airs%20&%20Public%20Distribution/16_Food_Consumer_Affa irs_And_Public_Distribution_20.pdf. 10 Report no. 20 of 2018, 'Compliance of the Fiscal Responsibility and Budget Management Act, 2003 for the year 2016-17', Comptroller and Auditor General of India, January 2019, https://www.cag.gov.in/sites/default/files/audit_report_files/Rep ort_No_20_of_2018_Compliance_of_the_Fiscal_Responsibility _and_Budget_Management_Act_2003_Department_of_Econom ic_Affairs_Minis.pdf. 11 Public Distribution System, Department of Food and Public Distribution, https://dfpd.gov.in/public-distribution.htm. 12 "Nutritional Intake in India 2011-12, NSS 68th Round, National Sample Survey Office, Ministry of Statistics and Programme Implementation, October 2014, http://mospi.nic.in/sites/default/files/publication_reports/nss_rep ort_560_19dec14.pdf. 13 Volume II, Economic Survey of India 2015-16, http://indiabudget.nic.in/es2015-16/echapvol2-05.pdf.   

dues.  The CACP (2018) recommended that the 
FRP must be implemented in all states and the 
announcement of SAP by states should be stopped 
immediately.47  In case state governments decide to 
continue with SAP, the difference between SAP 
and FRP should be paid by the state governments 
directly to farmers.

http://unionbudget.nic.in/budget2016-2017/es2015-
16/echapvol2-05.pdf. 

17 Economic Cost, Food Corporation of India (last accessed on 
February 9, 2018), http://fci.gov.in/finances.php?view=23.   

18 Third Report of the Standing Committee on Food, Consumer 
Affairs and Public Distribution: Demands for Grants 2015-16, 
Department of Food and Public Distribution, 
http://164.100.47.193/lsscommittee/Food,%20Consumer%20Aff
airs%20&%20Public%20Distribution/16_Food_Consumer_Affa
irs_And_Public_Distribution_3.pdf.   

19 The Case for Direct Cash Transfers to the Poor, Economic and 
Political Weekly, April 2008, 
http://www.epw.in/system/files/pdf/2008_43/15/The_Case_for_
Direct_Cash_Transfers_to_the_Poor.pdf. 20 Performance Evaluation of Targeted Public Distribution 
System, Planning Commission of India, March 2005, 
http://planningcommission.nic.in/reports/peoreport/peo/peo_tpd
s.pdf.   

21 Report of the Expert Group to advise the Ministry of Rural 
Development in the methodology for conducting the Below 
Poverty Line (BPL) Census for 11th Five Year Plan, August 
2009, 
http://rural.nic.in/sites/downloads/circular/ReportofExpertGroup
Chaired-Dr.N.C.Saxena.pdf. 

22 Evaluation Study on the Role of Public Distribution System in 
shaping household and nutritional security in India, Niti Aayog, 
December 2016, 
http://niti.gov.in/writereaddata/files/document_publication/Final
%20PDS%20Report-new.pdf. 

23 Audit on the Preparedness for Implementation of National 
Food Security Act, 2013 for the year ended March, 2015, Report 
No. 54 of 2015, Comptroller and Auditor General of India, 
http://cag.gov.in/sites/default/files/audit_report_files/Union_Civ
il_National_Food_Security_Report_54_of_2015.pdf.   

24 "Prices, Agriculture and Food Management", Chapter 5, 
Economic Survey 2015-16, 
http://unionbudget.nic.in/budget2016-2017/es2015-
16/echapvol2-05.pdf.  

25 Working Paper 294, "Leakages from Public Distribution 
System", January 2015, ICRIER, 
http://icrier.org/pdf/Working_Paper_294.pdf.   

26 Revival of the Public Distribution System: Evidence and 
Explanations, The Economic and Political Weekly, November 5, 
2011, http://www.epw.in/system/files/pdf/2011_46/44-
45/Revival_of_the_Public_Distribution_System_Evidence_and_
Explanations.pdf.   

27 The Case for Direct Cash Transfers to the Poor, Economic and 
Political Weekly, April 2008, 
http://www.epw.in/system/files/pdf/2008_43/15/The_Case_for_
Direct_Cash_Transfers_to_the_Poor.pdf. 

28 'Report of the Internal Working Group on Branch 
Authorisation Policy', Reserve Bank of India, September 2016, 
https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/IWG99F
12F147B6E4F8DBEE8CEBB8F09F103.PDF. 29 "The Cash Transfer of Food Subsidy Rules, 2015", Ministry 
of Consumer Affairs, Food and Public Distribution, September 
3, 2015, 
http://dfpd.nic.in/writereaddata/Portal/News/32_1_cash.pdf.  

30 The Food Security (Assistance to States) Rules, 2015, 
Ministry of Consumer Affairs, Food and Public Distribution, 
August 17, 2015, 

                                                                                                                                                                                     
http://dfpd.nic.in/fgAvAHcAcgBpAHQAZQByAGUAYQBkAGQAYQB0AGEALwBQAG8AcgB0AGEAbAAvAE0AYQBnAGEAegBp AG4AZQAvAEQAbwBjAHUAbQBlAG4AdAAvAA==/1_135_1_Food-Security.pdf. 

35 Unstarred Question No. 844, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on February 7, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU844.pdf. 36 "Envisioning a role for Aadhaar in the Public Distribution System", Unique Identification Authority of India, Planning Commission, June 2010, http://uidai.gov.in/UID_PDF/Working_Papers/Circulated_Aadhaar_PDS_Note.pdf. 37 Unstarred Q. No. 1464, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on July 24, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU844.pdf. 38Unstarred Question No. 549, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on February 6, 2018, http://164.100.47.190/loksabhaquestions/annex/14/AU549.pdf. 39 Audit on the Preparedness for Implementation of National Food Security Act, 2013 for the year ended March, 2015, Report No. 54 of 2015, Comptroller and Auditor General of India, http://cag.gov.in/sites/default/files/audit_report_files/Union_Civil_National_Food_Security_Report_54_of_2015.pdf. 40 Decentralised Procurement Scheme, Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, http://dfpd.nic.in/decentralized-procurement.htm. 41 Unstarred Question No. 511, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on December 19, 2017, http://164.100.47.190/loksabhaquestions/annex/13/AU511.pdf 42 Newsletter of the Department of Food and Public Distribution, Jan-March, 2015, http://dfpd.nic.in/writereaddata/images/pdf/Final_English_version_of_newsletter_May_29_2015.pdf. 43"Cabinet approves comprehensive policy to deal with excess sugar production in the country", Press Information Bureau, Cabinet Committee on Economic Affairs, September 26, 2018. 44 "Cabinet approves soft loan to sugar mills to facilitate payment of cane dues of the farmers for the current sugar season", Press Information Bureau, Cabinet Committee on Economic Affairs, February 28, 2019. 45 Lok Sabha Starred Question No. 148, Ministry of Consumer Affairs, Food and Public Distribution, July 2, 2019, http://164.100.24.220/loksabhaquestions/annex/171/AS148.pdf. 46 Report of the Committee on the Regulation of Sugar Sector in India: The Way Forward, October 2012, http://eac.gov.in/reports/rep_sugar1210.pdf. 47 Report on Price Policy for Sugarcane, 2018-19 season, Commission for Agricultural Costs and Prices, Ministry of Agriculture and Farmers' Welfare, August 2017, https://cacp.dacnet.nic.in/ViewReports.aspx?Input=2&PageId=41&KeyId=622. DISCLAIMER: This document is being furnished to you for your information.  You may choose to reproduce or redistribute this report for non-commercial purposes in part or in full to any other person with due acknowledgement of PRS Legislative Research ("PRS").  The opinions expressed herein are entirely those of the author(s).  PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the contents of the report are accurate or complete.  PRS is an independent, not-for-profit group.  This document has been prepared without regard to the objectives or opinions of those who may receive it. 

## Annexure

 
2017-18 
Actuals 
2018-19 
Budgeted 
2018-19 
Revised 
2019-20 
Budgeted 
% change in BE 
of 2019-20 over 
RE of 2018-19 
Food subsidy 
1,00,282 
1,69,323 
1,71,298 
1,84,220 
7.5% 
       Subsidy to Food Corporation of India (FCI) 
61,982 
1,38,123 
1,40,098 
1,51,000 
7.8% 
       Subsidy to states (decentralised procurement) 
38,000 
31,000 
31,000 
33,000 
6.5% 
       Sugar subsidy payable under PDS 
300 
200 
200 
220 
10.0% 
Assistance to state agencies for intra-state movement of foodgrains and for margin of fair price shops' dealers 
4,500 
4,000 
3,884 
4,102 
5.6% 
Investment in equity capital of FCI 
- 
- 
1,000 
1,000 
0.0% 
Assistance to sugar mills for the 2017-18 season 
- 
- 
400 
100 
-75.0% 
Assistance to sugar mills for the 2018-19 season 
- 
- 
- 
1,000 
- 
Scheme for defraying expenditure towards internal transport, freight, handling and other charges on export 
- 
- 
- 
500 
- 
Scheme for creation and maintenance of buffer stock of sugar 
- 
- 
450 
350 
-22.2% 
Scheme for extending soft loan to sugar mills 
- 
- 
- 
200 
- 
Financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity 
- 
- 
- 
100 
- 
Schemes for development of sugar industries 
918 
611 
470 
351 
-25.3% 
Department 
1,05,864 
1,74,159 
1,77,874 
1,92,240 
8.1% 

Sources:  Demand no. 15, Expenditure Budget, Union Budget 2019-20; PRS. 

Miscellaneous 
 
Cereals 
Pulses, nuts 
& oilseeds 
Vegetables 
and fruits 
Meats, eggs, and fish 
Milk & milk 
products 
food 
Rural 
1993-94 
71.0 
4.9 
2.0 
0.7 
6.2 
2.4 
1999-00 
67.6 
5.5 
2.0 
0.8 
6.2 
2.3 
2004-05 
67.5 
5.0 
2.2 
0.8 
6.4 
3.0 
2009-10 
64.2 
4.5 
1.8 
0.7 
6.8 
6.0 
2011-12 
61.1 
5.2 
1.9 
0.8 
7.1 
7.0 
Urban 
1993-94 
58.5 
6.1 
3.3 
1.0 
8.0 
5.6 
1999-00 
55.1 
6.9 
2.9 
1.1 
8.2 
5.5 
2004-05 
56.1 
6.7 
3.2 
1.1 
8.6 
5.3 
2009-10 
55.0 
5.9 
2.6 
1.0 
9.4 
5.9 
2011-12 
51.6 
6.4 
2.6 
1.1 
9.1 
8.6 

Sources:  Table T18, Nutritional Intake in India, 2011-12, NSSO; PRS. 

 
Year 
Cereals 
Pulses 
Milk and milk products 
Egg, fish, and 
meat 
Other food 
Rural 
1993-94 
69.4 
9.8 
8.8 
3.7 
8.4 
1999-00 
67.4 
10.9 
9.2 
4.0 
8.4 
2004-05 
66.4 
9.5 
9.3 
4.0 
10.8 
2009-10 
64.9 
9.1 
10.0 
4.0 
12.0 
2011-12 
62.5 
10.6 
10.6 
4.7 
11.7 
Urban 
1993-94 
59.4 
11.5 
11.7 
5.3 
12.1 
1999-00 
57.0 
13.1 
12.4 
6.0 
11.5 
2004-05 
56.2 
11.0 
12.3 
5.5 
15.0 
2009-10 
56.4 
11.3 
13.8 
5.6 
13.0 
2011-12 
53.7 
12.4 
13.6 
6.4 
13.9 

Sources:  Table T21, Nutritional Intake in India, 2011-12, NSSO; PRS. 

| State/UT          | Total consumption from PDS    | Offtake (2011-12)    | Leakage    | % leakage    |
|-------------------|-------------------------------|----------------------|------------|--------------|
| Andhra Pradesh    | 36.1                          | 40.7                 | 4.6        | 11.3%        |
| Arunachal Pradesh | 0.8                           | 1.0                  | 0.2        | 20.0%        |
| Assam             | 9.5                           | 24.4                 | 14.9       | 61.1%        |
| Bihar             | 11.3                          | 36.2                 | 24.9       | 68.8%        |
| Chhattisgarh      | 16.7                          | 16.7                 | 0.0        | 0.0%         |
| Goa               | 0.4                           | 0.8                  | 0.4        | 50.0%        |
| Gujarat           | 4.4                           | 15.7                 | 11.3       | 72.0%        |
| Haryana           | 2.2                           | 7.3                  | 5.1        | 69.9%        |
| Himachal Pradesh  | 4.9                           | 6.3                  | 1.4        | 22.2%        |
| Jammu and Kashmir | 8.8                           | 9.1                  | 0.3        | 3.3%         |
| Jharkhand         | 3.1                           | 12.4                 | 9.3        | 75.0%        |
| Karnataka         | 16.2                          | 30.1                 | 13.9       | 46.2%        |
| Kerala            | 11.4                          | 20.1                 | 8.7        | 43.3%        |
| Madhya Pradesh    | 15.5                          | 30.7                 | 15.2       | 49.5%        |
| Maharashtra       | 19.3                          | 42.7                 | 23.4       | 54.8%        |
| Manipur           | 0.0                           | 2.0                  | 2.0        | 100.0%       |
| Meghalaya         | 0.8                           | 2.5                  | 1.7        | 68.0%        |
| Mizoram           | 0.9                           | 1.1                  | 0.2        | 18.2%        |
| Nagaland          | 0.1                           | 2.0                  | 1.9        | 95.0%        |
| Odisha            | 15.4                          | 24.4                 | 9.0        | 36.9%        |
| Punjab            | 3.4                           | 8.7                  | 5.3        | 60.9%        |
| Rajasthan         | 10.1                          | 29.8                 | 19.7       | 66.1%        |
| Sikkim            | N/A                           | N/A                  | -          | -            |
| Tamil Nadu        | 39.5                          | 45                   | 5.5        | 12.2%        |
| Tripura           | 2.7                           | 3.3                  | 0.6        | 18.2%        |
| Uttar Pradesh     | 43.2                          | 82.9                 | 39.7       | 47.9%        |
| Uttarakhand       | 4.6                           | 6.6                  | 2.0        | 30.3%        |
| West Bengal       | 13.4                          | 43.9                 | 30.5       | 69.5%        |
| Total             | 295.5                         | 554.5                | 259        | 46.7%        |

Note:  Data from National Sample Survey 2011-12. Sources:  Table 1, Working Paper 294, "Leakages from Public Distribution System", ICRIER, January 2015; PRS. 

| Procurement    | Offtake   |           | Stocks   |       |
|----------------|-----------|-----------|----------|-------|
| Year           |           | % Offtake |          |       |
| Rice           | Wheat     | Total     | Rice     | Wheat |
| 2007-08        | 28.7      | 11.1      | 39.9     | 25.2  |
| 2008-09        | 34.1      | 22.7      | 56.8     | 24.6  |
| 2009-10        | 32.0      | 25.4      | 57.4     | 27.4  |
| 2010-11        | 34.2      | 22.5      | 56.7     | 29.9  |
| 2011-12        | 35.0      | 28.3      | 63.4     | 32.1  |
| 2012-13        | 34.0      | 38.2      | 72.2     | 32.6  |
| 2013-14        | 31.9      | 25.1      | 56.9     | 29.2  |
| 2014-15        | 31.6      | 28.0      | 59.6     | 30.7  |
| 2015-16        | 34.1      | 28.1      | 62.2     | 31.8  |
| 2016-17        | 36.5      | 23.6      | 60.1     | 32.8  |
| 2017-18        | 37.6      | 30.6      | 68.2     | 34.4  |

Sources:  Handbook of Statistics on Indian Economy (2018), Reserve Bank of India; PRS. 

 

Online 
Online Allocation 
State/UT 
Digitisation of 
Ration Cards 
Aadhaar Seeding 
in Ration Cards 
of Food grains 
Computerization 
of Supply-chain 
Transpare ncy Portal 
Grievance 
Redressal 
Andhra Pradesh 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Arunachal Pradesh 
100% 
45% - 
- 
Yes 
- 
Assam 
100% 
0% Implemented 
- 
Yes 
Yes 
Bihar 
100% 
69% Implemented 
Implemented 
Yes 
Yes 
Chandigarh 
100% 
100% NA 
NA 
Yes 
Yes 
Chhattisgarh 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Goa 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Gujarat 
100% 
95% Implemented 
Implemented 
Yes 
Yes 
Haryana 
100% 
86% Implemented 
Implemented 
Yes 
Yes 
Himachal Pradesh 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Jammu and Kashmir 
100% 
45% Up to TSOs 
- 
Yes 
- 
Jharkhand 
100% 
97% Implemented 
Implemented 
Yes 
Yes 
Karnataka 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Kerala 
100% 
98% Implemented 
- 
Yes 
Yes 
Madhya Pradesh 
100% 
91% Implemented 
Implemented 
Yes 
Yes 
Maharashtra 
100% 
87% Implemented 
Implemented 
Yes 
Yes 
Manipur 
100% 
22% Partial 
- 
Yes 
Yes 
Meghalaya 
100% 
0% - 
- 
Yes 
Yes 
Mizoram 
100% 
45% Implemented 
- 
Yes 
Yes 
Nagaland 
100% 
7% - 
- 
Yes 
Yes 
Odisha 
100% 
88% Implemented 
Implemented 
Yes 
Yes 
Punjab 
100% 
97% Implemented 
- 
Yes 
Yes 
Rajasthan 
100% 
95% Implemented 
- 
Yes 
Yes 
Sikkim 
100% 
82% Implemented 
- 
Yes 
Yes 
Tamil Nadu 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Telangana 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Tripura 
100% 
98% Implemented 
Implemented 
Yes 
Yes 
Uttar Pradesh 
100% 
77% Implemented 
- 
Yes 
Yes 
Uttarakhand 
100% 
90% Implemented 
- 
Yes 
Yes 
West Bengal 
100% 
62% Implemented 
Implemented 
Yes 
Yes 
Andaman & Nicobar Islands 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Dadra and Nagar Haveli 
100% 
96% Implemented 
Implemented 
Yes 
Yes 
Daman and Diu 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Delhi 
100% 
100% Implemented 
Implemented 
Yes 
Yes 
Lakshadweep 
100% 
98% - 
NA 
Yes 
Yes 
Puducherry 
100% 
100% NA 
NA 
Yes 
Yes 
Total 
100% 
79% 
30* 
20 
36 
34 

Sources: Unstarred Q. No. 1464, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on July 24, 2017; PRS  

| Year    | Paddy (common)    | % increase over last year    | Wheat    | % increase over last year    |
|---------|-------------------|------------------------------|----------|------------------------------|
| 2009-10 | 1,000             | 17.6%                        | 1,100    | 1.9%                         |
| 2010-11 | 1,000             | 0.0%                         | 1,120    | 1.8%                         |
| 2011-12 | 1,080             | 8.0%                         | 1,285    | 14.7%                        |
| 2012-13 | 1,250             | 15.7%                        | 1,350    | 5.1%                         |
| 2013-14 | 1,310             | 4.8%                         | 1,400    | 3.7%                         |
| 2014-15 | 1,360             | 3.8%                         | 1,450    | 3.6%                         |
| 2015-16 | 1,410             | 3.7%                         | 1,525    | 5.2%                         |
| 2016-17 | 1,470             | 4.3%                         | 1,625    | 6.6%                         |
| 2017-18 | 1,550             | 5.4%                         | 1,735    | 6.8%                         |
| 2018-19 | 1,750             | 12.9%                        | 1,840    | 6.1%                         |
| 2019-20 | 1,815             | 3.7%                         | -        | -                            |

   Sources:  Commission for Agricultural Costs and Prices, Ministry of Agriculture and Farmers' Welfare; PRS. 

| States/UTs                  |
|-----------------------------|
| Andhra Pradesh              |
| 11,55,661                   |
| Arunachal Pradesh           |
| 19,561                      |
| Assam                       |
| 1,29,243                    |
| Bihar                       |
| 41,369                      |
| Chandigarh                  |
| -                           |
| Chhattisgarh                |
| 12,38,000                   |
| Goa                         |
| 1,57,461                    |
| Gujarat                     |
| 1,60,685                    |
| Haryana                     |
| 1,88,425                    |
| Himachal Pradesh            |
| 3,260                       |
| Jammu and Kashmir           |
| 55,344                      |
| Jharkhand                   |
| 4,53,958                    |
| Karnataka                   |
| 27,49,532                   |
| Kerala                      |
| -                           |
| Madhya Pradesh              |
| 4,18,509                    |
| Maharashtra                 |
| 21,62,391                   |
| Manipur                     |
| 336                         |
| Meghalaya                   |
| -                           |
| Mizoram                     |
| 1,503                       |
| Nagaland                    |
| 3,247                       |
| Odisha                      |
| 6,86,211                    |
| Punjab                      |
| 1,01,249                    |
| Rajasthan                   |
| 14,66,629                   |
| Sikkim                      |
| 12,840                      |
| Tamil Nadu                  |
| 4,22,746                    |
| Telangana                   |
| 20,97,564                   |
| Tripura                     |
| 1,76,986                    |
| Uttar Pradesh               |
| 68,80,999                   |
| Uttarakhand                 |
| -                           |
| West Bengal                 |
| 66,13,961                   |
| Andaman and Nicobar Islands |
| 37                          |
| Dadra and Nagar Haveli      |
| 549                         |
| Daman and Diu               |
| 631                         |
| Delhi                       |
| 64,090                      |
| Lakshadweep                 |
| 1,390                       |
| Puducherry                  |
| 95,393                      |
| Total                       |
| 2,75,59,760                 |

Sources: Unstarred Q. No. 632, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on Feb 6, 2018; PRS. 

State 
Sugarcane dues 2018-19 
State 
Sugarcane dues 2018-19 
Andhra Pradesh 
289 
Maharashtra 
1,338 
Bihar 
923 
Odisha 
75 
Chhattisgarh 
106 
Puducherry 
0 
Goa 
4 
Punjab 
925 
Gujarat 
907 
Tamil Nadu 
362 
Haryana 
293 
Telangana 
155 
Karnataka 
1,704 
Uttar Pradesh 
10,134 
Madhya Pradesh 
83 
Uttarakhand 
542 

Sources:  Lok Sabha Starred Question No. 148, Ministry of Consumer Affairs, Food and Public Distribution; PRS. 
2019