India’s Public Distribution System (PDS), which feeds over 800 million people, faces
alarming inefficiencies. A recent report by the Indian Council for Research on International
Economic Relations (ICRIER) reveals that 28% of grains distributed through the system are
lost annually. This leakage, equivalent to 20 million tonnes of rice and wheat, costs the
exchequer ₹69,000 crore every year. Much of this is suspected to be diverted to the open
market or exported.
The report, based on data from the Household Consumption Expenditure Survey (HCES) and
Food Corporation of India (FCI) records, acknowledges improvements since 2011-12, when
leakages were at 46%. Despite efforts like Aadhaar integration and the introduction of
point-of-sale (POS) machines in ration shops, challenges persist, particularly in states like
Uttar Pradesh, Gujarat, and Nagaland, which report high leakage rates.
Encouragingly, states such as Bihar and West Bengal have significantly improved, with Bihar
reducing leakages from 68.7% in 2011-12 to 19.2% in 2022-23, and West Bengal from 69.4%
to 9% over the same period.
The report underscores the need for structural reforms. Recommendations include
transitioning from subsidized grain distribution to direct cash transfers, food stamps, or
voucher systems. Such changes could improve transparency, curb wastage, and ensure that
the system delivers on its promise of nutritional security for the needy.
As India strives to make its massive food subsidy program more effective, experts call for
decisive measures to plug the gaps and safeguard resources for millions who depend on it.
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