Justice Wadhwa Committee

on

PDS

 

JHARKHAND

 

 

Index

 

S.No.

Particulars

Page No.

 

 

A

 

Preface

 

1-4

 

B

 

Overview

 

i-xxxv

 

1

PDS system in Jharkhand

 

1-10

2

Legal Frame Work

 

2.1   Essential Commodities Act

2.2   PDS control order , 2001

2.3   The Bihar Trade and Licensing Order,1984

2.4   Bihar Essential Articles (Display of Prices and Stocks Order), 1977

2.5  Supreme Court Orders

2.6  Conclusions

 

11-26

 

(11-12)

(13-20)

(20-22)

(22)

 

(23-25)

(25-26)

 

3

Wholesale Distribution

 

3.1  Introduction

3.2   Bihar State Food and Civil Supply   Corporation

3.3   Bihar High Court Judgment for separate State Food Corporation.

3.4  Maladies affecting the functioning of BSFC

3.5  Conclusions regarding BSFC

27-48

 

(27)

(28-34)

(34-37)

 

(37-45)

(46-48)

 

4

Diversion of foodgrains

49-58

 

5

Transportation

 

59-62

6

Retail Distribution

4.1  Mode of  appointment of Dealers of Fair Price         shop

·        Conclusions

  1. Functioning of FPS
  2. Viability

·        Conclusions

63-86

(63-71)

 

 

(71-76)

(76-82)

(83-86)

7

Vigilance

 

  1. Vigilance committees
  2. Jharkhand State Grievance Commission
  3. Ombudsman/Regulator
  4. Conclusions

87-106

 

(87-92)

(92-96)

(96-104)

(104-106)

8

Enforcement

107-110

9

Identification of beneficiaries

111-122

 

10

Computerization Possibilities

123-128

 

11.

Recommendations

129-135

 

 

 

PREFACE

 

 

 

 

In the matter:

                Writ Petition (C) No. 196/2001 – People’s Union for Civil

                    Liberties  V/S Union of  India  and Ors.

 

 

1.                 Hon’ble Supreme Court of India by Order dated 12.7.2006 in the aforesaid Writ Petition constituted a Committee to be headed by me to look into the maladies affecting the proper functioning of the Public Distribution System (PDS) and to suggest remedial measures.  

 

2.       Hon’ble Court’s direction was initially given for the Government of Delhi to be followed on an all India basis.

 

3.       Committee submitted report on Delhi on 21.8.2007.  By order dated 10.1.2008, Hon’ble Court while accepting the report, directed the Committee to do the similar exercise in terms of earlier order for the entire country.

 

           4.     Scope of the task assigned to the Committee thus having been enlarged, the Committee projected to the Department of Food & Public Distribution, additional requirements of staff, space and delegation of financial powers for its smooth functioning.  The Department dilly dallied and did not meet the requirements.  The Committee had to approach the Hon’ble Court time and again.  It was only after a peremptory order dated 25.8.2008 was passed by the Hon’ble Court that the Department started taking steps for creating necessary infrastructure.  It was only thereafter that the Committee could start functioning in right earnest.  The Hon’ble Court extended the time for submitting the report   till April 2009.

 

5.       The Committee is submitting report of the State of Jharkhand.  The Committee is also submitting a separate comprehensive report on ‘Computerization of PDS’.

 

6.       No one   has doubted the utility of PDS being the need for supply of food grains to the poor of the country at affordable rates.  Procurement and distribution of food grains is a huge and gigantic task.  Unfortunately the whole system appears to be built up on corruption.  There are more leakages and maladministration and benefits to the poor are low.  Inefficiency and corruption has made PDS corrupt at several levels.  The system lacks transparency, accountability, monitoring and enforcing.  Survey is not being conducted regularly and properly, with the result people Above Poverty Line (APL) have been issued Below Poverty Line (BPL) cards and those eligible for BPL cards have been ignored.  Bogus cards are in plenty.  Immediate measures are required to reduce the diversion of food grains.  Delivery systems under the PDS have to be improved so that the real beneficiary gets its due entitlement at fixed price, fixed quantity, fixed time and wholesome quality.  Innovative methods are required to improve the system.  The whole system has to be totally revamped and modern technology would appear to be the only answer.

 

7.   Committee has suggested that in order to combat corruption and strengthening PDS there has to be zero tolerance approach.

 

8.     Based on the work done by the Committee and in compliance with the Hon’ble Court’s orders, a detailed report covering all issues tasked to the Committee is being submitted.   The first part of the report is a Broad Overview.  The report is then divided into 11 Chapters.  Last   Chapter contains the recommendations.

 

9.       The task before the Committee has been quite stupendous considering also the time schedule.  In this task Legal Team headed by Mr. Dayan Krishnan and Mr. Dinesh Dayal, Advocates and assisted by Mr. Gautam Narayan, Ms. Meenakshi Chauhan, Mr. Anant Garg and Mr. Aman R. Nath, Advocates rendered invaluable assistance. Dr. Saigal Topno and Ms. Sweety Topno, local lawyers engaged by the Committee also rendered invaluable assistance.   Mr. Biraj Patnaik helped in organizing public meetings.

 

10.             For the Committee to complete its task, it got full support and cooperation from the officers of the State of Jharkhand particularly Mr. A.K. Basu, Chief Secretary of Jharkhand, Mr. Rajiv Gauba, Resident commissioner Jharkhand, Mr. N.N. Pandey Principal Secretary, Department of Food & Civil Supplies, Mr. R.S. Sharma, Principal Secretary, Water supply and Sanitation and Science and Technology (Former Secretary, IT and Personnel), Dr.  Rana Awadhesh, Managing Director, Bihar State Food and Civil Supply Corporation Ltd.,  Mr. Vimal, Deputy Director, Department of Food & Civil Supplies ; Mr. Anurag Gupta, General manager, FCI Jharkhand , Mr. Rajiv Arun Ekka, Dy.  Deputy Commissioner of Ranchi, Mr.  A.K Sinha, Deputy Commissioner of  Ramgarh and Mr. Vinay  Kumar Chaubey, Deputy Commissioner of  Hazaribagh District.

   

11.             Mr. S.C. Rawal, former Registrar of Delhi High
Court performed the functions of the Secretary to the Committee.  He handled all the correspondence of the Committee and looked after the requirements of the Legal   Team attached to the Committee.

 

12.             Mr. K.K. Mittal, Dy. Registrar (equivalent to Director in Central Government) helped the Committee in going through the draft reports.  He looked after the administration and staff attached to the Committee and handled correspondence with the Department of Food & Public Distribution, Govt. of India.

 

13.             There may be some overlapping on   various points in the report and that is so because an attempt was made to make each Chapter self-contained.  It is also possible that there might have been some inadvertent errors which crept up in the report but the whole report is an attempt to present the correct picture of the ground realities keeping in view the directions of the Hon’ble Court.

 

14.             The sum and substance of the recommendations are given in Chapter 11 of the report.

 

 

(Justice D.P. Wadhwa)

Chairman

Central Vigilance Committee on

Public Distribution System

Delhi

Dated: 23.2.2009

 

 

 

 

 

 

 

Broad Overview

 

1.       By an order dated July 12, 2006  passed in Writ Petition (Civil) No. 196/2001 Supreme Court constituted this Committee and directed that the Committee shall look into the maladies which are effecting the (public distribution) system, and also suggest remedial measures.

 

2.       In particular the Committee was asked amongst other things to focus on;

a) The mode of appointment of the dealers,

b) The ideal commission or the rates payable to the dealers,

c) Modalities as to how the committees already in place, can function better, and

d) Modes as to how there can be transparency in allotment of food stock to be sold at the shops

                            

3.       It was further ordered that while dealing with the question of mode of appointment, the committee shall also suggest as to a transparent mode in selection of dealers. The Committee was also directed to indicate as to how more effective action can be taken on the reports of the vigilance committees already appointed. The Committee was required to invite suggestions from the general public, organizations and consider suggestions, if any received, in the proper perspective.

 

4.       The Supreme Court observed that there is large scale corruption involved and hardly any remedial steps are taken to put an end to this. The ultimate victim is the poor citizen who is deprived of his legitimate entitlement of food grains. The Public Distribution System is intended to ensure that a citizen gets the food grain at a reasonable price keeping in view the economic standards.

 

5.       These directions were initially given for the Government of Delhi and to be followed on all India basis.

 

6.                 The Committee submitted the report relating to Delhi to the Supreme Court on 21.8.2007. By order dated 10.1.2008 the Court accepted the report and directed that in terms of the earlier order similar exercise be undertaken by the Committee for the entire country. The Committee then proceeded to take up the study for other states.

 

7.                 In order to study the working of the Public Distribution System in Jharkhand this Committee visited the State from December 21, 2008 to December 25, 2008.

 

8.                 The Committee invited suggestions from the public, held Public meetings, met the representatives of various organizations like the FPS owner’s associations, transporters, and NGO’s.  The Committee held meetings with the Senior Officers of the State Food and Supplies Department, Members of the Jharkhand PDS Grievance Commission, Managing Director Bihar State Food and Civil Supplies Corporation (BSFC or the Corporation) and District administration and National Informatics Center.  The Committee had discussions with the officials of the Corporation. The Committee also visited the godowns of the Food Corporation of India, BSFC and some Fair Price Shops.

 

9.                 The Public Distribution System in the State of Jharkhand is a glaring example of what the system ought not to be.

 

10.             After more than eight years of the creation of  the State of Jharkhand and coming into force of the PDS Control Order, 2001 the State has not issued any orders as contemplated in paragraph 5 of the Annexe to the PDS Control Order, 2001. The Distribution mechanism of the State has continued in the hands of the most corrupt and inefficient Bihar State Food and Supply Corporation (BSFC). Sufficient storage capacity for foodgrain has not been created in the State ostensibly because it provides the BSFC and the concerned officials of the Department of Food and Supply in the State with excuses for their and acts of commission and omission.

 

11.             Instead of focusing its energy on tackling with the problems in the Public Distribution System, the State has created a toothless white elephant in the form of the Public Distribution System Grievance Commission. The Chairman of the Commission enjoys the rank of the Chief Secretary to the State Government and the members have the status equivalent to the secretaries in the State Government. The Commission, however, has no powers to take any action against any official of the state government, or that of the BSFC. Neither it has the powers to take any action against any individual involved in the implementation of the Public Distribution System.

 

12.             The maladies affecting the Public Distribution System in Jharkhand can be broadly classified into the following categories

 

              i.      Identification of the beneficiaries (BPL)

 

            ii.      Shortage of Storage capacity resulting in backlog in distribution

 

          iii.      Controls over the distribution mechanism : Role of Bihar State Food and Supply Corporation

 

          iv.      Diversion of food grain meant for TPDS

 

            v.      Viability of Fair Price Shops

 

          vi.      Non existent machinery for monitoring

 

I        IDENTIFICATION OF BPL

 

a)     Identification of BPL families is an important aspect relating to maladies affecting the system.

 

b)     In the State of Jharkhand BPL card holders were identified on the basis of survey done in the year 1997 and the same is applicable till now. It was noticed that the department implementing TPDS, i.e., Food and Civil Supplies Department did not conduct any survey to identify BPL/AAY households in the state. Instead, beneficiaries were covered under TPDS based on a survey conducted by the Rural Development Department (RDD) in 1997[1].

 

c)      According to survey conducted by RDD only in rural areas in 1997, there were 23.94 lakh BPL families in Jharkhand. No survey was conducted in the urban areas to identify BPL/AAY population. A separate survey was to be conducted for identification for urban BPL households.

 

d)     Committee observed that the survey conducted in year 1997 was erroneous and as informed by the various officials and many residents of Jharkhand during meetings and public hearings, 50 % of people who are actually entitled to be included in the BPL list have been excluded. No new survey is being done. Official records show that in Hazaribagh district 16% and in Daltonganj District 41% BPL households deprived of benefit of the scheme as they were not issued ration cards. However it was observed that BPL list prepared by Ministry of Rural development for 2002-2007 has been completed in many districts and is made online. This created further confusion. People who find their names in this BPL list are now demanding BPL ration cards.

 

e)     The Minimum Daily wage in the State of Jharkhand is Rs. 93 which means that an unskilled labour earns Rs.2790/- per month (Rs. 93 X 30 days) and Rs. 33480/- per year. Thus it is submitted that the BPL beneficiaries of urban areas should be identified on the basis of minimum daily wage. For the sake of clarification it was mentioned that all those families whose annual income is lesser than what the daily wage labourer earns should be identified as BPL in urban areas.

 

f)       Detailed discussions on the issue of BPL identification appear in the report of this committee with respect to the State of Orrissa and may be read as a part of this report.

 

“The Committee recognizes the fact that it is not an expert body to prescribe identification guidelines and is therefore not venturing into any such task. However, the Committee recognizing the critical nature and importance of identification in the PDS recommends that the expert body constituted by the MORD give its recommendations in a time bound manner and each State within a time frame fixed by the Hon’ble Court prescribe transparent criteria of its own for identification keeping in mind local conditions.

 

Once such guidelines are in place, as suggested in the Delhi report, a time-bound door-to-door drive to identify genuine beneficiaries and eliminate wrongful exclusions and bogus cards would be necessary, which is to be conducted by a reputed independent agency.  The agency will also simultaneously conduct a consumer satisfaction survey, which will enable the department to bring in necessary improvements to the system.

 

There would be an amnesty period of four weeks during which persons holding bogus cards could surrender them without liability. However on the expiry of this period the above mentioned intensive door to door verification would be conducted and during that verification if any bogus card is detected both the holder as well as the officers who had recommended the bogus card would be prosecuted under Section 7 and other Sections of the Essential Commodities Act, 1955 without exception. The Officers can be proceeded against departmentally and severely punished. Widest possible publicity must be given to the amnesty scheme.” 

 

g)          The above mentioned recommendations are required to be put in place on an urgent basis in the State of Jharkhand in as much as no BPL survey for PDS has been conducted since 1997. In the absence of a survey, in spite of a specific mandate under the PDS Control Order, large exclusion errors have resulted in leaving several people who are in the need for food security out of the Public Distribution System.

 

h)     As noticed above the committee set up by the MORD in 2008 is essentially to devise criteria for identifying the correct beneficiary in a rural setting. For the urban scenario, however, a different criterion will have to be devised. This Committee in its report on Delhi  had suggested that the basis for determination as to whether a person is BPL or not should be based on the minimum wage payable to an unskilled workman in the area i.e to say if the person is earning below this amount he would be deemed to be below the poverty Line.

 

i)       The committee is also reiterating its suggestion/recommendation made in the Delhi report that the concept of APL be abolished. Reference may be made to said report for a detailed analysis of the said recommendation and it may be added that the committee in its visit to state after state has found that the Concept of APL is serving no useful purpose for food security but is instead only a diversion tool. It may be added here that certain states  e.g. Karnataka which is infact, recognizing the same,  are  giving the food grain under this category to persons who are BPL but cannot get BPL cards owing to the cap fixed by the planning commission under a category called EBPL (this aspect is elaborated in the Karnataka state report). It is however relevant to point out that State like Karnataka which have adopted a system like EBPL must ensure that the BPL Quota is not expanded to unrealistic levels for political considerations. In this context, it may be noticed that the Central Government has warned the State that it would cut rice supply under APL if the no. of BPL beneficiaries is not brought down.

 

II       Shortage of Storage Capacity and Backlog in distribution

 

a)  The system of backlog is a sure way of ultimately diverting the foodgrain. During the public meetings it was revealed that the quota for the months of February, March and July had been lapsed. There was no explanation as to where this quota of foodgrain had been utilized.

 

b)     There is an acute shortage of storage capacity in the State of Jharkhand. No steps have been taken to increase the storage capacity. Ideally the State should have storage capacity of 2.5 times of the monthly allocation. Shortage of storage space results in damage of the food grain and backlog in distribution. In the State there are total 193 BSFC godowns.  In District Ranchi BSFC have godowns at 24 places. And in Hazaribagh district BFSC has godowns at 18 different places. Total Storage Capacity of BFSC godowns in the State of Jharkhand is 45658 MT. Total allocation for state of Jharkhand is 91000 MT per month (includes both wheat and rice).

 

c)      Similarly there is also a shortage of railway terminal points for unloading the total allocated food grains from the railway rakes and the storage capacity available with the FCI. In the State the FCI has 19 godowns under its control having a total storage capacity of 1.18 Lakh MT as against the requirement of 1.67 Lakh MT. There are only 9 railway terminal points for unloading of the food grains where the required number is 21.

 

d)     At the time of the visit of the Committee in the month of December, the BPL rice for the month of October 2008 had been issued to FPS owners and food grains for the month of November and December 2008 had not been distributed till 23rd December 08. The BPL stock for November and December’08 was lying in the godown and the FPS owners had also deposited the money but stock had not been distributed to FPS owners. According to the Godown Manager it was not distributed as he had not received the Stock Issue Order. This has also resulted in an outstanding balance of money received from FPS dealers towards cost of food grains which had not been delivered to them under BPL and AAY schemes. As a result the not only the beneficiaries were deprived of the supply of food grains for the relevant months, the money of the FPS dealers was also blocked for 3-4 months.

 

e)     Committee felt that there is an urgent need for creation of more storage capacity with the FCI and also by the Corporation.

 

III     Controls over the distribution mechanism: Role of Bihar State Food and Supply Corporation

 

a)     The distribution of food grains under the Public Distribution System in the State of Jharkhand has been with the Bihar State Food and Supply Corporation. Even after the reorganization of Bihar and creation of the separate State of Jharkhand no independent Corporation was set up by the State.

 

b)     Jharkhand State had complaints against the functioning of Corporation, therefore, State Government of Jharkhand wanted to dissociate itself with the Corporation and issued order directing that from April 15, 2006, Deputy Commissioners shall look after the work assigned to the There was an earlier order of the Division Bench of Patna High Court under which it had directed the Jharkhand Government to maintain status quo with respect to the Corporation before the division of the assets and liabilities.  Corporation sought stay of the April 15, 2006 order and sought contempt proceedings against the Jharkhand State.  On April 20, 2006 a notice was issued in contempt petition   and the High Court stayed the order dated April 15, 2006 of the Jharkhand State. Ultimately the impugned order was modified and status quo was directed to be maintained till the approval of the Central Government.  Central Government by its order dated 21.12.2006 approved the arrangement with respect to the division of assets and liabilities. The Patna High Court accepted the arrangement and allowed the State of Jharkhand to constitute a separate Corporation.

 

c)      Inspite of the fact that the State was unhappy with the BSFC it has yet not taken over the whole sale distribution under the PDS. The State Government has virtually no control over the working of the BSFC as its functionaries are appointed by the state of Bihar. There is no accountability. One visit by the team members of the Committee to a godown in Ranchi showed dismal and deplorable state of affairs. Insect infested rice was stored in large quantities. A blame game started between the officials of BSFC and the State Government. The CAG has found several irregularities in the functioning of the Corporation and has even accused it of diversion in many ways. There is an urgent need for the State to take over the distribution under PDS from BSFC. The Committee found the godowns of BSFC in  deplorable condition.  Large numbers of empty Jute bags were found lying in the godown for which there was no satisfactory explanation. There was no electricity or telephone connection. No proper weighing systems were available. In fact a godown which was having three very large sheds was found to have only manual weighing scales which could weigh only one bag at a time. There were complaints of short supply by the FPS.

             

IV      DIVERSION

 

a)     Food grain is procured for the Public Distribution System on behalf of the Central Government by the Food Corporation of India (FCI). Some States have also been allowed to do procurement for the Central pool under the Decentralised Procurement Scheme. The entire food grain so procured either by the FCI or the States comes into the Central Pool. The Central Government then allocates food grain to each State as per their entitlement under the Scheme.

 

b)     Diversion of food grain takes place at every level of the system. The different ways in which diversion takes place would show that Government Officials, Godown Keepers, Transporters and retailers are all involved in the diversion of food grain in some manner or the other. The malady of diversion is prevalent in the system in such large scale that it has become a menace and threat to the system.

 

c)      (i)  The first and foremost reason for diversion is the difference in the price of TPDS grain and market rate. This serves as an incentive for the unscrupulous persons connected with the implementation of the system to connive with the traders to divert the TPDS food grain into open market. The difference in price is also an incentive for people who are not otherwise eligible under the scheme to get the benefit of the lesser rates of grain.

 

(ii)      The second reason for diversion is the lack of any system of accounting for the grain allocated under the system. Ideally there should be a system by which the grain allocated to the State can be equated with the grain distributed to the beneficiaries. Since the scale of distribution and the number of beneficiaries is very large this can not be achieved manually. Thus there is need for complete automation and computerization of the Public Distribution System.

 

(iii) The third reason for is that the functions of implementation, enforcement and vigilance are not clearly demarcated and implemented.

 

d)     There are three ways in which diversion takes place in the State. Firstly by selling the TPDS grain in the open market, and secondly by substituting the TPDS grain by grain of inferior quality, and the third novel way adopted by BSFC by diverting food grain with higher subsidy for distribution to a category having lower subsidy.

 

e)     The Targeted Public Distribution System when introduced was intended to benefit about 6 crore poor families for whom a quantity of about 72 lakh tones of food grains was earmarked annually. Over and above the TDPS allocation, additional allocation of 103 lakh tones of food grain was earmarked annually and provided to the States as ‘transitory allocation’. This was intended for continuation of benefit of subsidized food grains to the population Above Poverty Line (APL) as any sudden withdrawal of benefits existing under PDS from them was not considered desirable. The allocation for APL has continued till date and has proved to be one of the greatest sources of diversion. At present the allocation for the APL to any State is 14.6% of its APL requirement. It is common knowledge that most APL cardholders do not get any food grains under the PDS. Rest do not bother to draw their entitlement. Since full quota is not being allotted for the APL most of the States have adopted the ‘first come first serve’ principle. This enables the FPS dealer to put off any card holder on the plea that the APL stock has been exhausted and divert most of the stock meant for APL.

 

f)       This Committee in its Delhi report has already suggested abolition of APL. We reiterate the suggestion and maintain that APL should be abolished and the subsidy provided for APL should be utilized to increase the BPL and make it more realistic and beneficial to the poor.

 

g)     Broadly speaking the FCI procures the food grain on behalf of the Central Government. The Central Government allocates food grain to the State as per their entitlement under the Targeted Public Distribution System. This allocation is transferred to the States. In the State of Jharkhand the Bihar State Food and Supply Corporation is dealing in storage and distribution.  

 

h)     The state of Godowns of the Bihar State Food Supply Corporation was deplorable. Large numbers of empty Jute bags were found lying in the godown for which there was no satisfactory explanation. No proper weighing systems were available. In fact a godown which was having three very large sheds was found to have only manual weighing scales which could weigh only one bag at a time. There were complaints of short supply by the FPS.

 

i)       The retailers also indulge in diversion. APL food grain can be easily diverted by them as already shown above. They also use bogus ration cards for diversion. Besides this the Committee received complaints showing that the FPS dealers retain the ration cards of the poor people and indulge in short weighing. As a matter of fact diversion at any stage has to be ultimately accounted for against some ration card. This makes the FPS licencee an accessory to all diversion done at any level and provides scope for him to indulge in diversion on his own.

 

j)       The weighing systems at different levels also provide large scope for diversion. The Committee found that that at most places manual weighing scales of very small capacities are used.

 

k)     There are provisions in the PDS Control Order, 2001 regarding quality Control. It is provided that the State Governments shall make arrangements for taking delivery of essential commodities issued by the Central Government by their designated agencies or nominees from the FCI depots/godowns and ensure further delivery to the fair price shop within the first week of the month for which allocation is made. Before making the payment to the FCI the representatives of State Governments or their nominees and the FCI shall conduct joint inspection of the stocks of foodgrains intended for issue to ensure that the stocks conform to the prescribed quality specifications. The FCI shall issue to the State Governments stack-wise sealed samples of the stocks of foodgrains supplied to them for distribution under the Public Distribution System at the time of dispatch. State Governments shall exercise necessary checks to ensure that full quantity lifted by them reaches their godowns and in turn the fair price shops. State Governments shall ensure that stocks of essential commodities under the Public Distribution System, as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder. The Committee found that there was no system of quality control in the state. No samples were found even at the whole sale distribution points. No samples were supplied to the retailers. There was no check on quality of grain being supplied to the beneficiaries. The Committee found rotten grain lying in the godown of BSFC in Jharkhand.

 

l)       The Committee is of the view that there should be complete automation of weighing systems at all levels. Weigh Bridges should be used at all FCI and whole sale distribution points. These weigh Bridges should be connected to computer systems to generate weight check memos automatically. Stock inventories should also be automatically generated. The system of sampling should be strictly observed. The State Government has to obtain stack wise samples from the FCI after a joint inspection of the grain. The whole sale distribution point must issue samples to the retailers to show the quality of grain supplied. The retailer must display the sample at his FPS shop so that the quality can be checked by the officials, vigilance machinery, enforcement machinery and the consumer.

 

m)  The Committee also learnt that at every stage of storage and transportation some pilferage takes place from the jute bags. It was shown to the committee how easy it is to poke a jute bag to take out grain from it and then close the opening created by the poker. A jute bag received from the FCI was found to contain an average weight of 48.5 Kg. The same bag is reduced to about 45-46 kg at the whole sale distribution point. During the visit to Chandigarh a suggestion was given to the Committee that the PDS foodgrain should be packed in non pilferable HDPE bags of smaller sizes. Rice and wheat floor is sold in open market by private companies in such smaller HDPE packaging. It is felt that in case TPDS food grain is packed in non pilferable bags of 10kg and 5 kg the same can be delivered to the beneficiary in sealed packing.  This measure along with automation in weighing and use of computerization and smart cards would go a long way in eliminating or at least reducing pilferage. It would also ensure a more hygienic handling of food grain and help in ensuring that the food grain of proper quality reaches the beneficiary.

 

BOGUS RATION CARDS

 

a)  Bogus ration cards come into existence in several ways. Some of the ways are enumerated below only as an example. The list is not exhaustive.

 

1.                 By using the cards of the people who are dead or have changed residence.

2.                 Obtaining a ration card at temporary place of residence or by showing residence at some place falsely.

3.                 Breaking up the family into smaller units

4.                 Duplicate ration cards issued in the name of  persons who are already issued cards.

5.                 Ration cards issued in fake names and at fake addressees.

 

b)                   A suggestion was received by the Committee to link the issue of ration cards with the voters list. This measure may help in reducing the bogus cards only to some extent. The correctness of the voters list itself can not be vouched for as the incidences of having bogus voters in the voters list is same if not more than the incidence of bogus ration cards.

 

c)                    Issue of ration cards to the intended beneficiaries is a process which requires proper care and scrutiny by the field staff. State Governments should lay down strict guidelines for issue of ration cards and the officials responsible for issue of ration cards should be made accountable for any bogus card found in their jurisdiction.

 

d)                   The Central Government has sponsored the Haryana Government and Chandigarh Administration to start a computerization project which includes introduction of smart cards with the biometrics of the card holder and his family members. This Committee has recommended computerization of the TPDS in the report relating to Delhi. This issue is further discussed in detail in the chapter on computerization in this report.

 

e)                    It is felt that smart cards with the biometrics of the card holder can be very useful in minimizing bogus ration cards.

 

Inclusion and exclusion errors

 

a)     The importance of having a proper criterion for identification of the BPL is the first and foremost condition for issue of ration cards to the intended beneficiaries. Thereafter BPL ration cards have to be issued to the deserving families. Even after that it is necessary that the State Governments conduct a periodical checking of ration cards to weed out ineligible and bogus ration cards. As per the PDS Control Order, 2001 a ration card should be valid for five years from the date of its issue unless it is suspended or cancelled earlier. In such a case a ration card shall be issued afresh or reviewed after fresh verification. The PDS Control Order, 2001 further provides that elimination of bogus ration cards or bogus units of ration cards shall be a continuous exercise to check diversion of essential commodities. This exercise is a must to keep a check on bogus ration cards. In  the state no such checking is being done.

 

b)     Besides the continuous checking the PDS Control Order, 2001 also provides for a review of BPL and Antyodaya families every year for the purposes of deletion of ineligible families and inclusion of eligible families. The importance of this has to be understood in light of the mandate that the State Governments shall ensure that no eligible applicant is deprived of a ration card under the PDS.

 

c)      It is the duty of the State Government to ensure that no eligible applicant entitled to the benefits under the TPDS is denied such benefit. It is also necessary to weed out bogus ration cards. There are provisions for ensuring both these objectives but the State Government has been failing in their implementation. As stated earlier this is because the State Government is lax in fixing responsibility and taking action against their officials.

 

V       VIABILITY OF FAIR PRICE SHOPS

 

a)  Since 1997, the Scale of issue of the BPL families has been gradually increased from 10 kg.  to 35 kg.  per family per month.  The scale of issue was increased from 10 kg. to 20 kg. per family per month with effect from   1.4.2000.  The allocation for APL families has been retained at the same level as at the time of introduction of TPDS (i.e. 10 kg. per family per month). The allocation of food grains for the BPL families has been further increased from 20 kg to 25 kg. per family per month with effect from July, 2001.  Initially, the Antyodaya families were provided 25 kg.  of food grains per family per month at the time of launching of the scheme.  The scale of issue under APL, BPL and AAY has been revised to 35 kg per family per month with effect from 1.4.2002 with a view to enhancing the food security at the household level.

 

b) The PDS Control Order, 2001 provides that the Central Government shall make available to the State Governments food grains for distribution under the Public Distribution System to the various categories of beneficiaries at such scales and prices, as may be specified from time to time. The State Government shall not divert the allocations made by the Central Government for distribution under the Public Distribution System. It is the duty of the State Government fix price under the various categories for retail sale. The PDS Control Order provides the fair price shop owner shall sell the essential commodity to the ration card holder as per his entitlement at the retail issue price fixed by the State Government. The end retail price is fixed by the State after taking into account margins for wholesalers/retailers, transportations charges, levies, local taxes etc.  Under the TPDS the States were requested to issue food-grains at a difference of not more than 50 paisa per kg over and above the CIP for BPL families.  Flexibility to States/UTs. has been given in the matter of fixing the retail issue prices by removing the restriction of 50 paisa per kg over and above the CIP for distribution of food grains under TPDS except with respect to Antyodaya Anna Yojana where the end  retail price is to be retained at Rs. 2/ a Kg. for wheat and Rs. 3/  a Kg. for rice.

 

b)     While fixing the sale price the states have also to consider the viability of the fair price shops There has been a general suggestion that the commission of the fair price shops should be increased to approx 2.5% to 10%.. According to the Planning Commission a FPS can be considered viable if the annual income from the business is 12% or more.

 

c)      The following table shows the prices at which the State buys food grains from the Central Government, the commission of BSFC, the commission of retailer  and the price at which a fair price shop is expected to sell the food grains to the consumers.

 

 

BPL

APL

AAY

 

Wheat       

Rice

Wheat      

Rice

Wheat  

Rice

Central Government issued price (FCI)

415             

565

610           

830

200         

300

Agricultural Marketing Tax (1%)

4.15            

5.65

6.10         

8.30

2.00         

3.00

BSFC Administrative Charges or Commission

29.15          

27.30

24.15         

26.00

29.15       

27.30

BSFC issued price

448            

597

640             

864.30

231.15      

330.30

(1) FPS Commission

(2) Transportation Charge ( 0 to 15 km)

 

9.70           

 

 

4.00          

13.05

 

 

4.00

16.75          

 

 

4.00               

27.70

 

 

4.00

9.70           

 

 

4.00            

13.05

 

 

4.00

Consumer End Price

462            

615

661                

896

200             

 

300

 

d)     The study of this table shows that whereas on BPL wheat the BSFC gets a commission of Rs. 29.15 per quintal the FPS owner only gets a commission of Rs 14.00 per quintal including transportation. On BPL rice BSFC gets a commission of Rs. 27.30 per quintal but the FPS owner only gets Rs. 18.00 per quintal.

 

e)     The Committee maintains its stand which it stated during the study of the Delhi model that in order to improve the viability of fair price shop, the consumers should not be burdened and also no additional burden should be there on the government. 

 

f)       Presently FPS Dealers are not selling Non PDS Commodities though there is no statutory prohibition for selling other commodities. It is recommended that Government should grant licence to existing Kirana/ Grocery shops. Selling non PDS items from the same premises which can certainly helps in increasing their viability. Standalone FPS shop be not allowed as it is inherently unworkable model and leads to malpractices. A system needs to be developed where general stores are given licences to sell PDS grains.

 

g)     Transportation cost constitutes an important aspect in running a Fair Price Shop as transportation cost is borne by FPS owners in the State of Jharkhand and it depends on distance of wholesale depot. Transportation Cost varies with the location of FPS. Usually the transportation cost of shops at remote (rural) areas for all commodities is higher than for the urban shops. The Managing Director BSFC informed the Committee that the Corporation gets Rs. 29/- per quintal of wheat and Rs. 27/- per quintal of rice as commission. From this it meets all the expenses and also does some saving. The subsidy given by the Central Government is for the poor and it is not meant for increasing the bank balance of the Corporation. It would be appropriate for the Corporation to utilize the money to undertake delivery of PDS grain at the FPS Shop which would result in reducing their expense on transportation and handling.

 

h)     Efforts should be made by State Government to make administrative formalities required to be completed by the FPS owners less cumbersome and time efficient. As the allocation of food grains in the State is untimely FPS owners has to travel / contact godown owners many time to check whether food grains is ready to be issued. He has to keep check whether Stock Issue order (SIO) is given or not. Again he has to travel for payment of money. All these lead to hidden additional cost for FPS owners.

 

i)        Number of ration cards attached to shop has a direct bearing on profit of FPS. In state of Jharkhand Government by letter dated 10th April 2006 directed that no new licence for FPS should be issued as there are more than required no. of FPS shops in the State. It is pertinent to mention again that Committee was informed that no new FPS licence was issued in Jharkhand after 1997 as there were more than required number of shops which was officially recognized by letter dated 10th April, 2006. Mushrooming of FPS needs to be curbed by the State Government and shops be allowed to run only after careful calculation of viability and demand structure of PDS food grains.

 

 

VI      IMPLEMENTATION, VIGILANCE AND ENFORCEMENT

 

It is said that no one can be judge of his own cause. Implementation, Vigilance and Enforcement are three aspects on which the success or failure of the TPDS depends. The functions under each of these processes should be clearly defined and segregated. Persons involved in the process of implementation should not be involved in Vigilance and Enforcement. Similarly those responsible for monitoring by way of vigilance and enforcement should not be involved in implementation. If the same people are involved in implementation, vigilance and enforcement the vigilance will be biased and there will be no action taken for the infractions, irregularities, and illegalities.

 

(A) Implementation

         

It is the duty of the Food and Supplies Department of the state getting subsidized food grain from the Central Government to implement the Targeted Public Distribution Scheme. This may be done by the department either on its own or through its agency like the State Corporations. The various aspects of the implementation of TPDS are.-

 

  • Identification of the families living below poverty line including Antyodaya families and issue of ration cards.
  • Licensing
  • Quality Control
  • Allocation and Distribution
  • Scale of issue and price

 

a)       The identification of BPL and Antyodaya families includes (i) the identification of the poor by the State in accordance with the guidelines of the MoRD. (ii) the laying down of a criterion by the State Government for limiting the number of BPL within the estimates of the Central Government arrived at on the basis of the Lakdawala report. (iii) identification of beneficiaries in accordance with the criterion           fixed by the State Government. (iv)    ensuring that every person covered by       this criterion is provided with a BPL or Antyodaya ration card.  (v) Limiting the BPL ration cards only to the entitled persons.

 

b)       Licensing means and includes the appointment of the Fair Price dealers, grant of  licences to the FPS dealers and  prescribing conditions for running of the FPS.

 

In the state of Jharkhand no new licencees are being appointed after 1997 as the number of licencees is already in excess of the requirement. This has happened because licences are issued in perpetuity. In the event of the death of a licencee his heirs are preferred for appointment as retail licencee.

 

c)  (i) Quality control requires ensuring that the quality of food grain procured and supplied by the Central Government through FCI reaches the beneficiary. In case of decentralized procurement the quality has to be maintained according to the standards laid down by         the Central Government or the FCI. It is therefore necessary that samples are maintained at every stage of distribution till the FPS so           that it can be ensured that the quality of food grain available in stock     is according to the sample. Sampling procedures have to be prescribed           by the FCI and the State Government should ensure strict compliance   with those procedures.  (ii)  The Committee on visit to the State of Jharkhand found a complete absence of samples both at the whole sale distribution points of the      State even at the FPS level. It was impossible under the circumstances to vouch for the quality of food grain. The Committee found rotten grain in the godowns.  (iii)   The absence of sampling systems in the State also is a source of diversion   of PDS grain by substitution with poor quality of grain. Thus          maintaining quality control is a very essential part of the      implementation of the TPDS.  (iv)   The FCI by a letter dated 30-10-2007       directed its regional offices to make arrangements for inspecting the quality of food grain at the FPS. However, it was pointed out that the states was not co-operating with the FCI officials in this respect. Implementation of the TPDS is the joint responsibility of the Centre and the State. Hence it is necessary that the State Governments should co-operate with the FCI in maintaining the quality of PDS food grain. (v)  The PDS Control Order 2001 provides that the FCI shall issue to the State Government stock wise sealed samples of the stacks of foodgrain supplied to them for distribution under the Public Distribution System at the time of dispatch. The State Government has to ensure that the stocks of essential commodities under the Public Distribution System, as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder.

 

Allocation and Distribution

 

a)     Allocation of food grain to the States is made by the Central Government according to their entitlement as per the estimates of the Planning Commission. The State Government then makes allocation to each District. The District Supply Officer allocates the food grain to each Block /Taluk. From there allocation is made to each FPS. In the State of Orrissa whole sale distribution has been privatized and given to storage agents. In The State of Jharkhand distribution is being done through the whole sale godowns which are controlled by the BSFC. The retail distribution in the state is in private hands.

 

b)     There is an acute shortage of storage capacity in the State of Jharkhand. No steps have been taken to increase the storage capacity. Ideally the State should have storage capacity of 2.5 times of the monthly allocation. Shortage of storage space results in damage of the food grain and backlog in distribution.

 

c)      The problem of backlog is a major problem which not only delays the issuance of foodgrain to FPS but increases the chances of diversion. Neither the Food and Supply officers nor the FPS owners are aware how much stock is lifted from FCI. There should be transparency about the lifting date and quantity of stock.

 

d)     The capital of FPS owners gets blocked for three to four months as foodgrains are not issued in time. FPS owners pay money out of their pocket to deposit draft in time. The one reason for delay in issuance was that Release Orders are not given from BSFC Regional office to Godown. Thus, it is suggested that they should be allowed to deposit money only when grain is available for lifting at the BSFC godown. It is also suggested that a system of e-banking should be adopted for depositing the money by FPS Owners. The amounts so received through E-banking from the Fair Price Shops shall also be verified and authenticated by Food and Civil Supply Department and FCI online to ensure that the amounts remitted correspond to the allocation of Fair Price Shops. For this purpose, a computerized system should be in place to ensure connectivity between these three agencies so that remittances can be properly monitored at all ends. 

 

e)     The conditions of Godowns is deplorable and the storage system is very badly managed due to which the foodgrains quality deteriorates. A proper scientific storage system should be adopted and grains should be issued in time so that quality does not deteriorates by time.

 

f)       The BSFC godowns have no electric connections. The godowns need to be electrified urgently.

 

g)      All the State Food Corporations Godowns in Jharkhand State do not have electronic weighment system, and are using manual weighing machine. The godowns store food grains for all the subsidized schemes for poverty alleviation and receive huge quantity of food grains monthly from FCI. Weighing machines are manual and small. They are not sufficient to weigh the huge quantity of grains which reaches the godowns from FCI. In such a situation manual weighing is obviously not possible and absence of electronic weighing machine clearly shows that food grains are not weighed at all when food grains are unloaded at godown or supplied to the FPS dealers. Absence of weighbridges makes the scheme vulnerable to malpractices.[2] Thus, there should be electronic weighing systems at the BSFC godowns and all records should be computerized. Weight check memos should also be issued automatically through the computerized system.

 

h)      There is no system of maintaining or issuing samples in the BSFC godowns. It is the duty of the State to ensure that the stocks of food grain as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder. For this purpose FCI issues stock wise sealed samples of stocks of food grain supplied by them.  BSFC should ensure that the samples are maintained in their godowns. They should also issue  stock wise sealed samples to the retailers which should be available at the FPS for inspection by enforcement squads, Vigilance Committee or the consumers.

 

(B)     MONITORING

 

The monitoring of the Targeted Public Distribution System can be divided into two parts

1.                 VIGILANCE

2.                 ENFORCEMENT

 

VIGILANCE

 

a)     Awareness and availability of information is the key to vigilance. The PDS Control Order, 2001 provides that a copy of the allocation order made to the Fair Price Shop shall be simultaneously sent to the Nagar Palika, Gram Panchayat or the Vigilance Committees or any other body nominated for monitoring the functioning of the fair price shop. It further provides that the bodies nominated for monitoring the functioning of the FPS by the State Government shall display the stocks of essential commodities allotted during the months to the FPS on a notice board outside their office. 

 

b)     Vigilance under the TPDS is envisaged through the Vigilance Committees, Gram Panchayats, Nagar Palikas, and the Consumer.

 

c)      The provisions regarding Vigilance Committees have been ignored if not flouted by the State Government. Either the Vigilance Committees envisaged under the PDS Control Order, 2001 have not been formed or they have not been meeting and performing their duties. This is because there is no accountability for any one to ensure that the meetings of the Vigilance Committees take place regularly. The PDS Control Order, 2001 provides that the meetings of the Vigilance Committees on Public Distribution System at the State, District, Block and FPS level shall be held on a regular basis. The date and periodicity has to be notified by the State Governments. However, the periodicity has to be not less than one meeting a quarter at all levels.

 

d)     The State Government is therefore duty bound to ensure that meetings of the Vigilance Committees at all levels take place at least once in three months. However, no authority has been made responsible for ensuring that such meetings take place. The State Government should fix the responsibly of the officials of the administrative machinery to convene the meetings and ensure the presence of the members. Rules can provide that any member who does not attend two consecutive meetings would be replaced. The Secretary of the Department of Food and Supply should be responsible for convening the meetings at the State level, the District Magistrate should be responsible for the District level Committee, Block Development Officer should be responsible for the block and FPS level committees.

 

e)     The PDS Control Order, 2001 also requires the State Governments to make rules regarding furnishing of copies of the specified documents, namely ration card register, stock register, and sale register. Any ration card holder desirous of obtaining extracts from the records of the FPS owner can make a written request to such owner along with the fee specified by the State Government and the FPS owner has to supply the copies of the record within fourteen days from date of receipt of the request.

 

f)       The right to information thus provided under the PDS Control Order, 2001 has been negated by the State by not making rules regarding the fees payable for obtaining the copies. Where such rules have been made there is no publicity given to educate the beneficiary.

 

g)     There are no elected Panchayats in the State. However, there are traditional Panchayats. The Panchayat and the Nagar Palikas should be actively involved in the vigilance. The elected representatives of the people must perform their duty in keeping a vigil on the activities concerned with the Public Distribution System.

 

h)     The purpose of providing the copies of the allocation order for each FPS should also be sent to the Gram Panchayat or Nagar Palika and should be displayed on their notice board is to prompt their members to be vigilant and check the activities of the FPS licencees.

 

i)       The involvement of political persons in the implementation of the scheme should be strictly avoided and they should play a greater role in vigilance. In case the political persons are involved in the implementation process it becomes difficult to take any action against the defaulting licence.

 

j)       Another aspect of the Vigilance mechanism is the complaint system. It is necessary that there should be 24 hour dedicated helpline set up in the state so that any one can lodge a complaint against any of the persons involved in the implementation of the Public Distribution System.

 

k)     The State has set up a Public Distribution System Grievance Commission. The Committee found the Commission to be unnecessary burden on the State. The Chairman of the Commission enjoys the rank and status of the Chief Secretary of the State and its other two members have the status of the Secretaries to the State Government. The Commission has no powers to take any action against the government officials, officials of the BSFC or even the defaulting FPS owners. It has no powers to supervise the vigilance mechanism and has no role to play in the enforcement of the system.

 

l)       There should be a machinery to verify the complaints and take action against the guilty. The complainant should be able to follow up his complaint. The identity of the complainant if necessary should be protected. The committee has also recommended the setting up of an independent watchdog in the form of a regulator/ombudsman to oversee the smooth functioning of the system.

 

 

 

ENFORCEMENT

 

a)     The enforcement in the State under the Public Distribution System is dismal and ineffective. This is the reason for the improper implementation of the system and large extent of diversion. No system can succeed if there is no fear of punishment.

 

b)     The Committee found that the State did not have any enforcement mechanism. A vigilant consumer or any vigilance set up can not succeed without a proper enforcement mechanism. Section 7 of the Essential Commodities Act, 1955 provides for punishment for violations of the Control Orders issued under Section 3 of the Act. These provisions are technical in nature and require specially trained personnel to enforce them. The normal police have proved ineffective in enforcing these provisions.

 

c)      It has also been observed that the cases filed under the Essential Commodities Act, 1955 keep on pending in courts indefinitely and a large majority of cases end up in acquittal of the accused persons. It is necessary that special courts and specially trained prosecutors are appointed for the trial of these cases.

 

d)     The licence granted to the dealers lay down certain conditions. The violation of these conditions makes the licence liable for cancellation of his licence. The Supreme Court has also ordered that a licence would make himself liable for cancellation of his licence in the following cases.

That the licences of those fair price shop owners

·        who do not keep their shops open throughout the month during the stipulated period,

·        fail to provide grain to BPL families strictly at BPL rates,

·        keep the cards of BPL households with them,

·        make false entries in the BPL cards,

·        engage in black-marketing or siphoning away of grains to the open market, and

·        hand over such ration shops to such other person/organizations, will be liable to be cancelled.

 

e)  This order was passed on 2.5.2003 but no action has been taken by the State to enforce this order. It is therefore necessary that the special squads be formed consisting of persons drawn from the administration and the police and should be placed directly under the District Magistrate. These squads should be responsible for conducting raids, launching criminal prosecutions and also for recommending departmental action for suspension or cancellation of licence, or imposing penalties. The Committee was not informed if any action had been taken against any official though it can not be denied that no diversion of food grain is possible without the connivance of the officials of the department. . It is also important that these squads also have the powers to recommend action against officials in whose jurisdiction violations are detected or who is found to be involved in diversion of food grain. The Committee feels that there should be dedicated Special squads in every District for enforcement of the penal provisions of the Essential Commodities Act, 1955. The Committee has suggested Zero Tolerance in the matter of enforcement in the Public Distribution System. Similarly a special squad should also be created at the State level for surprise checks whenever there is complaint requiring such action.

 

Special attention is also required to ensure speedy disposal of cases filed in courts. Special Courts may have to be set up in consultation with the High Court to ensure speedy disposal.



[1] CAG, Audit Report (civil and Commercial) for the year ended 31st March 2006

[2] CAG Annual Report of Jharkhand , Chapter III at page 57

 

 

 

REPORT

 

 

Chapter 1

 

PDS SYSTEM IN STATE OF JHARKHAND

INTRODUCTION

 

1.1            ABOUT THE STATE OF JHARKHAND

 

1.1.1       The 28th State of the Indian Union was brought into existence by the Bihar Reorganization Act, 2000 on November 15, 2000. The State of Jharkhand was earlier a part of the State of Bihar; therefore many laws, orders, circulars and instructions which were in force in the State of Bihar were adopted by the State of Jharkhand.

 

 1.1.2      As per 2001 Census, the Population of the state of Jharkhand  is 2,69,09,428. In Jharkhand  the Per Capita Income is Rs. 4161.00[1]. 74.65% of its population resides in rural areas, 54% of its population in rural area live below the poverty line. The road network of the state is very poor. Jharkhand has 21.40 km per 100 sq km road as against national average of 74.25 km.[2]

 

1.1.3       Few important demographic details of State of Jharkhand based on 2001 census are mentioned below[3]

 

Density of Population:       338 persons / Sq. KM

No. of Districts:                           24 

No. of Sub divisions:                    35

No. of Blocks:                             212

No. of Villages:                           32,620

No. of Villages Electrified:            14,667 (45 % of total)

No. of Villages connected by Road:      8484

 

 

Map of Jharkhand

 

1.1.4       The residents of Jharkhand are mainly rice eaters and prefer parboiled rice instead of raw rice. The State is however, getting more of raw rice from the Central Government.

 

1.2         TARGETED PUBLIC DISTRIBUTION SYSTEM

1.2.1       The Targeted Public Distribution system was introduced w.e.f June 1st 1997. TPDS envisaged that  Below poverty line population would be identified in every State and every BPL family would be entitiled to a certain quality of foodgrains at  subsidized price.

1.2.2       PDS is operated under the joint responsibility of the Central and the State Governments. The Central Government has taken the responsibility for procurement, storage, transportation and bulk allocation of foodgrains, etc. The responsibility for distributing the same to the consumers through the network of Fair Price Shops (FPS) rests with the State Governments. The operational responsibilities including allocation within the State, identification of families below poverty line, issue of ration cards, supervision and monitoring the functioning of FPS’s rest with the State Governments.

1.2.3       The TPDS scheme classifies beneficiaries in three categories Above poverty line (APL), Below Poverty line (BPL) and Antodaya Anna Yojana (AAY) The price at which they get the subsidized foodgrain is different for each Category. Under all these schemes, presently beneficiaries are entitled for 35 Kg of food grain

1.2.4       Scale of issue: Since 1997, the Scale of issue of BPL families has been gradually increased from 10kg. to 35 kg per family per month. The scale of issue under APL, BPL and AAY has been revised to 35 kg per family per month with effect from 1.4.2002 with a view to enhancing the food security at the household level and liquidating surplus stocks of food grains in the Central Pool[4].

1.2.5       Issue Price: The end retail price is fixed by the States after taking into account margins for wholesalers/retailers, transportation charges, levies, local taxes etc. Under the TPDS the States were requested to issue foodgrains at a difference of not more than 50 Paise per kg over and above the CIP for BPL families. Flexibility to States has been given in the matter of fixing the retail issue prices by removing the restriction of 50 paise per kg over above the CIP for distribution of foodgrains under TPDS except with respect to Antyodaya Anna Yojana where the end retail price is to be retained at Rs. 2/kg for wheat and Rs. 3 /kg for rice[5].

1.2.6       Issue Price for APL, BPL, AAY

              Above Poverty Line (APL) beneficiaries are entitled to wheat @Rs. 6.61/kg and Rice @ Rs. 8.96/kg .CIP is Rs. 6.10/kg for Wheat and Rs. 8.30/kg for Rice.

              Below Poverty Line (BPL) beneficiary gets wheat @ Rs 4.62/kg and Rice @ Rs 6.15/kg. Central issue Price (CIP) is Rs. 4.15 for Wheat and Rs. 5.65 for Rice.

              Under the Antodaya Anna Yojana (AAY) Scheme, price at which beneficiary gets food grain and Central issue Price (CIP) are same i.e. Wheat @ Rs 2/kg and Wheat @ Rs 3/kg.

1.2.7       Rs 2 Scheme (State sponsored scheme)

Food and Civil Supply Department, Government of Jharkhand by the letter no. 1644 dated 01.11.2008 announced the Rs 2/- Scheme. Under this Scheme, the State of Jharkhand has further subsidized the foodgrains for BPL families; all the BPL beneficiaries will get wheat @ Rs 2 per kg and Rice @ 3 Rs per kg from the month of November, 2008. But till the end of December, 2008 the above said scheme had not been implemented.

1.2.8      The total number of cards issued in the State of Jharkhand are 29.09 lakh. The position of Ration Cards in the State of Jharkhand is as follows:-[6]

Total no. of APL cards                          5.15 Lakh.

Total No. of BPL cards                          16.67Lakh

Total No. of AAY Cards                        7.27 Lakh

 

1.3            AGENCIES INVOLVED

1.3.1  Food Corporation of India

1.3.2  Department of Food and civil supply Jharkhand

1.3.3  Bihar State Food and civil supply Corporation

 

1.3.1       Food Corporation of India

 

1.3.1.1           The State of Jharkhand is divided into two FCI Regions, Ranchi and Hazaribagh, having one district office in Ranchi and other in Hazaribagh.  Jharkhand has 24 revenue districts. These districts are attached to 6 FCI owned Godowns and hired godowns of Central Warehouse Corporation (CWC), State Warehouse Corporation (SWC) and private godowns at 13 places. Total storage capacity of these godowns is 1.18 lakh MT which cater to all revenue districts of the State. However, the Department of Public Distribution (Government of India) provides the following data regarding storage capacity in Jharkhand.

 

(Figures in Lakh MT) [7]

STATE

FCI

CWC

SWC

GRAND TOTAL

JHARKHAND

1.23

0.35

0.00

1.58

 

1.3.2       Department of Food and Civil supply Jharkhand

 

ADMINISTRATIVE SET UP

 

Secretary

 

 


Commissioner, Food

 

 


Divisional Commissioner

 

 


Deputy Director, Food

 

 


District Supply Officer

 

 


Additional District Supply Officer

 

 


Marketing officer

 

 


Supply Inspector

 

 

ADMINISTRATIVE OFFICERS IN DISTRICT

 

Deputy Commissioner

(DC is the appellate authority in a District)

 

 

 


Sub Divisional Officer(SDO)

 In Rural areas

Special Officer Rationing (SOR)

In Town

The SDO is licensing officer at the  Sub-Divisional level mainly in rural areas 

SOR is Licensing authority at town level. In Jharkhand SOR post is only in three  places Ranchi, Jamshedpur and Dhanbad. In rest of the Places/towns SDO is the Licensing authority

 

 

In the State of Jharkhand, presently there are 22 sanctioned posts for District Supply Officer out of which only 1 is filled and rest 21 posts are lying vacant. Further it is submitted that there are 14 sanctioned posts for Assistant District Supply Officer out of which only 4 are filled and rest 10 are vacant. There are also 129 posts of Block Supply Officers, only 41 are filled and 89 posts are lying vacant. Out of 212 sanctioned posts for Supply Inspector, 136 are filled and 76 are rest lying vacant[8].

 

1.3.3       Bihar State Food and Civil Supply Corporation (BSFC)

This Corporation acts as the agent of the State Govt. in Bihar/Jharkhand in matters of procurement, transportation and handling, storage and distribution of food grains to targeted PDS dealers and other Govt. agencies. The company, being a Procurement , Storage and Distribution agency of the State Government, procures foodgrains from FCI against monthly/ yearly allotments made by the Central/State Government under various schemes. The Company through its District offices deposits the cost of foodgrains to FCI and obtains Release Orders (RO) from them for lifting and distribution to FPS dealers.

 

1.4            ISSUE/ ALLOCATION 

 

1.4.1       The GOI allocates in the State about 10.50 Lakh MT of food grains annually for APL, BPL, AAY and Annapurna Yojana. But the State gets only 50 to 60 % of the allocated food grains through FCI. The reasons for not getting the full quantity of the allocated food grain as disclosed by the Department of Food and  Civil Supply are

 

a)                 Shortage of Railway Rakes

b)                 Less number of Railway Terminals

c)                  Shortage of Storage Capacity

d)                 Shortage of Regional offices of FCI

 

1.4.2       There are only 2 District offices of FCI, one in Ranchi and another in Hazaribagh. These two District offices issue the release order for the allocation of foodgrains. The various authorities have to travel to these two District offices to obtain the release order which takes long time. Thus, there is need for more offices of FCI at regional level so that release Orders can be issued in time. [9]

 

1.4.3       FCI is feeding only those depots on priority that are connected with broad gauge rail and depots connected by road are not being fed regularly. The FCI does not issue food grains on the days when railway rakes are unloaded as there is shortage of space for parking of trucks, and there is only one weigh Bridge.

 

1.4.4       Allocation of foodgrains

Central Government allocation to State Government

 

 


Procurement by FCI as per State requirement

 

 


District Wise allocation by State Government

 

 


Block Wise allocation from Districts

 

 


FPS Allocation from Blocks

 

 


As per allocation, Demand Draft deposit by FPS to SFO

 

 


Against DD, SFC issue Stock Issue Order (S I O) to FPS

 

 


Collection of Foodgrain by FPS from Block Godown

 

 


Transportation of Food Grain to FPS Shops  by FPS Owners

 

 


Provision of Opening of Sale after inspection by Vigilance committee and Food inspector

 

 


Distribution to Beneficiaries according to their entitlement/Card

 

 

 

 

 

 

 

 

 

Chapter 2

LEGAL FRAMEWORK

 

2.1         ESSENTIAL COMMODITIES ACT, 1955: The Essential Commodities Act 1955 (Act) is an Act to provide, in the interest of general public, for the control of the production, supply and distribution of, and   trade and commerce, in certain commodities.

 

i.             Section 3 of the Act confers powers on the Central Government to control production, supply, and distribution etc. of essential commodities.  Central Government has issued an order called Public Distribution System (Control) Order 2001 (Order), which was amended in 2004.

ii.            Stringent provisions have been provided in the Act and the Order, to deal with any infringement of the provisions of the Act or the Order.

iii.           Section 7 provides for penalties.  Any person contravening the Order is liable to be sentenced to imprisonment, which may extend upto 7 years and shall also be liable to fine.  Sentence of imprisonment cannot be less than 3 months unless there are adequate and special reasons.  The property in respect of which contravention of the Order has taken place, is liable to be forfeited to the Government and so also any vehicle used in carrying such commodity.  If a person commits offence a second time then imprisonment cannot be less than 6 months subject to, adequate and special reasons.

iv.           Section 8 provides that a person who attempts to contravene or abets any contravention of the Control Order is similarly liable.

v.            Section 9 provides for punishment upto 5 years or fine or both, if the record is not maintained in terms of the Control Order or any statement or information furnished, which is not true.

vi.           Section 10 deals with offences by Companies, in which case every person who at the time of contravention was in charge, is responsible for the contravention and shall be deemed to be guilty.

vii.          Section 10A has made any offence punishable under the Act cognizable.

viii.         Section 10C provides that Court may presume the existence of such mental state where an offence under the Act requires culpable mental state on the part of the accused.  “Culpable mental state” includes intention, motive, knowledge or reason to believe a fact.

ix.           Under Section 11, a Court can take cognizance of an offence under the Act not only on a complaint made by a public servant but also by any person aggrieved or any recognized consumer organization. 

x.            An offence for contravention of the Control Order is to be tried summarily (Section 12A).

xi.           If an accused is sentenced to imprisonment for a period not exceeding one month and of a fine not exceeding Rupees two thousand, no appeal can be filed.

xii.         Section 14 provides that when a person is prosecuted for contravention of any order which prohibits him from doing any act or being in possession of a thing without lawful authority or without a permit, licence or other document, the burden of proving that he has such an authority, permit, licence or other document, shall be on him.

 

 

 

2.2            THE PUBLIC DISTRIBUTION SYSTEM (CONTROL) ORDER, 2001:

2.2(a)      The Public Distribution System (Control) Order, 2001 (hereinafter referred to as the ‘PDS Order 2001’) has been issued by the Central Government in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955 for maintaining supplies and securing availability and distribution of essential commodities under the Public Distribution System. The said Order has been amended in 2004.

 

2.2(b)      The PDS control order 2001 promulgated by Government of India, provides for:-

2.1.          Distinctive Ration Cards

2.2.          Functioning of FPS

2.3.          Distribution

2.4.          Identification of beneficiaries

2.5.          Licensing

2.6.          Monitoring

2.7.          Grievance Redressal

 

2.2.1       Provisions for Ration Cards

1        Clause 4:The State Government shall issue distinctive ration cards to Above Poverty Line, Below Poverty Line and Antyodaya families and shall conduct periodical review and checking of the ration cards as per paragraph 2 of the Annexe to this Order.

2        Para 2 of Annexe provides that State Governments shall ensure that no eligible applicant is denied a ration card under the Public Distribution System. State Government shall issue distinctive ration cards to APL, BPL and Antyodaya families. The ration card holder shall be entitled to draw essential commodities from a fair price shop on weekly basis.

3        The designated authority shall issue a ration card within one month of the date of receipt of the application after necessary checks and verification. State Government shall conduct periodical checking of ration cards to weed out ineligible and bogus ration cards and bogus units in ration cards.

4        Elimination of bogus ration cards as well as bogus units in the ration cards shall be a continuous exercise by the State Governments to check diversion of essential commodities.

5        Ration cards shall not be used as documents of identity.

 

2.2.2       Provisions for Functioning of FPS shops

1             Para 5(i) of Annexure to PDS control order 2001 provides that the essential commodities must be sold as per the entitlement of ration card holders and at the retail issue prices fixed by the concerned State Government.

 

2                    Para 5(ii) of the Annexure to PDS control order 2001  provides that each FPS will display the following information on a notice board which is to be put up at a prominent place in the Shop on a daily basis:-

 

(i)      List of BPL and Antodaya beneficiaries,

(ii)      Entitlement of essential commodities,

(iii)     Scale of issue,

(iv)     Retail issue prices,

(v)      Timings of opening and closing of the fair price shop,

(vi)     Stock of essential commodities received during the month,

(vii)    Opening and closing stock of essential commodities and

(viii)   The authority for redressal of grievances/lodging complaints with respect to quality and quantity of essential commodities under the Public Distribution System.

 

2.2.3       Provisions for Distribution:

(a)          Clause 6 of PDS Control order provides:

(1)     The procedure for distribution of foodgrains by the Food Corporation of India to the State Governments or their nominated agencies shall be as per paragraph 4 of the Annexe to this Order.

(2)     Fair price shop owners shall take delivery of stocks from authorized nominees of the State Governments to ensure that essential commodities are available at the fair price shop within first week of the month for which the allotment is made.

(3)     The district authority entrusted with the responsibility of implementing the Public Distribution System shall ensure that the stocks allocated to the fair price shops are physically delivered to them by the authorized nominee within the stipulated time.

(4)     The authority or person, who is engaged in the distribution and handling of essential commodities under the Public Distribution System, shall not willfully indulge in substitution or adulteration or diversion or theft of stocks from Central godowns to fair price shop premises or at the premises of the fair price shop.

(b)          Para 4 of Annexure to the PDS Control Order provides:

(1)     The Food Corporation of India (FCI) or any other agency designated for the purpose by the Central Government shall ensure physical delivery of foodgrains of fair average quality to State Governments for distribution under the Public Distribution System, as per the allocations made by the Central Government, within two weeks of the receipt of payment from the State Governments and issue of release orders.

(2)     State Governments shall, on getting allocation of foodgrains from the Central Government, issue district-wise allocation orders authorizing their agencies or nominees to draw foodgrains from the FCI within ten days of the receipt of allocation orders made by the Government of India

(3)     The designated authority of the State Governments shall ensure delivery of one copy of allocation order made to the fair price shop simultaneously to Gram Panchayats or Nagar Palikas or Vigilance Committees or any other body nominated for monitoring the functioning of the fair price shops by the concerned State Government.

(4)     Gram Panchayats or Nagar Palikas or Vigilance Committees or any other body nominated for monitoring the functioning of the fair price shop by State Governments shall display the stocks of essential commodities allotted during the month to the fair price shops on a notice board outside their office.

(5)     While making monthly allocations to the fair price shops the designated authority of State Governments shall take into account the balance stock, if any, lying un-distributed with the fair price shop owners for the subsequent allocations.

(6)     State Governments shall make arrangements for taking delivery of essential commodities issued by the Central Government by their designated agencies or nominees from the FCI depots/godowns and ensure further delivery to the fair price shop within the first week of the month for which allocation is made.

(7)     Before making the payment to the FCI the representatives of State Governments or their nominees and the FCI shall conduct joint inspection of the stocks of foodgrains intended for issue to ensure that the stocks conform to the prescribed quality specifications.

(8)     The FCI shall issue to the State Governments stack-wise sealed samples of the stocks of foodgrains supplied to them for distribution under the Public Distribution System at the time of dispatch.

(9)     State Governments shall exercise necessary checks to ensure that full quantity lifted by them reaches their godowns and in turn the fair price shops.

(10)    State Governments shall ensure that stocks of essential commodities under the Public Distribution System, as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder.

 

2.2.4       Provisions for Identification

           Para 1 of Annexe talks of Identification of families living below the Poverty Line:

(1)     State Governments shall formulate suitable guidelines for the purpose of identification of families living Below the Poverty Line (BPL), including the Antyodaya families, as per the estimates adopted by the Central Government. Care will be taken to ensure that the families so identified are really the poorest. The exercise of identification of BPL and Antyodaya families, wherever it has not been done already, shall be completed within three months of the issue of this Order.

(2)     State Governments shall get the lists of BPL and Antyodaya families reviewed every year for the purpose of deletion of ineligible families and inclusion of eligible families.

(3)     While undertaking the exercise of identification or review of BPL and Antyodaya families, each State Government shall prescribe a suitable proforma to be filled up by or on behalf of the head of a family.

(4)     The data provided in the prescribed proforma shall be verified by the authority designated by the State Government for the purpose. The said authority shall also certify the correctness of the information contained in the proforma.

(5)     Gram Sabhas shall finalize the list of beneficiaries belonging to BPL and Antyodaya categories drawn up by the designated authority in respect of the area under their respective jurisdiction.

(6)     Where there are no Gram Sabhas, the local representative bodies shall finalize the list of beneficiaries belonging to BPL and Antyodaya categories within their respective jurisdiction.

(7)     The designated authority of the State Government or the local representative bodies including Gram Sabhas and Gram Panchayats which have been entrusted with the task of identification of beneficiaries, shall verify and certify the information in the prescribed proforma for BPL and Antyodaya families.

 

2.2.5       Provisions for Issue of Licence

The PDS Order, 2001, under Clause 7 read with paragraph 5 of the Annexure to the Order lays down the procedure for issue of licences or authorization to the fair price shops for the distribution of essential commodities under Public Distribution System. And duties and responsibilities of the fair price shop owners are provided.

 

 

 

2.2.6       Provisions for Monitoring

The procedure for monitoring of the Public Distribution System including the functioning of the fair price shops by the State Governments shall be as per paragraph 6 of the Annexe to this Order.

The para 6 of the Annexure provides

1) State Governments shall ensure a proper system of monitoring of fair price shops and prescribe model sale register, stock register and ration card register.

(2) State Governments shall ensure regular inspections of fair price shops not less than once in six months by the designated authority. State Governments may issue orders specifying the inspection schedule, list of check points and the authority responsible for ensuring compliance with the said orders.

(3) Meetings of the Vigilance Committees on the Public Distribution System at the State, District, Block and FPS level shall be held on a regular basis. The date and periodicity shall be notified by State Governments However, the periodicity shall not be less than one meeting a quarter at all levels.

(4) State Governments shall ensure a periodic system of reporting and the complete information in this regard shall be sent in the prescribed form as follows:

(i)      By fair price shops to the District Authorities by the 7th of the month

(ii)      By the District Authorities to State Government by the 15th of the month following the month for which allocation is made

(iii)     By the State Government to the Central Government by the end of the month following the month for which allocation is made.

(5) Future allocation of foodgrains to States shall be linked to the receipt of regular reports from the respective States and furnishing of utilization certificates by them within a period of two months from the month for which allocation is made.

(6) State Governments shall ensure monitoring of the functioning of the Public Distribution System at the fair price shop level through the computer network of the NIC installed in the District NIC centers. For this purpose computerized codes shall be issued to each FPS in the district.

(7) State Governments shall educate the ration card holders regarding their rights and privileges under the Public Distribution System by use of electronic and print media as well as display boards outside fair price shops.

(8) State Governments shall issue and adopt the Citizen’s Charter based on the model Citizens Charter issued by the Central Government.

(9) The designated authority shall direct the concerned fair price shop owner to provide relevant extracts of the documents maintained by him on an application made by a beneficiary, on payment of a prescribed fee.

Orders applicable in the Public Distribution system of Jharkhand are as follows

1.                 Bihar Essential Articles(Display of Prices and Stocks) Order 1977 Republished in 1986

2.                 Bihar Trade Articles (Licence Unification) Order, 1984.

 

2.3         THE BIHAR TRADE AND LICENCING ORDER, 1984

2.3.1       State of Jharkhand has not issued any Control Order so far in terms of the PDS Control Order, 2001. The Bihar Trade and Licencing Order 1984 is still applicable in the State of Jharkhand though the State of Bihar has issued  a  separate Control Order in 2007.

 

2.3.2       The Bihar Trade and licensing Order 1984 (hereinafter called The Order of 1984) mainly governs the issuance renewal, suspension, cancellation of Licence. It further provides restrictions relating to price that retail price shall not exceed the retail price fixed or recommended by the Central Government or State Government

 

2.3.3       Authorised Persons as per 1984 Order

 

i.        Clause 2(c) says, Collector includes Deputy Commissioner, Additional Collector and such other officers, not below the Rank of SDO as may be authorized by the collector to perform the functions and exercise the powers of the Collector.

 

ii.      Clause 2( i ) provides that  Licensing Authority means an officer not below the rank of SDO appointed by the State Government to exercise the powers and perform  the duties of the Licensing  Authority  for different areas and under  the different provisions of  Bihar Trade Articles ( Licences Unification ) Order, 1984. The order of 1984 provides the role and powers of Commission and Collectors in clause 27.

 

2.3.4       Redressal Mechanism (Appellate and Revisional Powers) as per 1984 Order

 

              The Order of 1984 also provides for redressal mechanism for Licence of shop. If any order is made by any officer of lower rank than the Collector appeal may lie to the Collector and if the Order is made by the Collector appeal lies to the Commissioner.  Such appeal shall be preferred within 30 days from the date of receipt of the Order appealed against by the appellant. The Commissioner has revisional powers and he may call for the record of any case decided by the Collector or the Licensing Authority if he is satisfied that Collector or the Licensing Authority

i.                    has exercised a jurisdiction not vested in him or

ii.                  it has exercised the jurisdiction vested in him or it with material irregularity.

iii.                has improperly failed to exercise the jurisdiction vested in him or it.

Thus, the 1984 Order does not provide redressal mechanism for  the Consumer and it only provides redressal to licencee of shop.

 

2.3.5       Inspection, search and seizure as per 1984 Order

Power to enter, search, inspect and seize stock is also given in the Bihar Trade Articles (Licences Unification) Order, 1984, to various authorities of Food and Supply Department, Executive Magistrates, Block Development Officer.

 

2.4            BIHAR ESSENTIAL ARTICLES (DISPLAY OF PRICES AND STOCKS ORDER), 1977

              Clause 3 says every dealer shall before commencement of his business on any day display at a conspicuous place near the entrance of his business premises list of prices and stocks of all articles.Clause 4 says that Dealers shall not sell to any person any article at a price higher than that displayed.Clause 7 provides for maintenance of Stock Register in respect of articles mentioned in Schedule I.

 

 

 

 

2.5         ORDERS PASSED BY THE HON'BLE SUPREME COURT IN W.P. (C) NO. 196/2001

 

2.5.1       The Hon'ble Supreme Court by the order dated 02.05.2003 directed as follows,

"It is necessary to issue immediate directions to evolve a system whereby eligible BPL families, which may not be on BPL list, are so included as also regarding the ration shops and other outlets remaining open and giving deliveries of food-grains to those, who are on the list and hold the requisite cards……. the respondents shall ensure that the ration shops remain open throughout the month during fixed hours and the details of which shall be displayed in the notice board.

 

To facilitate the supply of the grain, we issue the following directions:-

(1)     Licencees, who 

(a)      do not keep their shops open throughout the month during the stipulated period,

(b)     fail to provide grain to BPL families strictly at BPL rates and no higher,

(c)      keep the cards of BPL households with them,

(d)     make false entries in the BPL cards,

(e)      engage in black-marketing or siphoning away of grains to the open market and hand over such ration shops to such other person/organizations,

 

shall make themselves liable for cancellation of their licences.The concerned authorities/functionaries would not show any laxity on the subject.

 

(2) Permit the BPL household to buy the ration in installments.

(3) Wide publicity shall be given so as to make BPL families aware of their entitlement of food-grains."

 

Same Order further directed that

"According to the figures supplied by the petitioner, approximately 1.5 crore persons are eligible to get Antyodaya Anna Yozana (AAY) Card. We direct the Government of India to place on AAY category the following groups of persons :-

 

(1)     Aged, infirm, disabled, destitute men and women, pregnant and locating women, destitute women ;

(2)     widows and other single women with no regular support;

(3)     old persons (aged 60 or above) with no regular support and no assured means of subsistence;

(4)     households with a disabled adult and assured means of subsistence;

(5)     households where due to old age, lack of physical or mental fitness, social customs, need to care for a disabled, or other reasons, no adult member is available to engage in gainful employment outside the house;

(6)     primitive tribes."

 

2.5.2       The Hon'ble Supreme Court by its order dated 8.5.2002 fixed the

(a)          Responsibility of Collectors.

“The CEO/Collector of all the Districts in the States and territories shall scrutinize the action taken by all the implementing agencies within their jurisdiction to ensure compliance with this court's orders and report to the Chief Secretary. The responsibility for implementation of the order of this Court shall be that of the CEO/Collector. The Chief Secretary will ensure compliance with the

Order of this Court.”

(b)          Time of opening of  FPS

“The respondents shall ensure that the ration shops remain open throughout the month, during fixed hours, the details of which will be displayed on the notice board.”

 

2.6            CONCLUSIONS

 

2.6.1      The State government has not issued any order as contemplated by para 5 of the Annexure to the PDS Control order 2001 for regulating the Sale and distribution of essential commodities.

2.6.2      The Bihar Trade and licensing Order 1984 only governs the issuance renewal, suspension, cancellation of Licence. The Order, 1984 is woefully inadequate as it does not contain provisions with respect to the following aspects

        i.            Identification of beneficiaries

      ii.            Distinctive Ration Cards to APL/

    iii.            Distinctive Ration Cards to APL/ BPL/Antodaya and its periodical review

    iv.            Scale of Issue and Issue Price

      v.            Distribution of Foodgrains

    vi.            Monitoring of  Public Distribution system

  vii.            Grievance Redressal mechanism for beneficiaries.

 

Hence, there is a need to issue a separate PDS control Order for the State to regulate the sale and distribution of essential commodities.

 

*******

 

 

 

 

 

 

 


 

Chapter 3

 

WHOLESALE DISTRIBUTION

 

3.1            INTRODUCTION

3.1.1      PDS is operated under the joint responsibility of the Central and the State Governments. The Central Government has taken the responsibility for procurement, storage, transportation and bulk allocation of foodgrains,   Central Government is responsible for procurement, storage, transportation upto principal centres of FCI, allocation to State and Union Territories and maintenance of buffer stock.  State and UT Governments are responsible for identification of AAY and BPL families; issuance of ration cards to eligible families; storage in State/UT godowns; licensing and supervision over Fair Price Shops; distribution of ration to ration card holders through FPS and eliminating of leakages/ghost cards etc.

 

3.1.2                  For the purpose of distribution, State/UT Governments have constituted separate Corporations which are Government Companies under the Companies Act 1956.  There is no separate Corporation for the State of Jharkhand. The Bihar State Food and Civil Supplies Corporation continues to act as an agent of the Government of Jharkhand in the matters of procurement,  transportation and handling, storage and whole sale distribution.

 

 

3.2         BIHAR STATE FOOD AND CIVIL CORPORATION LIMITED (BSFC)

3.2.1       Bihar State Food and Civil Supplies Corporation has been established on 2nd April 1973 and is registered under Companies Act 1956. This Corporation acts as the agent of the States Governments of Bihar and Jharkhand in matters of procurement, transportation and handling, storage and distribution of food grains to targeted PDS dealers and other Govt. agencies.  

 

3.2.2      Organizational Set up.

 

The Management of the company is vested in a Board of Directors, all appointed/ nominated by the Bihar State Government. Managing Director of the Corporation is the Highest Official and there are three officers under him Chief of Administration, Chief Procurement and Chief Finance. Chief Administration looks after perssonnel department, Vigilance and Administration. Chief Procurement looks after Procurement, storage and distribution and is an intermediary between FCI and Food and Supply Department of the State.

 

3.2.3      Hierarchy at District office of the BSFC

 

District Manager

 

Accounts Officer

 

Godown Manager

 

 

 

3.2.4      Main activities of the Corporation are follows

 

(i)           Procurement of food grains from FCI under various Central Govt. Schemes like TPDS (BPL, APL, Antyodaya Anna Yojana), Annapurna, SGRY, Food For Work, MDM, Relief etc. their storage, transportation, handling and distribution to the Govt. agencies and Targeted PDS dealers in the State of Bihar and Jharkhand.

 

(ii)          The Corporation also participates in the Procurement drive of the State Govt. of Bihar for purchase of Wheat, Rice and Paddy in the open market in view of the Price Support Scheme to the farmers.

 

3.2.5      Bihar State Food & Civil Supplies Corporation continues to operate in the States of Bihar and Jharkhand in terms of instructions contained in the order No.1202/25/2004-SR Govt. of India, Ministry of Home          Affairs, New Delhi dated 13.09.2004.

 

3.2.6      BSFC has 10 offices of BSFC in the State of Jharkhand at Sahebganj, Dumka, Hazaribagh, Ranchi, Giridih, Dhanbad, Jamashedpur, Gumla, Palamu, Chaibasa.

 

3.2.7      In the State of Jharkhand there are total 193 BSFC godowns.  In District Ranchi BSFC have godowns at 24 places. And in Hazaribagh district BFSC has godowns at 18 different places. Total Storage Capacity of BFSC godowns in the State of Jharkhand is 45658 MT. Total allocation for state of Jharkhand is 91000 MT per month (includes both Wheat and rice).  Corporation gets Rs. 19/- per quintal of wheat, Rs. 27/- per quintal of rice as handlng charges. From this it meets all the expenses and also does some savings. 

3.2.8      The company, being a procurement, storage and distribution agency of the State Government, procures foodgrains from FCI against monthly/ yearly allotments made by the Central/State Government under various schemes. The Company through its District offices deposits the cost of foodgrains to FCI and obtains Release Orders (RO) from them for lifting and distribution to FPS dealers.

3.2.9      Committee asked the Managing Director of BSFC to provide the Profit and Loss A/c and Balance sheet of Jharkhand BSFC for last 3 years to understand the working of the Corporation. But instead of this, he has provided the Committee with the combined financial details of Corporation for the State of Bihar and Jharkhand. So practically it was not possible for Committee to understand the actual financial position of the Jharkhand BSFC by studying the combined financial reports for both the States.

 

3.2.10             However, Committee perused the two Audit Report of Comptroller and Auditor General of India

a)                 Report for the year 2005-2006 of State of Bihar in which CAG audited accounts and performance of BSFC.

b)                 Audit Report (Civil and Commercial), of State of Jharkhand for the year 2005-2006, in which Audit of Food, Civil supplies and Consumer Affairs Department was done.

 

3.2.11     The report of the Comptroller and Auditor General for the period ending 31-3-2006  for State of Bihar and State of Jharkhand points out the following defects in the working of BSFC.

 

A.                Lifting/ offtake:

In the State of Jharkhand out of the total allotment  by GOI, only 42-77% of wheat and 10-33% of rice were lifted under BPL, while 35to 92% of wheat and 35-88% of rice were lifted under AAY scheme during the years 2001-2006. During 2001-2006, as against the allotment of 16.79 lakh MT of wheat and 20.42 lakh MT of rice under BPL category by GOI, BSFC had lifted and distributed 9.88 lakh MT wheat and 5.08 lakh MT or rice respectively. In case of AAY category, as against the allotment of 4.32 lakh MT of wheat and 4.75 lakh MT of rice BSFC had lifted and distributed 3.42 lakh MT of wheat and 3.70 lakh MT of rice respectively during 2001-2006.The Audit report of BSFC says that failure of the BSFC to lift the quantity available with FCI within the scheduled time due to not making available the required number of trucks and delay in obtaining ROs had also contributed towards low lifting.

 

B.                  Diversion:

The BSFC had diverted AAY Rice and wheat to APL scheme and to BPL scheme. Total foodgrains diverted from AAY to BPL scheme was worked out to be 1683.4MT of wheat and 1673 MT of rice. Since this diversion was from foodgrains attracting higher subsidy (AAY) to lower subsidy (BPL), BSFC unduly earned Rs.80.53 lakhs in Jharkhand.

 

By diverting foodgrains of AAY, Annapurna, MDM, SGRY to BPL and APL scheme in both state of Bihar and Jharkhand BSFC generated profit of Rs.10.22 crore. The diversion was in clear violation of provisions of the PDS control, 2001 and led to generation of additional fund by the company at the cost of the Government subsidy.

 

BSFC diverted BPL foodgrain worth Rs. 89 lakh and AAY foodgrain worth Rs.5.34 lakh belonging to district Dumka to another 2 districts Deoghar and Jamtara , which was in addition to the foodgrains allotted to those two districts. Consequent to this diversion not only the programme implementation suffered in Dumka, misappropriation also could not be ruled out.

 

C.                 Backlog:

The Company had an outstanding balance of Rs.82.96 crore (as on 31st March 2005) received from FPS dealers towards cost of foodgrains which had not been delivered to them under BPL and AAY schemes . As a result the beneficiaries were deprived of the supply of foodgrains for the relevant months. The Company had not adopted  any mechanism to review old deposits lying with it , for taking action for refund/ adjustment.

 

D.                Transportation:

The transportation and handling of foodgrains from FCI godowns to the Company's godowns is done by Transport agents (TAs) appointed by the Company on annual rate contract basis. TAs are appointed through open tenders with a provision to extend the contract for the next two years without calling fresh tenders Often there were delays in finalising the rate contract with the TAs. In the absence of a rate contract, the transportation was got done by Godown Managers of the Company by hiring trucks from the open market, classifying it as "Departmental Transporting". It was noticed during audit that there was lack of transparency in the engagement of TAs and competitive rates were not obtained by the Company indicating deficient planning and monitoring by the higher Management.The Foodgrains allotted against various schemes are required to be lifted by the Company within a prescribed time period. As per the agreement, the TAs are required to provide sufficient number of trucks to lift the foodgrains for which FCI issues ROs. It was, however, noticed that Transportors failed to provide the required number of trucks as a result of which allotment of 77,000 quintals of foodgrains lapsed. Undue benefit of Rs 2.46 crore was extended to Bihar State Food & Civil Supplies Corporation due to fixing of excess transportation and handling charges by Rs 1.85 per quintal on wheat during 2001-06.

 

E.                 Defalcation/ theft of foodgrains

Audit scrutiny revealed that non-observance of the prescribed internal controls which stipulate monthly submission of stock statement by the Godown Managers to the District office, reconciliation of the Store Issue Orders (SIO) with the balance stock available in the godowns, surprise physical verification of stocks by the District Managers, periodical verification of stocks by the district supply officers etc. had facilitated the defalcation/theft by the employees, of  foodgrains worth 26.20 Lakh in District Hazaribagh.  Foodgrains valued at Rs 1.22 crore were diverted in totality by BSFC officials. The Management stated (September 2006) that necessary criminal and civil suits had been filed against the officials.

 

The above observations clearly show that the Bihar State Food and Civil Supplies Corporation is a thoroughly mis- managed company, indulging all possible malpractices, including diversion of stocks, defalcation.

 

3.3         BIHAR HIGH COURT JUDGMENT FOR SEPARATE STATE FOOD CORPORATION

 

3.3.1       Bihar State Food & Civil Supplies Corporation Ltd. (Corporation) was looking after the distribution of PDS food grains for whole of the State of Bihar.  On November 15, 2006 Bihar State was re-organized into Bihar and Jharkhand.  Even after reorganization, Corporation is distributing PDS food grains in the State of Jharkhand as well.    Jharkhand State had complaints against the functioning of Corporation, therefore, State Government of Jharkhand wanted to dissociate itself with the Corporation and issued order directing that from April 15, 2006, Deputy Commissioners shall look after the work assigned to the Corporation.  There was an earlier order of the Division Bench of Patna High Court under which it had directed the Jharkhand Government to maintain status quo with the Corporation before the division of the assets and liabilities.  Corporation sought stay of the April 15, 2006 order and sought contempt proceedings against the Jharkhand State.  By April 15, 2006 order Food & Civil Supplies Department of the Jharkhand had issued a notification to the Districts to seal the Corporation godowns, which housed food grains for public distribution system besides under other schemes.  At the same time districts were directed to make their own arrangements for lifting food grains from the Food Corporation of India godowns.  Respective District Administrators were also instructed to shoulder the responsibility with its Supply Officers and specially Rationing Officers in the District and also to arrange for the transportation and the maintenance. 

 

3.3.2       On April 20, 2006 a notice was issued in contempt petition   and the High Court stayed the order dated April 15, 2006 of the Jharkhand State.

 

3.3.3       It is not necessary to narrate further history of litigation however it is pertinent to mention that under the orders of the High Court, Secretaries of the two Governments met and arrived at an arrangement subject to approval by the Central Government.   When the single Judge of the High Court stayed the arrangement till the arrangement was approved by the Central Govt., Corporation went in appeal by filing LPA.  The impugned order was modified and status quo was directed to be maintained till the approval of the Central Govt.  Central Govt. by its order dated 21.12.2006 approved the arrangement earlier arrived at by the Secretaries of the two Governments.  When the matter was finally taken up to consider the writ petition the Court observed that

 

in that view  of the matter there is no subsisting order of stay in  the matter,  as such it is desirable that the final order/notification  to be issued in this respect within two months and the assets and liabilities  in the ratio  3:1 as mutually decided  be apportioned.  The Jharkhand State will constitute its own State Food Corporation and will start looking after the lifting, handling, distribution and supply of food grains to its consumers under different schemes.          

 

So far lifting of the food grains for A.P.L./B.P.L./Antyodaya schemes by the Jharkhand State is concerned, its reason has been assigned in the supplementary counter affidavit filed by Jharkhand State.  No case of contempt is made out.

 

The impugned orders are quashed.  The respondents are now free to pass similar orders in this regard after issuance of final notification within two months.       

 

3.3.4      The Committee, during its visit to Jharkhand found that there is no separate Food Corporation so far constituted by the Jharkhand State and the work continues to be done by the Bihar State Food Corporation. The above Court litigation between State Government and BSFC also suggests that the State Government is not satisfied with the functioning of the BSFC in the State of Jharkhand and further the state government is of the view that because of the negligence and improper lifting of foodgrains by BSFC the PDS system of Jharkhand is badly affected.[10]Inspite of the state being dissatisfied about the functions of BSFC no effort has been made to set up an efficient Corporation of itself. The Bihar State Food Corporation is not functioning properly in the State of Jharkhand and the Committee found the many maladies in its functioning.

 

3.4.        MALADIES AFFECTING THE FUNCTIONING OF BSFC

1        Management

2        Storage Conditions

3        Backlog

4        Payment and money of FPS owner

5        Vigilance

6        No Inspections by FCI

 

3.4.1      Management

The BSFC is not managing the godowns properly. The delayed allocation, improper maintenance of record, improper storage and transportation system of BSFC clearly shows mismanagement and lack of Administration.  The BSFC is not following the standards of storage system. The condition of BSFC godowns shows that higher officials are not supervising the  functioning of godowns properly. Delay in transportation or in issuance of stock issue order shows lack of coordination between various concerned authorities which results in disruption of supply chain. Mr. Rana Awdhesh, MD BSFC stated that there is need to improve supply chain management.

 

3.4.2      Conditions of Godowns

3.4.2.1      The condition of Godowns is also not good in Jharkhand.   The same was observed by the Committee during its visit and inspection of the godowns at Kudru (Ranchi) and same was also brought to the notice of the committee during the public Hearing conducted at Annagada Block and Hazaribagh.  Three Godowns are situated at Kudru. Each of these godowns has capacity of 2500 MT hence total capacity of 7500 MT . Following relevant facts revealed during godown visit.

3.4.2.2      Weighment: Committee inspected godown no. 3. The said Godown had a simple manual weighing Scale (Taraju) in which one bag at a time can be weighed. It’s beyond comprehension that all the bags which come to godown are weighed on that weighing machine Chief Procurement Officer of BSFC informed that none of the BSFC godown has electronic weighing systems.

3.4.2.3      Electricity: The said godown is built in a very big area. It remains dark even in day time as the sunlight from big doors is the only source of light. The Godown Manager informed the Committee members there is no electric connection in all three godowns at Kudru. Record is maintained in Stock registers manually. Seeing the Condition of this godown, Computerization of PDS system seems a far fetched goal.

3.4.2.4      Grievance of Labours: The Prabhu Nath Singh, Godown Manager who Manages godown no. 1 and 3 informed that about 150 truck of foodgrain come in godown every month. One truck contains 120 quintal thus, it becomes 18000 Quintal a month. Committee found that lots of labours were present in the godown, when asked they informed that there are total 72 labours on contractual basis which are hired by the transporter who brings foodgrains from FCI to BSFC godown. These 72 labours do loading/ unloading work at BSFC godown.

3.4.2.5      Empty bags: Committee found lots of empty bags lying in the godown no. 3.  Committee member asked the Godown Manager about those bags and he said that often many bags contain lesser quantity of grains so while distributing the foodgrains to FPS dealers they fill those bags with full 50 kg and therefore in this process many bags are left as empty bags. When asked about how many numbers of bags are lying empty in godown he said about 700-800 empty bags are lying in godown no. 3 and about 1000 empty bags are lying in godown no. 1.

3.4.2.6      Undistributed Stock: The BPL rice for the month of October has been issued to FPS owners and food grains for the month of November and December 08 has not been distributed till 23rd December 08. The BPL stock for November and December’08 was lying in the godown and the FPS owners had also deposited the money but stock has not been distributed to FPS owners. Godown Manager that it is not distributed as he has not received the Stock Issue Order.

3.4.2.7      Sampling: No Sample of foodgrains received and to be issued was present in the Godown. Godown Manager informed they don’t get any sample from FCI. Further no sample is given to the FPS owners by them.

3.4.2.8      Days when grain was issued: As per Issue Registers in the month of November food grains were issued from 1st November to 21st  November 2008. Godown manager further informed that there are 140 FPS dealers attached to godown no 3.

3.4.2.8      Stock of Backlog allocation not issued: While going through stock register and issue register it was observed by the Committee that in the month of November, 2008 the Godown manager received more quantity of food grains and issued the less quantity. Godown manager Prabhu Nath Singh said that received quantity is more because he received the extra food grains which is from backlog allocation. He said he has allocated less as the quantity allocated is equal to the quantity of entitlement of the FPS owners. The system of backlog is a sure way of ultimately diverting the foodgrain. During the public meetings it was revealed that the quota for the months of February, March and July had been lapsed.[11] There was no explanation as to where this quota of foodgrain had been utilized.

3.4.2.10    Rotten grains Stock: In the Godown no.3 at Kudru block, Ranchi many bags of rotten and infected rice which was almost in powdered form were laying since year 2003. On asking GM, he informed that this stock of rice was seized by CBI and the same had been lying here since 2003. The Committee also found pile of bags full of rotten black rice. On asking about the same rotten rice, labours present and the godown manager informed that this stock is lying since 2005 and because of this rotten stock other good grains are also getting infected. Committee brought to the notice of MD, BSFC the above said facts about quality of grains and the rotten grains lying at the godown he assured the immediate action on it.

3.4.2.11    Storage System: There was no proper storage system in the godown. There were no methods of disinfecting the food grains. Stocks of food grains were lying in the godown in rotten condition when millions of people are living below poverty line who do not get their full entitlement of foodgrains. In order to combat food insecurity it is essential to store the food grains properly and distribute the same timely. Both the factors appeared to be totally ignored in the PDS in the State of Jharkhand. Neither there is timely distribution and delivery to the beneficiaries nor there is quality storage of foodgrains. The result is that beneficiaries get the foodgrains 2-3 months late and also in a very bad condition/ quality.

 

3.4.3      Backlog

1             Backlog in allocation to FPS dealers is the major problem in Jharkhand. The food grain is not issued to dealers in time and there is always delay / backlog in allocation of foodgrains to FPS owners. One of the main reasons for this was negligence by the BSFC in not lifting the full quantity of food grain allocated from FCI[12]. The food grains issued to BSFC lapses as same is not issued to dealers and it is not known what happens to the foodgrains stock which comes to BSFC as backlog allocation and as the same is not issued to FPS dealers and is shown as lapsed Allocation

2             Mr. R.N. Lal, Chief of Procurement, BSFC informed the committee that one of the reasons for delay in the issuance of food grain to the FPS owners was that FPS dealers have to first deposit their bank drafts to marketing officer/supply head, then it reaches to SFC Godown in charge. All this process almost takes more than 1 week. There is no system of direct deposit of Bank Draft. He also informed that FPS dealers generally deposit the bank draft on time.

3             Managing Director, BSFC informed the Committee that one reason of backlog  is that there is a major problem of Labour for loading and unloading of bags of foodgrains as the labour have a Union which often goes on strike.  

4             Another reason stated by Managing Director for backlog is that there is need for sufficient storage capacity; due to which there is delay in lifting and distribution of food grains. He informed the Committee that BSFC is planning PPP system that is ‘public-private-partnership’ system for building new Godowns for storage of food grains at Block Level with storage capacity of 500 Mt and at District Level with storage capacity of 1000 Mt whereby land and building of private persons can be hired by BFSC for using it as godown. Under this scheme, BSFC will help the private individual in getting loan from the bank for construction of Storage Godown on his own land and will hire these godowns for specific period of time and pay the installment of loan on behalf of the owner of the land. This will help both the sides. He said that there is always delay in supply of food grains from FCI and he suggested for rapidity in supply and lifting.

5             District Collector, Ramgarh, also said that FCI does not provide grain on time to BSFC which resulted in backlog which further resulted in non distribution and diversion.

6             Shri Ram Naresh Singh, President of FPS owners Association, informed the Committee that allocation of foodgrains is not in time and is always delayed by 2-3 months. He said Backlog in allocation is common and usual problem in Jharkhand.

7             The Jharkhand State government had planned to start a new scheme from November’ 08 whereby wheat was to be distributed at the rate of Rs 2 per kg and rice @ Rs 3 per kg. However, this scheme has not come into operation. Due to the new rates of distribution of food grains the supply of food grains has been delayed as there is confusion about how to adjust the money already received from the FPS owners (FPS owners deposit the money for the monthly allocation by 15th day of a month). The government officials took the plea that delay in issue of stock to FPS is because of Rs 2 scheme, however the plea is not tenable as the delays were because of untimely lifting from FCI, delayed release orders or stock issue orders. It was  more because of mal-administration of  the functioning. This is also clear from the information gathered by the Kudru Godown ,Ranchi where BPL rice only upto the month of October has been issued to FPS owners and  was not issued for the month of November and December 08 till 23rd Day of December i.e the day of Committee’s Visit. BPL stock for November and December’08 was lying in the godown but was not distributed to FPS owners, though they had deposited the money in time. On asking why the same is not distributed Godown Manager said that its not distributed as they have not received the Release Order from BSFC Regional Office.

8             Mrs. Manju Kumari , Marketing Officer, Ranchi said that it is never clear  how much stock BSFC lifts from FCI and she suggested that there should be transparency about the quantity of stock lifted from FCI and time of lifting. She also suggested that if the backlog problem is solved PDS system will improve to large extent as the backlog allocation is the major problem in the system.

 

3.4.4      Payment through Bank draft

              The dealers have to deposit the money by the 15th day of the preceding month prior to the month of allocation. The quota is distributed  to them after 2-4 months .Thus the money of the FPS dealers is blocked and there is loss of interest to  the FPS dealers.

 

 

3.4.5      Vigilance Squad of BSFC

Chief Procurement officer of BSFC informed the committee that BSFC has its own flying squad and vigilance department which conduct periodically surprise inspections in the godowns of the BSFC but no document or Inspection report was shown to the Committee. The Conditions of the Godown inspected by the committee also does not suggest that any inspection was ever done

 

3.4.6      Inspections by FCI Officials

The Government of India  decided that  a system of regular inspection be put up in place not only for FCI godowns but also for State Government/Authorised wholesale Godowns and thus issued instructions to FCI vide letter  dated 24th October 2007.  In pursuance to that FCI issued directions to all Regional General Managers vide Letter dated 31st October 2007 to inspect State Government /Authorised  wholsale godowns and to submit detailed report to the Headquarter and to State Government. Committee inquired from the FCI officials during meeting dated 21st December 08 whether they have conducted such inspections. Committee was informed that no such inspection has been conducted by the FCI officials in State of Jharkhand.

 

3.4.7      Public Grievances [13]

Committee was informed during the Annagada Public Hearing on 23rd December 08 held at Block Annagada, Ranchi by Shrikant Labh, Secretary FPS Association

a)     That rotten grains and good grains are lying in the godown together and if the FPS owners do not pay Rs. 10 per bag to Godown Manager he gives rotten grains to him.

b)     So far as Quantity is concerned Godown manager always supplies the grains by taking average weight of bag as 52 kg where as the average weight of a bag is only 45 kg. Thus, there is a shortage of 7 kg per bag.

c)      Bihar State Food Corporation shows backlog allocation and there is always delay of 2-4 months.    At some places even Antodaya grains are not given in time and there is delay of about 3-4 months.

d)     Three to four months money is paid by FPS owner and it gets blocked but foodgrains are not allotted in time. FPS owners pay money out of their pocket to deposit draft in time.

e)     If this backlog problem is cured and corrected 80% problem  can be solved and food security can be ensured to a large extent.

f)       It was also suggested by him that they should be allowed to deposit money only when grain is available at the BSFC godown.  

 

 

 

3.5         CONCLUSION

3.5.1       There is an acute shortage of storage capacity in the State of Jharkhand. No steps have been taken to increase the storage capacity. Ideally the State should have storage capacity of 2.5 times of the monthly allocation. Shortage of storage space results in damage of the food grain and backlog in distribution.

 

3.5.2       The problem of backlog is a major problem which not only delays the issuance of foodgrain to FPS but increases the chances of diversion. Neither the Food and Supply officers nor the FPS owners are aware how much stock is lifted from FCI. There should be transparency about the lifting date and quantity of stock.

3.5.3       The capital of FPS owners gets blocked for three to four months as foodgrains are not issued in time. FPS owners pay money out of their pocket to deposit draft in time. The one reason for delay in issuance was that Release Orders are not given from BSFC Regional office to Godown. Thus, it is suggested that they should be allowed to deposit money only when grain is available for lifting at the BSFC godown. It is also suggested that a system of e-banking should be adopted for depositing the money by FPS Owners. The amounts so received through E-banking from the Fair Price Shops shall also be verified and authenticated by Food and Civil Supply Department and FCI online to ensure that the amounts remitted correspond to the allocation of Fair Price Shops. For this purpose, a computerized system should be in place to ensure connectivity between these three agencies so that remittances can be properly monitored at all ends. 

3.5.4       The conditions of Godowns is deplorable and the storage system is very badly managed due to which the foodgrains quality detoriates. A proper scientific storage system should be adopted and grains should be issued in time so that quality does not detoriate by time.

3.5.5       The BSFC godowns have no electric connections. The godowns need to be electrified urgently.

3.5.6       All the State Food Corporations Godowns in Jharkhand State do not have electronic weighment system, and are using manual weighing machine. The godowns store food grains for all the subsidized schemes for poverty alleviation and receive huge quantity of food grains monthly from FCI. Weighing machines are manual and small. They are not sufficient to weigh the huge quantity of grains which reaches the godowns from FCI. In such a situation manual weighing is obviously not possible and absence of electronic weighing machine clearly shows that food grains are not weighed at all when food grains are unloaded at godown or supplied to the FPS dealers. Absence of weighbridges makes the scheme vulnerable to malpractices.[14] Thus, there should be electronic weighing systems at the BSFC godowns and all records should be computerized. Weight check memos should also be issued automatically through the computerized system.

3.5.7       There is no system of maintaing or issuing samples in the BSFC godowns. It is the duty of the State to ensure that the stocks of food grain as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder. For this purpose FCI issues stock wise sealed samples of stocks of food grain supplied by them.  BSFC should ensure that the samples are maintained in their godowns. They should also issue  stock wise sealed samples to the retailers which should be available at the FPS for inspection by enforcement squads, Viglance Committee or the consumers.

 

 

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Chapter 4

 

DIVERSION OF FOODGRAINS

 

4.1          Food grain is procured for the Public Distribution System on behalf of the Central Government by the Food Corporation of India (FCI). State of Jharkhand has also been allowed to do procurement for the Central pool under the Decentralised Procurement Scheme. The entire food grain so procured either by the FCI or the States comes into the Central Pool. The Central Government then allocates food grain to each State as per their entitlement under the Scheme.

4.2          Diversion of food grain takes place at every level of the system. The different ways in which diversion takes place would show that Government Officials,  Storage Agents, Godown Keepers, Transporters and retailers are all involved in the diversion of food grain in some manner or the other. The malady of diversion is prevalent in the system in such large scale that it has become a menace and threat to the system.

4.3          The first and foremost reason for diversion is the difference in the price of TPDS grain and market rate. This serves as an incentive for the unscrupulous persons connected with the implementation of the system to connive with the traders to divert the TPDS food grain into open market. The difference in price is also an incentive for people who are not otherwise eligible under the scheme to get the benefit of the lesser rates of grain.

4.4          The second reason for diversion is the lack of any system of accounting for the grain allocated under the system. Ideally there should be a system by which the grain allocated to the State can be equated with the grain distributed to the beneficiaries. Since the scale of distribution and the number of beneficiaries is very large this can not be achieved manually. Thus there is need for complete automation and computerization of the Public Distribution System.

4.5          The third reason for is that the functions of implementation, enforcement and vigilance are not clearly demarcated and implemented.

4.6          There are two ways in which diversion takes place. Firstly by selling the TPDS grain in the open market, and secondly by substituting the TPDS grain by grain of inferior quality.

4.7          The Targeted Public Distribution System when introduced was intended to benefit about 6 crore poor families for whom a quantity of about 72 lakh tones of food grains was earmarked annually. Over and above the TDPS allocation, additional allocation of 103 lack tones of food grain was earmarked annually and provided to the States as ‘transitory allocation’. This was intended for continuation of benefit of subsidized food grains to the population Above Poverty Line (APL) as any sudden withdrawal of benefits existing under PDS from them was not considered desirable. The allocation for APL has continued till date and has proved to be one of the greatest sources of diversion. At present the allocation for the APL to any State is 14.6% of its APL requirement. It is common knowledge that most APL cardholders do not get any food grains under the PDS. Rest do not bother to draw their entitlement. Since full quota is not being allotted for the APL most of the States have adopted the ‘first come first serve’ principal. This enables the FPS dealer to put off any card holder on the plea that the APL stock has been exhausted and divert most of the stock meant for APL.

4.8          Bogus ration cards come into existence in several ways.Some of the ways are enumerated below only as an example. The list is not exhaustive.

1.                 By using the cards of the people who are dead or have changed residence.

2.                 Obtaining a ration card at temporary place of residence or by showing residence at some place falsely.

3.                 Breaking up the family into smaller units

4.                 Duplicate ration cards issued in the name of  persons who are already issued cards.

5.                 Ration cards issued in fake names and at fake addressees.

 

 4.9         A suggestion was received by the Committee to link the issue of ration cards with the voters list. This measure may help in reducing the bogus cards only to some extent. The correctness of the voters list itself can not be vouched for as the incidences of having bogus voters in the voters list is same if not more than the incidence of bogus ration cards. Issue of ration cards to the intended beneficiaries is a process which requires proper care and scrutiny by the field staff. State Governments should lay down strict guidelines for issue of ration cards and the officials responsible for issue of ration cards should be made accountable for any bogus card found in their jurisdiction. The Central Government has sponsored the Haryana Government and Chandigarh Administration to start a computerization project which includes introduction of smart cards with the biometrics of the card holder and his family members. This Committee has recommended computerization of the TPDS in the report relating to Delhi. This issue is further discussed in detail in the chapter on computerization in this report. It is felt that smart cards with the biometrics of the card holder can be very useful in minimizing bogus ration cards.

 

4.10        This Committee in its Delhi report has already suggested abolition of APL. We reiterate the suggestion and maintain that APL should be abolished and the subsidy provided for APL should be utilized to increase the BPL and make it more realistic and beneficial to the poor.

4.11        In the State of Jharkhand the BSFC  had diverted AAY Rice and wheat to APL scheme and to BPL scheme. Total foodgrains diverted from AAY to BPL scheme was worked out to be 1683.4MT of wheat and 1673MT of rice. Since this diversion was from foodgrains attracting higher subsidy (AAY) to lower subsidy (BPL), BSFC unduly earned Rs.80.53 lakhs in Jharkhand.[15]

 

4.12        Foodgrains are packed in Jute bags. Bags contain mark of FCI with logo and stiching is done by using thread. The jute bags are good to hold the weight but it is common practice during handling, loading /unloading that labour use iron hooks to lift bags. The hook is pricked in the bag and bag gets damaged and so there is lots of leakage of foodgrain during the handling.

4.13        Improper weighing methods is another aspect which needs attention. It was informed to the Committee that except for some big depots, FCI uses beam scale for weighment which seriously hampers delivery schedules.

4.14        The Committee was further informed that Weigh-bridges are not maintained properly. It was informed that there were frequent break-down of these weigh-bridges, resulting in stoppage of issue of food grain.[16]

4.15        The State Food Corporations Godowns in Jharkhand State do not have electronic weighment system, and are using manual weighing machine. The godowns store food grains for all the subsidized schemes for poverty alleviation and receive huge quantity of food grains monthly from FCI. Weighing machines are manual and small not sufficient to weigh the huge quantity of grains which reaches the godowns from FCI. In such situation manual weighing is obviously not possible and absence of electronic weighing machine clearly shows that food grains are not weighed properly when food grains are unloaded at godown or supplied to the FPS dealers. Absence of weighbridges made the scheme vulnerable to malpractices.

4.16        BSFC diverted  foodgrains of District Dumka worth Rs. 89 lakhs  of BPL category  and AAY foodgrain worth Rs.5.34 lakh  to  districts Deoghar and Jamtara ,which was in addition to the foodgrains  already  allotted to those two districts. Consequent to this diversion not only the programme implementation suffered in Dumka, misappropriation also could not be ruled out.[17]

4.17        One more peculiar mode of diversion in Jharkhand is backlog. This can be easily inferred by the following examples. In West Singhbhum and Dumka 44.887 quintals of foodgrains worth Rs. 2.33 crore (at BPL rate ) were not issued to FPSs between March and August’ 05 . Reasons for this backlog were stated to be irregular supply of foodgrains by FCI. Consequent to this backlog, BPL beneficiaries were not distributed foodgrains on time and made to take avoidable recourse to purchase from the market at higher prices.  In respect of AAY benefifiaries foodgrains worth Rs.1.42 crore were not issued to FPS between march and August 2005.  Since the AAY beneficiaries do not have the purchasing power to lift the backlog after six months in one go, the possibility of foodgrains having been diverted and misappropriation of prices was strong[18]

4.18        Irregular delivery of foodgrains to FPS owners, improper weighment at godown during issuance to FPS owners is another aspect which needs proper consideration. The FPS Owners gets almost 7 kg less quantity of food grains per bag from BSFC Godowns, which ultimately results in allocation of lesser quantity to beneficiaries. Allocation of lesser quantity of foodgrains per bag  affects the profit of FPS. To do away such malpractices foodgrains can be packed in smaller bags of 5 or 10 kg so that PDS commodity be supplied in pre-packed  small bags to the consumer. Poor packaging is major factor which  leaves scope for diversion of foodgrains. Central Government and State Government should ensure better packaging of commodities.

4.19        The general awareness of the beneficiaries, high literacy and strong grass root level organisation (PRI) and strong vigilance Committee are the important factors to reduce leakages. Strong Political commitment and careful monitoring by the bureaucracy are the key elements for successful PDS. Leakages happen due to wrong identification, theft and diversion of grain by officials involved in distribution system.  It requires strong political commitment and participation of the people in delivery process. The nexus between officials, the mafia and ration shop dealers must be broken in order to reduce leakages. Monitoring and accountability of TPDS can be improved by automation and computerisation of the PDS system. TPDS needs to be strengthened by means of the effective use of IT including introduction of unique biometric smart cards.

4.20        In its Eleventh Five Year Plan, Planning Commission has introduced new scheme to curb leakages/diversion of foodgrains. The scheme aims at taking effective measures to curb diversion and leakages through Global Positioning System, Radio Frequency Identification Device, etc.[19]

4.21        The retailers also indulge in diversion. APL food grain can be easily diverted by them as already shown above. They also use bogus ration cards for diversion. Besides this the committee received complaints showing that the FPS dealers retain the ration cards of the poor people and indulge in short weighing. As a matter of fact diversion at any stage has to be ultimately accounted for against some ration card. This makes the FPS licencee an accessory to all diversion done at any level and provides scope for him to indulge in diversion on his own.

4.22        The weighing systems at different levels also provide large scope for diversion. The Committee found that that at most places manual weighing scales of very small capacities are used.

4.23        There are provisions in the PDS Control Order, 2001 regarding quality Control. It is provided that the State Governments shall make arrangements for taking delivery of essential commodities issued by the Central Government by their designated agencies or nominees from the FCI

4.24        Depots/godowns and ensure further delivery to the fair price shop within the first week of the month for which allocation is made. Before making the payment to the FCI the representatives of State Governments or their nominees and the FCI shall conduct joint inspection of the stocks of foodgrains intended for issue to ensure that the stocks conform to the prescribed quality specifications. The FCI shall issue to the State Governments stack-wise sealed samples of the stocks of foodgrains supplied to them for distribution under the Public Distribution System at the time of dispatch. State Governments shall exercise necessary checks to ensure that full quantity lifted by them reaches their godowns and in turn the fair price shops. State Governments shall ensure that stocks of essential commodities under the Public Distribution System, as issued from the FCI godowns, are not replaced by stocks of inferior quality during storage, transit or any other stage till delivery to the ration card holder.

4.25        The Committee found that there was no system of quality control in any state. No samples were found even at the whole sale distribution points. No samples were supplied to the retailers. There was no check on quality of grain being supplied to the beneficiaries. The Committee found insect infested grain at one of the Storage Agents in Orrissa and rotten grain lying in the godown of BSFC in Jharkhand.

4.26        It is suggested that there should be complete automation of weighing systems at all levels. Weigh Bridges should be used at all FCI and whole sale distribution points. These weigh Bridges should be connected to computer systems to generate weight check memos automatically. Stock inventories should also be automatically generated. The system of sampling should be strictly observed. The State Government has to obtain stack wise samples from the FCI after a joint inspection of the grain. The whole sail distribution point must issue samples to the retailers to show the quality of grain supplied. The retailer must display the sample at his FPS shop so that the quality can be checked by the officials, vigilance machinery, enforcement machinery and the consumer.

4.27        The committee also learnt that at every stage of storage and transportation some pilferage takes place from the jute bags. It was shown to the committee how easy it is to poke a jute bag to take out grain from it and then close the opening created by the poker. A jute bag received from the FCI was found to contain an average weight of 48.5 Kg. The same bag is reduced to about 45-46 kg at the whole sale distribution point.

4.28        During the  Committee’s visit to Chandigarh a suggestion was given to the Committee that the PDS foodgrain should be packed in non pilferable, tamper proof bags of smaller sizes. Rice and wheat floor is sold in open market by private companies in such smaller HDPE packaging.

4.29        It is felt that in case TPDS food grain is packed in non pilferable, tamper proof bags of 10kg and 5 kg the same can be delivered to the beneficiary in sealed packing.  This measure along with automation in weighing and use of computerization and smart cards would go a long way in eliminating or at least reducing pilferage. It would also ensure a more hygienic handling of food grain and help in ensuring that the food grain of proper quality reaches the beneficiary.

4.30        The Committee feels that diversion of PDS food grain can be largely curbed by use of information and communication technology (ICT) based solutions. Suggestions in this regard have been given in the recommendations made by this Committee.

 

 

 

 

 

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Chapter 5

 

TRANSPORTATION

 

5.1.          The Transportation and handling of foodgrains from FCI godowns  to the  BSFC’s godowns is done by the Transport agents appointed by the Company on annual rate contract basis. BSFC has their own contract with the private transporters. Transportation charges from FCI godown to BSFC godown are borne by BSFC. For transportation, tenders are floated and benchmark rates are fixed and if any tender contains a rate below that, it is not accepted. The labour engaged for loading unloading are contractual labour is hired by transporters. One labourer gets Rs 1.33 per bag for unloading and stocking it in godown. The present charges were fixed in the year 1973 and the same have not been revised since then.

5.2.          During transportation of food grain from FCI to BSFC Godowns, there are chances of diversion as no officer of BSFC accompanies the truck and BSFC chief Procurement officer Mr. Lal informed the Committee that they have found some cases of diversion during transportation.

5.3.          Committee visited the FCI godown and inspected document pertaining to the month of November’ 2008 and found that stock was issued on 21 days in that month. On 20th November’08  11 truck food grains were loaded and issued  to BSFC On 21st 7 trucks, on 22nd November 08 4 trucks and on 24th November’08 18 trucks food grains were loaded for BSFC.

5.4.          The Marketing officer in Ranchi Mrs. Manju Kumari, informed the Committee that the number of trucks which need to be loaded to carry foodgrains in a day from FCI to BSFC godown are not loaded. Lesser than the required number of trucks are loaded in a day, may be due to lack of number of trucks or due to labour problem for loading, but result is that required number of trucks are not loaded in a day and so ultimately the full allocated foodgrains is not supplied in time.

 

5.5.          Recommendations

 

i)                   A proper vigil has to be kept on transportation of the Specified Food Articles from the Godowns of FCI to the Fair Price Shops. GPS system can be used for tracking the movement of Trucks carrying foodgrains. For this, routes that have to be followed by Trucks carrying SFAs have to be prepared and specified. Devices required for GPS should be installed on every such Truck and movement of the Truck should be monitored. Attachment of device of GPS in the Trucks engaged in Public Distribution System may be made part of the tender conditions.

ii)                 The State of Chattisgarh has successfully adopted the system of GPS in the State. Similarly, Indian Oil Corporation is also using this technology for the Trucks deployed by it. Similar system can be adopted for Jharkhand. The system may be procured, installed, operated and maintained by Department or these may be outsourced to an outside private agency through an open tendering process.  

iii)               There should be routine daily physical checking of the GPS Units to detect any tampering etc. Any tampering with GPS system installed on the Trucks carrying SFAs or any deviation of the Truck from the route prescribed would be considered as violation of the Public Distribution System (Control) Order, 2001.

iv)               The bags carrying wheat and rice should bear the name of the scheme as Antodaya, BPL, and Annapurna etc. before delivery from FCI.

v)                 The trucks carrying the food grains from SFC godown to PDS shop should have a banner having name of District, Block and scheme for which food grains are meant for so that diversion could be checked.

vi)               There should be “Zero tolerance” in cases of breach of contract committed by Transporters. Deterrent monetary penalty should be imposed against the errant Transporters. In the event of even a single breach resulting in diversion of SFAs, not only should the Bank Guarantee be forfeited but also the Transporters should be blacklisted for a specified number of years along with monetary penalty. Apart from the errant Transport Contractor, immediate stringent deterrent action should be taken against officials working in the Department, in cases where a prima facie case of their involvement in an incident of diversion is made out

vii)             It is relevant to point out here that the Planning Commission provides funds under its plan programmes for strengthening the operational machinery of Public Distribution System.[20] The funds are, inter - alia, provided for schemes for purchasing mobile vans/Trucks for distributing essential commodities, where static/regular Fair Price Shops are not found viable/feasible.  This facility of mobile Fair Price Shop, the Committee feels, can be availed of for providing SFAs in areas where the number of food cards/ration cards does not justify opening of a Fair Price Shop as per the norms. 

viii)           Proper Distribution of PDS commodity needs timely issue and lifting of foodgrain, monitored transportation, proper weighment and packaging of foodgrains to ensure that issued quality and quantity of foodgrain reach the beneficiary. Committee suggests that foodgrains can be issued in non- pilferable temper proof bags and if possible  smaller packs of 5-10 Kg to minimize leakages and ensure full supply to beneficiary.

 

 

 

 

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Chapter 6

 

RETAIL DISTRIBUTION

The present chapter deals with different aspects of retail distribution which includes

·                    Modes of appointment of dealers of Fair price Shops,

·                    Functioning of Fair price shops.

·                    Viability of Fair price shops.

 

6.1         MODE OF APPOINTMENT OF DEALERS OF FAIR PRICE SHOPS

The State of Jharkhand does not have its own PDS Control Order and is still following the Bihar Trade Articles (Licences Unification) Order, 1984, as their PDS Control Order. But Bihar Trade Article (Licences Unification) Order, 1984 provide rules and regulations for issuance of licence for any type of business relating to sale, purchase, and storage of Food articles and this also include the licence for running Fair price shops. It does not have any separate provision for issuing licence for the appointment of dealers of Fair price shops. The procedure as provided under this order is as follows:-

6.1.1      Procedure for Issuance of Licence as per 1984 Order

6.1.1.1    Licence when Required

1.                 No dealer shall after the commencement of this order, carry on business of purchase, sale or storage for sale of any of the trade articles mentioned in Schedule I except under and in accordance, with, the terms and conditions of a licence issued in this behalf by the Licensing Authority under the provisions of this Order.

2.                 Provided that no Licence shall be required for a dealer who stores for sale at any one time the trade articles, in quantities not exceeding the limits as may be prescribed by the State Government with prior concurrence of the Central Government for any trade article from time to time.

3.                 Provided further that a dealer holding a valid licence of trade articles under the various Licensing Orders mentioned in Schedule III may obtain a licence for the same trade articles under this Order upto the 15th April, 1985, the commencement of this Order. His existing licence shall be deemed to be a licence issued to him as a dealer under this Order up to the said day.

4.                 For the purpose of this clause, any person, firm, association of persons or a co-operative society who stores any trade article at any one time in quantities exceeding the limit prescribed in sub-clause (1), shall, unless the contrary is proved by him, be deemed to be carrying on business as a dealer and to store the same for the purpose of sale.

6.1.1.2    Issue of Licence

a)                 Every application shall for the grant of licence (whole-sale or retail) shall be made to the Licensing Authority in Form ‘A’ along with the fee prescribed in Schedule IV.

b)                 Every Licence issued under this Order shall be in Form ‘C’ and subject to the terms and conditions mentioned therein;

c)                  The Licence shall be valid up to 31st December next; and

d)                 If a Licence granted under this Order is defaced, lost or destroyed, the licencee shall forthwith inform the Licensing Authority who may, on application and on the payment of fee prescribed in Schedule IV by the licencee, issue a duplicate licence.

e)                 A dealer may obtain a licence for any one or more trade articles mentioned in Schedule I.

f)                   A separate licence shall be necessary for each place of business.

g)                 Wholesale and retail licences of the same trade article shall not be obtained for the same place of business.

h)                 More than one licence for the same trade article at one place of business in the same or different names shall not be obtained.

6.1.1.3    Renewal of Licence

An application for renewal of a licence shall be made along with the fees determined under clause 6 to the Licensing Authority in Form ‘B’. The licence may be renewed for one year/three years on the payment of renewal fee prescribed in Schedule IV. In case the licencee shall fails to furnish the application along with fee within the stipulated time i.e. 31st December, the Licensing Authority may entertain an application up to 31st January, on the payment of late fee as specified below :-

1.                  For the first fortnight Rs 2.

2.                  For the second fortnight Rs 5.

6.1.1.4    Fee Chargeable

The fees for issue of licence, renewal of licence and issue of duplicate licence shall be chargeable as prescribed in Schedule IV or as determined by the State Government from time to time.

6.1.1.5    Power to Refuse Licence

1.       The Licensing Authority may, after giving the person affected an opportunity of being heard, and for reasons to be recorded by him in writing, refuse to grant or renew a licence.

2.       The Licensing Authority shall refuse to grant or renew a licence if :-

(a)      the applicant is a minor or lunatic or is of unsound mind; or

(b)     the applicant is an undercharged insolvent; or

(c)      three years period has not expired from the date of conviction of the applicant under the Essential Commodities Act, 1955 (Central Act 10 of 1955).

3.       The Licensing Authority shall also refuse to grant a licence for a particular trade article if :-

(a)      a licence has already been issued to another dealer at the same place of business for the trade articles for which the applicant has applied for; or

(b)     the applicant has applied for both wholesale and retail licence for the same trade article.

 

6.1.1.6    Suspension and cancellation of licence

1.       If any licencee or his agent or servant or any other person  acting on his behalf contravenes any of the terms and conditions of the licence, then without prejudice to any other action that may be taken against him under the Essential Commodities Act, 1955 ( Central Act 10 of 1955 ) his licence may be cancelled or suspended with regards to one or more trade articles by an order in writing of the Licensing Authority and an entry will be made in his licence relating to such suspension or cancellation.

2.       No order of cancellation shall be made under this clause unless the licencee has been given a reasonable opportunity stating his case against the proposed cancellation but during the pendency or in contemplation of proceedings of cancellation of licence, the licence can be suspended for a period not exceeding 90 days without giving any opportunity to the licencee of stating his case. Such suspension shall be limited only to those articles regarding which contravention has been made by licencee.

 

Note: No licence can be cancelled without following procedures such as serving of show cause, consideration of replies thereon etc. - however, this does not apply to the power of State Government to terminate agreement with a fair price shop agent if there is any violation of the agreement or conditions for agency- fair price shop agency stands on a different footing than the licence under this Order.

 

6.1.1.7    Consequence of Conviction

Where a licencee has been convicted by a Court of Law for the contravention of any order made under section 3 of the Essential Commodities Act, 1955, the Licensing Authority shall, by order in writing, cancel his licence.

Provided that where such conviction is set aside in any appeal or revision, the Licensing Authority may, on an application by the dealer whose licence has been cancelled, restore the licence to such dealer.

 

 

6.1.2      Committee’s Observations during visit to State regarding Issuance of Licences

6.1.2.1      SDO (Sub Divisional Officer) is the Licensing authority in rural areas. In urban area, allotment of Licence is done by Special Officer Rationing (SOR). In Jharkhand, there are only 3 SOR at Ranchi, Jamshedpur and Dhandbad. So in rest of the urban towns, Licensing is done by SDO only.

6.1.2.2      After year 1997, new licences have not been issued by the Jharkhand State Government. Only substitution of FPS Licences in the case of Death of FPS Owner has been done. Deputy Secretary, Food & Civil Supply by a letter dated 10th April, 2006 issued direction that no new licence for FPS be issued as there are more than required number  of FPS shops in the State. The Bihar Trade (licensing and unification) Order says that licence shall be issued for 3-5 years and same be renewed periodically. However, it was informed by the officials that in effect licences are issued perpetually and is given to heirs if the FPS owner dies.

6.1.2.3      The Committee  asked for the record files pertaining to issuance of licence before the year 1997 during its inspection of files at office of Deputy Commissioner Ranchi. Deputy Commissioner informed that Files relating to issuance of licence to FPS owners prior to 1997 are not available in his office. Mr. S.K Verma, Special Rationing Officer (SOR), stated that the record prior to the year 1997 has been destroyed as per official rules which means  that there are no official files available regarding issue of licences.

6.1.2.4      There is no rule regarding the place of residence of dealer, but usually as a matter of precedence it is required that the applicant shall a resident of the same area/village. He also informed that there is some reservation for SC/ST regarding issuance of FPS licence.

6.1.2.5      Scheme of Anukampa (substitution of licence to heir in case of death of owner): By the Letter No. 5489 dated 14.10.98 of Food and Supply Department, State Government made an order that in the case of death of any FPS Dealer as per the Scheme of Anukampa the FPS Shop shall  be allotted to the Husband/ Wife/ Son/ Unmarried Daughter or Daughter in law of the Deceased FPS owner. This order makes clear that FPS Shop will not be allotted to any new person but only to the family members of the Deceased FPS owner.

6.1.2.6      Eligibility: - There is no rule regarding eligibility but usually it is given to the person who is the resident of the same area and has passed the 10th standard exam. Though there is no rule regarding the place of residence of dealer, but usually as a matter of precedence it is required that the person must be resident of same area/ village.

6.1.2.7      Procedure for issue of Licence

(a)                         There is no prescribed method or procedure for issuing licence for FPS Shop. Mr. Manoj Kumar SDO, Sadar, Ranchi informed the Committee about the procedure for issuance of licence. There  is no  written rule /provision for publication of notice in case of Vacancy. He informed the Committee that applications are invited and then Block Supply Officer verifies the applications. When any requirement of FPS shop in an area arise, then the SDO of the concerned area either advertise in the newspaper; or

(b)                        publicly notified same to invite applications; or

(c)                         The other method is discussing in the Gram Sabha of the area and then to choose the Dealer after the consultation with all the Members of the Gram Sabha.

(d)                         In case of death of FPS owner knowledge of the same comes to the residents of the concerned area, in such cases the applications come directly to the SDO. Applicants have to deposit the application form along with the requisite fee challan.

6.1.2.8      Inquiry by Tehsildar: - The Tehsildar / Block Supply Officer of the area does the local enquiry of the eligible applicants and submit his report to the SDO.

6.1.2.9      Affidavit: - The selected applicant has to give one affidavit consenting to all the terms and conditions required for running FPS Shop. At the time of submitting the affidavit, Applicant also had to deposit the security money into the bank and present the receipt of the same to the licensing Authority.

6.1.2.10     Issuance of Licence: - After the above said procedural requirements are fulfilled SDO issues the licence to the selected applicant.

 

6.1.3      Conclusion

 

1.                 Since there are no separate rules or regulations for the issuance of Licences for the appointment of FPS Dealers in the Bihar Trade Articles (Licence Unification) Order, 1984 which regulates the issuance of licence for trade in food articles and the Jharkhand Government is not  following any  rules or regulations provided under the PDS Control Order, 2001,  there is urgent need for issuing an Order as envisaged under para 5 of the Annexe to the PDS Control Order, 2001  for issue of licences to the FPS Dealers and regulating the sale and distribution of essential commodities.

 

2.                 After Year 1997, Only substitution of FPS Licences in the case of Death of FPS Owner was done and No new licences were issued in the State of Jharkhand. When Committee asked the officials about this fact, it was informed that Deputy Secretary, Food & Civil Supply by a letter dated 10th April, 2006 directed that no new licence for FPS should be issued as there are more than the required number of FPS shops in the State.

 

3.                 Ms. Pooja Singhal, Director Secondary, informed the Committee that Licences are issued in perpetuity and there is no criteria for review to check performance of FPS owner.  She further informed  that FPS owner master the tricks of the trade and develop nexus  in so many years  and if any officer of the department goes for inspection on these shops, he is unable to break this nexus between FPS Dealer and the Department officials. FPS licences should be granted for five ears and there should be a provision for review of performance every year.

 

6.2         FUNCTIONING OF FPS SHOPS

 

6.2.1       Presently, there are total 14,406 no. of fair price shop in the State of Jharkhand.  These shops are allocated to the Schedule Caste, Schedule Tribes, Minority Group, Co-operatives, Female Groups, and General Section of the Society.

 

6.2.2       There has not been the desirable level of transparency in the working of PDS. Committee found that many card holders were even not aware of their entitlement . Details of the allocation to the shops are not made public, with the result that shopkeepers almost dictate terms to the card holders attached to the shop.

 

6.2.3       GOI guidelines in 1997 on functioning of FPS

              In order to introduce greater transparency in the working of the system. GOI directed the states by guidelines to strengthen TPDS issued in the year 1997 that FPS should display following information without fail

i.                    Total number of APL and BPL Cards attached to shop

ii.                  Monthly allocation made to the shop

iii.                Last month issue from shop

iv.                Issue prices

v.                  Scale of issue

vi.                Authority to report grievances

 

6.2.4       It was further proposed in the above said guidelines by GOI to various states that Panchayats and Nagar Palikas are proposed to be given responsibility for supervising and overseeing the work of the FPS. The Panchayats President and members of Municipality or other local bodies should be informed of the allocation and actual offtake of essential commodities for the fair price shops within their territory. In addition collectors of the Districts can also use the local Press to inform the public about monthly allocation of various essential commodities to the District and the actual issue of these during  the previous month to the card holders. It is submitted that State of Jharkhand does not have elected Panchayati Raj system presently. But traditional Panch system exists there.

 

6.2.5       PDS Control Order, 2001 on functioning of FPS

 

              PDS Control Order, 2001, provides for the functioning of FPS shop in proper and transparent manner. Para 5(i) of Annexure to PDS control order 2001 provides that the essential commodities must be sold as per the entitlement of ration card holders and at the retail issue prices fixed by the concerned State Government.

              Para 5(ii) of the Annexure to PDS control order 2001  provides that each FPS will display the following information on a notice board which is to be put up at a prominent place in the Shop on a daily basis:-

(i)      List of BPL and Antodaya beneficiaries,

(ii)      Entitlement of essential commodities,

(iii)     Scale of issue,

(iv)     Retail issue prices,

(v)      Timings of opening and closing of the fair price shop,

(vi)     Stock of essential commodities received during the month,

(vii)    Opening and closing stock of essential commodities and

(viii)   The authority for redressal of grievances/lodging complaints with respect to quality and quantity of essential commodities under the Public Distribution System.

 

 

6.2.6       Supreme Court Directions regarding of functioning of FPS:

To facilitate the supply of the grain, Hon’ble Supreme court issued the following directions vide order dated 2nd May 2003 in WP (c ) 196 of 2001:-

(1)     Licencees, who 

(a)   do not keep their shops open throughout the month during the stipulated period,

(b)   fail to provide grain to BPL families strictly at BPL rates and no higher,

(c)   keep the cards of BPL households with them,

(d)   make false entries in the BPL cards,

(e)   engage in black-marketing or siphoning away of grains to the open market and hand over such ration shops to such other person/organizations,

 

shall make themselves liable for cancellation of their licences. The concerned authorities/functionaries would not show any laxity on the subject.

 

(2)     Permit the BPL household to buy the ration in installments.

(3)     Wide publicity shall be given so as to make BPL families aware of their entitlement of food-grains."

             

6.2.7       Facts observed by Committee regarding functioning of FPS : Even after the GOI guidelines, PDS Control Order and Supreme Court directions the FPS shops are not obeying the directions stated above.[21]

a.      Fair Price shops do not display the required information at display boards

b.     FPS shops do not open regularly and remain closed

c.      At some places distance of shop is very far and is a problem for beneficiaries.

d.     FPS owners give lesser quantity and do not weigh it properly. Some shop keepers do not run shop at the place designated by the Department as per terms of the Licence and they run it at different place like running shop out of village in forest area.

e.      People are not aware of price of commodities at which they are entitled to get foodgrains and Even FPS owners do not tell the rates of commodities

 

6.2.6      Distribution

 

6.2.6.1    Fixed dates for distribution: Dates are fixed for FPS owners to distribute the BPL and AAY grains. The reason stated for this arrangement is to keep proper check on distribution. Department officials can go on these days and make sure that distribution should be properly done by the FPS Dealer. 21, 22, and 23 of every month are fixed for distribution of AAY foodgrain and 27, 28, and 29 of every month are fixed for distribution of BPL Food grain. Vigilance committee and DSO of the area are also required to inspect the FPS’s on these days.

 

6.2.6.2    Camps: Regular camps are organized for the distribution of Food grains. These camps are organized by District Administration. Under these camps, all the FPS Shop owners have to bring their allocated foodgrain for distribution in the camps organized by District Administration and all the beneficiaries are informed by the FPS Dealers about the place of these camps. Then, distribution of FPS grain was done from these camps in the presence of District administration officials. There is a rule that if less than 70 % of beneficiaries attached to any FPS shop come on the day of distribution in these camps, then his licence will be cancelled. It helps in ensuring that all the beneficiaries get informed about these camps. Purpose is proper distribution and to curb the diversion to the naxalite nexus. Such camps are organized on the regular basis in the Chatra area which is the most affected by naxalites.

 

6.2.6.3    Distribution by fixing the days for AAY and BPL is not good procedure because

1.                 It puts lots of pressure on beneficiaries to collect their entitled quota on that particular day. If he by some reason is unable to collect his quota it will lapse.

2.                 It also puts lots of pressure on FPS shop to distribute whole quota on that day.

3.                 The procedure clearly violates the directions of the Supreme Court contained in the order dated May 2, 2003 in Writ Petition (Civil) No. 196 of 2001. In this order the Supreme Court has directed that Licencees who do not keep their shops open through out the month during the stipulated period shall make themselves liable for cancellation of their licence. The above said order of Hon’ble Supreme Court also provides that in order to facilitate the supply of grain the BPL house hold should be permitted to buy the ration in installments. Both these directions are thus being flouted because of the distribution of ration only on fixed dates.

 

6.3         VIABILITY OF THE FAIR PRICE SHOPS

6.3.1       The Committee examined the question of viability of FPS’s as the same is linked with the rate of commission to be paid to FPS dealers. The committee discussed the issue of viability with FPS owners and their associations , government officials and also invited written suggestions from the public.

 

6.3.2       Viability of Fair price shop is critical to sustenance of Public distribution system and to minimize leakages of PDS grains. The number of ration cards attached to FPS in each category, offtake of grains, margin on commodities, cost incurred on transport and handling, rents etc are the determinant of viability of Fair Price Shops. Programme Evaluation Organisation under Planning   Commission in its evaluation Report on TPDS of year 2005 put that Viability of FPS means  an annual return of 12% or more on the working capital. [22] This has been again mentioned in 11th Five year Plan (ie year 2008-20012) Report of Planning Commission.

 

6.3.3       Average gross income of an FPS is calculated as an average of the total margins generated from the sale of sugar, kerosence, rice and wheat (APL, BPL,AAY) and other receipts out to the sale of gunny bag in which PDS grains are packed  and sent in to the FPS.

 

6.3.4       PEO report, 2005 brings out the importance of kerosene in the income composition of the FPS. Report says the income from kerosene almost equals the combined share of BPL rice and wheat and thus speaks of the importance of keeping kerosene within the PDS retailer trading to improve their viability.

 

6.3.5       The Committee has observed that there are many factors affecting the  viability of FPS.some of these are

 

i.        Delay in supply of essential Commodity

ii.      Losses suffered by FPS dealers due to blockage of working capital invested for the stock for long periods.

iii.    Losses suffered on account of short supply of goods

iv.    Unequal distribution of ration cards

v.      High transportation cost and other recurring cost like rent, electricity, loading charges etc

vi.    Commission being too low to run viable FPS.

 

6.3.6       Existing System

6.3.6.1      Para 3(1) of the Annexure read with clause 5 of the PDS Control Order, 2001 states that the Central Government is to make food grains available to the State Government at a particular price that is specified from time –time.

 

6.3.6.2    The State Government then adds its administrative charges on the central issue price and then allocates these food grains to the fair price shop at the prescribed rates. The fair price shop then sells the food grains at the rate prescribed by the State government.  The table underneath would give a general view on the prices at which the State buys from the centre and the price at which a fair price shop is expected to sell the food grains to the consumers.

6.3.6.3     

 

BPL (In Rs)

APL

AAY

 

Wheat       

Rice

Wheat      

Rice

Wheat  

Rice

Central Government issued price (FCI)

415.00             

565.00

610.00          

830.00

200.00         

300.00

Agricultural Marketing Tax (1%)

4.15            

5.65

6.10         

8.30

2.00         

3.00

BSFC Administrative Charges or Commission

29.15          

27.30

24.15         

26.00

29.15       

27.30

BSFC issue price

448.00            

597.00

640.00             

864.30

231.15      

330.30

(1)FPS Commission

(2)Transportation Charge ( 0 to 15 km)

9.70           

 

4.00          

13.05

 

4.00

16.75           

 

4.00              

27.70

 

4.00

9.70           

 

4.00            

13.05

 

4.00

Consumer End Price

462.00            

615.00

661.00                

896.00

200.00            

300.00

Note :- Transportation rates for distance of more than 15 Kms will be fixed by Deputy Commissioner.

 

6.3.6.4    Under the present system as is clear from the above data that in case of APL category the State Food Corporation buys wheat from the Central Government (Food Corporation of India) at the rate of Rs. 610/- per quintal. Then it adds Rs. 30.25/- per quintal to it then sells the same to the fair price shop at the rate of Rs. 640.25/- per quintal. The fair price shop sells the same to the consumers at the rate of Rs. 661/- per quintal after adding Rs. 20.75/- per quintal as Commission. In case of rice, the State Food Corporation buys the same at the Rs. 830/- per quintal from the central Government (Food Corporation of India) and sells the same to the fair price shop at Rs. 864.30/- per quintal. The fair price shop sells the rice at Rs. 896/- per quintal after adding Rs. 31.70/- per quintal as commission. It is submitted that the said Rs. 34.30/- charged by the State Food Corporation is the administrative expenditure, which is primarily used for both maintenance of godowns and also for the transportation of the food grains from one FCI Godown to Corporation Godown and from one Corporation Godown to another.

 

6.3.6.5    Similarly in case of BPL category the State Food Corporation buys wheat from the central government (Food Corporation of India) at the rate of Rs. 415/- per quintal. Then it adds Rs. 33.30/- per quintal to it then sells the same to the fair price shop at the rate of Rs. 448.30/- per quintal. The fair price shop sells the same to the consumers at the rate of Rs. 462/- per quintal after adding Rs. 13.70/- per quintal as Commission. In case of rice, the State Food Corporation buys the same at the Rs. 565/- per quintal from the central Government (Food Corporation of India) and sells the same to the fair price shop at Rs. 597.95/- per quintal. The fair price shop sells the rice at Rs. 615/- per quintal after adding Rs. 17.05/- per quintal as commission.

 

6.3.6.6    In case of AAY category the State Food Corporation buys wheat from the central government (Food Corporation of India) at the rate of Rs. 200/- per quintal and then sells the same to the fair price shop at the same rate. The fair price shop also sells at the same rate to the consumers i.e. Rs. 200/- per quintal. In case of rice, the State Food Corporation buys the same at the Rs. 300/- per quintal from the central Government (Food Corporation of India) and sells the same to the fair price shop at Rs. 300/- per quintal. The fair price shop also sells the same at Rs. 300/- per quintal. It is relevant to note that in case of AAY category the fair price shop receives its commission from the department while depositing the bank draft for buying the food grain. FPS dealers have to deposit the amount for the food grain only after deducting the Commission.

 

6.3.6.7    All this commission of the FPS dealers includes the transportation subsidy given to them by the State Government for transporting the food grains from the Godowns of State food Corporation to their FPS Shops. Under the prevailing system the average monthly income of the FPS shop by selling food grains in only Rs 970. If the FPS Dealer is selling Kerosene Oil and Salt also, then his income increases to Rs 1114.

 

6.3.6.8    To lift the food grain from the Godown the FPS dealer has to first approach the godown keeper and then the labourers. It was stated that the FPS dealer has to pay the labourers per bag for uplifting the bag and also to get good quality of food grain. If the labourer is not paid properly, he would load rotten quality of foodgrain for the FPS Dealer. 

 

6.3.6.9    The transportation cost from BSFC godown to FPS shop is borne by FPS dealer. Mr. ShriKant Labh Secretary, FPS Association said that they incur expenses of Rs. 100 per bag as they have to bear cost of transportation, maintenance of shop, and have to pay bribe to Food and Supply officials. Ram Naresh Singh, President of FPS owners Asociation suggested that Government should provide door step delivery of foodgrains so as to make PDS more viable and to curb diversion

 

6.3.7       Committee visited the FPS shop of Daulat Ram Kesari (licence no. 186/84) situated at Village Pisca Nagdi, Raatu Block, Ranchi.

1             It was observed by the committee that the day committee visited the shop was distribution day but no member of vigilance committee was present in the shop.

2             The shop has 152 AAY cards 280 BPL cards and 132 APL cards. FPS Dealer informed that there is always 2-3 months delay in allocation of foodgrains for BPL. So far AAY grain is concerned, earlier there was backlog of 2 months but presently, it is of 1 month. He informed that he deposited the money for the grain allocation for month of November 08  through draft before 15th November, but the foodgrain had not been allocated till 22nd December 08.  He informed that he has deposited the money for November and December of 2008. Thus he pointed out that as the commission to FPS owners is very low, he doesn’t earn much from shop. Moreover he has to deposit money for 2-3 months with BSFC.  His money gets blocked and thus running FPS shop is not a viable and profit making business. He accepted the fact that he can’t run shop honestly. He narrated five problems which he has to face in the business.

1.     Less Commission (18 Rs Per quintal) which includes transportation.

2.     Time gap between the deposit of bank draft and issue of food grain by BSFC which is generally around 2 to 3 months.

3.     Shortage in quantity of foodgrains supplied by BSFC  godowns as the same is not weighed and they supply less quantity of grains per bag.

4.     Quality of foodgrains is very bad.

5.     Supply is always delayed in time. He informed that presently (i.e. 23 December 2008) he is distributing grains for the month of October 08.

 

6.3.8       Suggestions received from the Public

1.                           In the Public Hearings conducted by the Committee at Block Annagada, Ranchi and at  District Hazaribagh that the fair price shop owners have raised the following problems:

a.            Less commission

b.           Low allocation both due to number of cards and improper weighment.

c.            Backlog allocation and lapse of quota

d.           Blockage of capital due to delay in allocation

e.            High transportation cost

 

2.                          During one of the Public Hearing, it was also suggested by President of Fair price Association that the profit margin or the commission given to the fair price shops should be increased to 10% to 15% on the sale price of the food grains.

6.4          Conclusions

a)                Presently FPS Dealers are not selling Non PDS Commodities though there is no statutory prohibition for selling other commodities. It is recommended that Government should grant licence to existing Kirana/ Groccery shops. Selling non PDS items from the same premises which can certainly helps in increasing their viability. Standalone FPS shop be not allowed as it is inherently unworkable model and leads to malpractices. A system needs to be developed where general stores are given licences to sell PDS grains. There can be a restriction on sale of non PDS wheat and rice at such shops. For this FPS can be allowed  to supply goods produced  and marketed by  public and cooperative agencies like khaadi and village industries, cooperative marketing federation and can also be allowed to keep products by women self help groups like pickles, jams dry masala etc. This will also ensure the place of distribution of PDS grain as Committee observed in the State of Jharkhand there were complaints that many FPS owners do not run FPS shop at the place allowed by the Licence terms and condition and they run shop at some remote forest area.

 

b)                There has been a general suggestion that the commission of the fair price shops should be increased to approx 2.5% to 10%. According to the Planning Commission a FPS can be considered viable if the annual income from the business is 12% or more. It is submitted that the Committee maintains its stand which it stated during the study of the Delhi model that in order to improve the viability of fair price shop, the consumers should not be burdened and also no additional burden should be there on the government. 

 

c)                 The demand of the FPS owner has been that sufficient number of Ration Cards be attached to FPS i.e between 500-1000 and they should get proper quantity of foodgrains and in time.

 

d)                Transportation cost constitutes an important aspect in running a Fair Price Shop as transportation cost is borne by FPS owners in the State of Jharkhand and it depends on distance of wholesale depot. Transportation Cost varies with the location of FPS. Usually the transportation cost of shops at remote (rural) areas for all commodities is higher than for the urban shops. The Committee has observed that the State Food Corporation keeps around Rs. 34/- per quintal as administrative charges. As per the officials the same is used to maintain the Corporation Godowns and is also used for the transportation charges for the internal movement of the food grains. It is submitted that the committee in the Delhi report has stated that, it is the State’s obligation under the PDS Control Order, 2001 to ensure door step delivery. Clause 6(3) read with para 4(6) of the Annexure to PDS (Control) order 2001, casts a duty on the authorities to ensure physical deliveries of PDS Commodity to the FPS. Further, in the 9-point action plan formulated jointly by the Government of India and State/UT Governments, door step delivery of PDS commodities to the FPS  has been pointed as one of the measures to prevent Diversion. In the light of this obligation it would be appropriate for the State Government to ensure delivery of PDS grain at the FPS Shop which would result in reducing their expense on transportation and handling.

 

e)                Efforts should be made by State Government to make administrative formalities required  to be completed by the FPS owners less cumbersome and time efficient. As the allocation of foodgrains in Jharkhand is untimely FPS owners has to travel / contact godown owners many time to check whether foodgrains is ready to be issued. He has to keep check whether Stock Issue order (SIO) is given or not. Again he has to travel for payment of money. All these lead to hidden additional cost for FPS owners.

 

f)                  Transportation cost, loading, rent, electricity are the recurrent cost of FPS owner. Transportation and loading charges can be mitigated by door step delivery of PDS commodity.

 

g)                Efficient retailing would require preconditions such as experience and ability to undertake certain investment and sustain an adequate return.  FPS licences should be granted to people/ groups who have adequate liquidity of fund. Integrity and rapport of person in the local area are other aspects to be considered.  Pattern of ownership of FPS can have important bearing on their viability. Self help groups and Cooperatives can be given priority for granting licences to rationalize the cost structure of FPS.

 

 

h)                Number of ration cards attached to shop has a direct bearing on profit of FPS. In state of Jharkhand Government by letter dated 10th April 2006 directed that no new licence for FPS should be issued as there are more than required no. of FPS shops in the State. It is pertinent to mention again that Committee was informed that no new FPS licence was issued in Jharkhand after 1997 as there were more than required number of shops which was officially recognized by letter dated 10th April, 2006. Mushrooming of FPS needs to be curbed by the State Government and shops be allowed to run only after carful calculation of viability and demand structure of PDS foodgrains.

 

i)                  Fixed days for distribution for AAY and BPL puts lots of pressure on the beneficiaries to collect their entitled quota on that particular day. If he by some reason is unable to collect his quota it will lapse and some times leads to loss of wages for daily wage earners. Moreover it also puts lots of pressure on FPS shop to distribute whole quota on that day. Further this procedure clearly violates the directions of the Supreme Court contained in the order dated May 2, 2003 in Writ Petition (Civil) No. 196 of 2001. In this order the Supreme Court has directed that Licencees who do not keep their shops open through out the month during the stipulated period shall make themselves liable for cancellation of their licence. The above said order of Hon’ble Supreme Court also provides that in order to facilitate the supply of grain the BPL house hold should be permitted to buy the ration in installments. Both these directions are thus being flouted because of the distribution of ration only on fixed dates.

 

 

 

 

 

 

 

 

 

 

 

Chapter 7

VIGILANCE MECHANISM

 

7.1.         The Government of India 1997 guidelines to strengthen TPDS directed states to constitute the Vigilance Committee at FPS Level, Taluk Level, District Level and State level. The 1997 guidelines mentions that constitution of Vigilance Committee is supplemental to the administrative review done at various levels. It was directed that at FPS level  the committee can include a  few card holders attached  to the shop ( some of whom should be women), elected president of Panchayats or Municipal councilor, consumer activists and other social workers of repute. Taluk level committees with Taluk supply officer as convener and District Level Committee with DSO as convener can be formed. It was further directed that review of working of PDS should be a subject of review in the Panchayats and Nagar Palikas at their regular meetings.

 

7.2          The PDS Control Order, 2001 requires that Meetings of the Vigilance Committees on the PDS at State, district, Block and FPS level shall be held on a regular basis. The periodicity shall not be less than one meeting a quarter at all levels.

 

7.3          By the Order dated 13.02.2008, the Secretary, Government of Jharkhand constituted Vigilance Committees at District, Block, and Sub Divisional Level. The said order also provided about the eligible persons who can be appointed as a member of these committee’s and their rights and duties.

A.                Members of Block Level Distribution cum Vigilance Committee:

a.            One Social worker nominated by State Government as Chairman.

b.           Block Supply Officer as Member Secretary.

c.            9 Social Workers nominated by State Government which should include one Schedule Caste, Schedule Tribe, Minority Section, and One Ladies as  members of the Committee.

 

B.                 Members of Sub Divisional Level Distribution cum Vigilance Committee:-

a.            Sub Divisional Officer as Chairman

b.           Asst. District Supply Officer as Member Secretary

c.            Local residents of the area as members nominated by the all MLA and MP of area as their representatives.

d.           9 Social Workers nominated by State Government which should include one Schedule Caste, Schedule Tribe, Minority Section, and One Ladies as  members of the Committee.

 

C.                 Members of District Level Distribution cum Vigilance Committee

a.     Deputy Commissioner as Chairman

b.    District Supply Officer as Member Secretary

c.     Chairman of Municipalities of all District/ Notified Area as Member

d.    9 Social Workers nominated by State Government which should include one Schedule Caste, Schedule Tribe, Minority Section, and One Ladies as  members of the Committee.

e.     Local residents of the area as members nominated by the all MLA and MP of area as their representatives.

 

D.                The rights and duties of the Members of Vigilance Committee are as followed:-

 

1.    Committee shall meet once in every month.

2.    Member, Secretary will inform the Government regarding the decisions taken by the vigilance committees.

3.    Committee shall have right to inspect Fair price shops, hawking stores and Kerosene Oil Depots.

4.    Right to inquire about the lifting and distribution by FPS Shop, Hawking Stores and Oil Depots as per the allocation.

5.    The Committee shall have rights to spread the awareness among the beneficiaries through village Chowkidar regarding the lifting of Food grain from BSFC Godown by FPS Owner.

6.    The tenure of the members will be 3 years from the enforcement of this notification. However if required modification of any kind can be made by the Government of Jharkhand. If any member will be found inefficient, he may be removed any time by the Government.

7.    If it was found that any selected member is guilty under the Essential Commodities Act, then he shall be removed.

8.    The District Level Committee shall have powers to constitute the FPS Level Committee.

9.    In the event, social workers are not inducted in the committee at various levels, the committee shall fulfill its responsibilities and duties through designated members.

10.   The Committee has to monitor the supply position in area under its control.

11.   All information required by the Committee shall be provided through member Secretary.

 

7.4          The list of Vigilance Committees at Block level in District Ranchi was provided to the Committee however, Deputy Commissioner Ranchi informed that till date no meeting of Block level Committees has taken place.

             

7.5          The Committee observed that the Vigilance Committee at State level and District level are not constituted. However, the Vigilance Committees at Block levels are formed. Process of Constitution of Vigilance Committees at FPS level is going on. Block level FPS committee’s have been constituted in District Ranchi.

 

7.6          The Committee was informed that the Vigilance Committees constituted in the State have not been meeting.

 

7.7          The provisions regarding Vigilance Committees have been ignored if not flouted by the State Government. Either the Vigilance Committees envisaged under the PDS Control Order, 2001 have not been formed or they have not been meeting and performing their duties. This is because there is no accountability for any one to ensure that the meetings of the Vigilance Committees take place regularly. The PDS Control Order, 2001 provides that the meetings of the Vigilance Committees on Public Distribution System at the State, District, Block and FPS level shall be held on a regular basis. The date and periodicity has to be notified by the State Governments. However, the periodicity has to be not less than one meeting a quarter at all levels.

 

7.7          The State Government is therefore duty bound to ensure that meetings of the Vigilance Committees at all levels take place at least once in three months. However, no authority has been made responsible for ensuring that such meetings take place. The State Government should fix the responsibly of the officials of the administrative machinery to convene the meetings and ensure the presence of the members. Rules can provide that any member who does not attend two consecutive meetings would be replaced. The Secretary of the Department of Food and Supply should be responsible for convening the meetings at the State level, the District Magistrate should be responsible for the District level Committee, Block Development Officer should be responsible for the block and FPS level committees.

7.8          The PDS Control Order, 2001 also requires the State Governments to make rules regarding furnishing of copies of the specified documents, namely ration card register, stock register, and sale register. Any ration card holder desirous of obtaining extracts from the records of the FPS owner can make a written request to such owner along with the fee specified by the State Government and the FPS owner has to supply the copies of the record within fourteen days from date of receipt of the request.

7.9          The right to information thus provided under the PDS Control Order, 2001 has been negated by the State by not making rules regarding the fees payable for obtaining the copies. Such rules should be framed and given wide publicity  to educate the beneficiary.

7.10        The Panchayat Raj Institutions and the Nagar Palikas should be actively involved in the vigilance. The elected representatives of the people must perform their duty in keeping a vigil on the activities concerned with the Public Distribution System.

7.11        The purpose of providing that the copies of the allocation order for each FPS shop should also be sent to the Gram Panchayat or Nagar Palika and should be displayed on their notice board is to prompt their members to be vigilant and check the activities of the FPS licencees.

7.12        The Vigilance Committees are also responsible to inspect the distribution in the  FPS shops on the  fixed days of distribution. However, Committee when visited FPS shop in Raatu Block, Ranchi no member of Vigilance Committee was present in the shop.

 

7.13        JHARKHAND STATE GRIEVANCE COMMISSION

7.13.1     On 9th May 2005 Hon’ble Supreme Court passed the following order in WP(C) 196 of 2001.

 

In 5th Report of August, 2004 of the Commissioners it has been reported that on ground level, Public Distribution System is not working well, many poor people living BPL have not been issued the BPL ration cards.  Orders of this Court are not being implemented and to support details have been given at page 3411 along with recommendations up to page 3421.   The recommendation is that the Chief Secretaries shall put in place a mechanism to ensure suitable action against the officials who hesitate in taking action against the guilty; the State Government shall set up Committees to frame detailed procedure and time frames for dealing with various types of grievances and complaints received from the public;  an independent Public Service Commission be constituted to listen to the grievances and provide redressal in a time bound manner and the said body should be vested with necessary powers and finances to carry out its functions and to ensure implementation of Court's orders.  Some of the States mentioned are Rajasthan, M.P., Orissa, Delhi, Bihar, West Bengal, Chhattisgarh and Assam.   The State Governments have not respondent to the report. A grievance has also been made by Mr.Gonsalves that despite letters from the Commissioner pointing out the violations of the Court's Orders appropriate actions are not taken.  Learned counsel suggests that the licences of the violators shall be cancelled and work of Public Distribution System be assigned to Panchayat or other bodies.  Before we consider these aspects, we deem it appropriate to give a last opportunity to the State Governments to respond to the report, particularly those States whose names have been mentioned in the report, to file their response within eight weeks.”
 

7.13.2     Perusal of the order dated 9th May 2005 in WP(C) of 2001 of the Hon’ble Supreme court  would show that there are no directions for creation of such a Commission. It was merely a suggestion of the Commissioners of the Court given in their 5th Report which was being considered by the         Hon’ble Supreme Court. As a matter of fact it appears that thereafter by order dated 16.7.2006 a committee under the Chairmanship of Shri D.P. Wadhwa (Retd.) Judge of the Supreme Court was constituted to pursue various functions.

 

7.13.3     The Jharkhand State Government constituted a High Level Committee by its Departmental Notification no. 1154 dated 18.10.2005 purportedly to implement the recommendation of the Supreme Court Commissioners 5th report. The said Committee then further recommended for the infrastructure to establish the Grievance Commission. State government decided to constitute Public Distribution Grievance Commission in Order to implement the recommendations of Supreme Court Commissioners and published a Resolution in Official Gazette no 328 dated 15 June 2007 for Constitution of the same providing the Powers and Responsibilities of Grievance Commission.

 

7.13.4     The Public Distribution Grievances Commission created by the aforesaid Gazette Notification consists of Chairman and two Members.  The Chairman has been given the status equivalent to the Chief Secretary of the State and each Member has been given the status equivalent to the Secretary in the Government of Jharkhand.

 

7.13.5     The purpose of creating such a Commission as stated in the aforesaid gazette notification is that it is expedient to establish an independent Public Distribution Grievances Commission to listen to the grievances and complaints related to Public Distribution System received from public and provide redressal in a time bound manner and also to ensure suitable action against the official who hesitate in taking action against the guilty to implement courts orders in the light of Supreme Court’s Order dated 09.05.2005 in Civil Writ petition No. 196 of 2001.

 

7.13.6     The Notification dated 15.06.2007 also reproduces the orders of the Hon’ble Supreme Court in order to show that the Public Distribution Grievances Commission has been set up in compliance with the orders of the court.

 

7.13.7     The members of the Public Distribution Grievances Commission met the Committee.  It appears that they have received several complaints and a list of the nature of complaints received by them was submitted by Mr. Mahabir Prasad to the Committee.  However he did not furnish any records of the action taken by the Public Distribution Grievances Commission on those complaints.

 

7.14        This Committee has recommended the desirability of having an Ombudsman/Regulator for the proper Vigilance of the Public Distribution System. The Committee found that the Public Distribution Griviance Commission set up by Jharkhand is not well structured. It is also not vested with sufficient powers to investigate complaints or to monitor the working of the Public Distribution System.

 

7.15        OMBUDSMAN/ REGULATOR

1.     The Ration Card Holders have been given certain entitlements under Public Distribution System.  It is the responsibility of the state apparatus to ensure that these beneficiaries enjoy access to these entitlements smoothly, without let or hindrance. Public satisfaction in this field would strengthen the democratic system and reinforce public confidence. Widespread discontent will naturally provoke disruption and affect social stability adversely. Hence, it is imperative to take urgent action for suitably strengthening the vigilance and monitoring system in the existing Public Distribution System framework. This can be done by the appointment of an independent Ombudsman/Regulator.

2.     While the Central Vigilance Committee is of the  view that an independent monitoring mechanism for addressing consumer complaints along with a host of other related issues needs to be set up on priority. Such grievance redressal machinery would be in addition to the already existing legal remedies that may be available to an aggrieved person under Clause 11 of the Public Distribution System (Control) Order, 2001. This alternative mechanism may be in the form of “Ombudsman/ Regulator” that may be created under Para 6(1) of the Annexe to Clause 8 of the Public Distribution System (Control) Order, 2001. Para 6(1) of the Annexe to Clause 8 of the Public Distribution System (Control) Order, 2001 casts an obligation upon the State Government to provide a proper system of monitoring FPS. This clause provides the statutory basis for setting up an independent monitoring mechanism such as an “Ombudsman/ Regulator”.

3.     The objective of Ombudsman/ Regulator would be that he/she would act as ‘Watch Dog’ to ensure effective compliance of the PDS Control Order, 2001’. The Ombudsman/ Regulator will also provide free, fair, independent mechanism for speedy resolution of complaints with reference to the benchmark set out in the governing statute, order and circulars by the authorities. Ombudsman/ Regulator should focus on investigating and resolving individual complaints and also address systemic issues. The Ombudsman/ Regulator provides consumers an easily accessible system, which would be just and speedy in redressal of their complaints and grievances. This should not become a procedure bound system or be driven by dilatory reports. Investigation will be resorted to wherever considered necessary by the Ombudsman/ Regulator. The Ombudsman/Regulator shall oversee the functioning of the Enforcement Branch including the Anti Hoarding Cell.   

4.     Ombudsman/ Regulator should be appointed by the Governor of Jharkhand in concurrence with the Chief Justice of The High Court. He or she will not be eligible for re-appointment.

5.    Eligibility conditions

A.     The Ombudsman/Regulator should be a sitting/retired member of the Jharkhand Higher Judicial Services who is or has been in the super time scale.

B.      If the Ombudsman/Regulator is a retired member of the Jharkhand Higher Judicial Services, he/she will remain in office for a term of three years or upon reaching the age of Sixty five, whichever is earlier. 

5.                 Terms and conditions of service

The salary and allowances payable to the Ombudsman/ Regulator shall be the same as payable to a member of the Jharkhand Higher Judicial Service in the super time scale.

6.                 Removal and Resignation from office

Whereas a sitting member of the Jharkhand Higher Judicial Services will be governed by the service rules applicable to him. In the case of a retired member of the Jharkhand Higher Judicial Services being appointed, the following will apply: -

A.    The Ombudsman/ Regulator may be removed from office by the Government any time after appointment if Ombudsman/ Regulator has:

              (i).     Been adjudged an insolvent; or

(ii).     Been convicted of an offence involving moral turpitude; or

(iii).   Become physically or mentally incapable of acting as Ombudsman/ Regulator; or

(iv).    Acquired such interest as is likely to prejudicially affect his functions as Ombudsman/ Regulator; or

(v).     So abused his position as to render his or her continuance in office prejudicial to the public interest.

B.     However, the removal on the grounds specified in clauses (iv) and (v) can be done only in concurrence with the Chief Justice of the High Court, after following the principles of natural justice.

   8. Functions and Responsibilities of Ombudsman/ Regulator

A.      Ombudsman/ Regulator would be that he/she would act as ‘Watch Dog’ to ensure effective compliance of the PDS Control Order, 2001, The Jharkhand PDS control order 2008 and applicable instructions. The Ombudsman/Regulator will constantly monitor each facet of the distribution process detailed in the governing control orders and circulars to ensure inter alia that the correct quantities of SFAs reach the intended beneficiaries.

B.       In addition the Ombudsman/ Regulator will deal with Consumers’ complaints and grievances which may broadly be classified into two groups:

Ø                  Basic

Ø                  Complex. 

C.       Basic complaints would mainly relate to non-provision of Public Distribution System items benchmarked to quality/quantity, delays, harassment etc. Complex complaints would relate to matters involving laws, enforcement deficiencies and widespread discontent. Basic complaints may require summary disposal without undertaking any detailed investigation. Complex complaints may involve proper investigation.

Having regard to the class of complaints, whether basic or complex, the functions and responsibilities of the Ombudsman/ Regulator will be as follows:

(i).     To act as the repository of complaints/grievances received upon the Helpline. Ombudsman/ Regulator shall also monitor the functioning of GPS technology that may be used in the Transportation of Food grains and deal with all matters relating to consumer complaints arising from deficiencies in various stages of Public Distribution System operation;

(ii).     To act as the monitoring authority in respect of functioning of the Vigilance Committees and follow up action taken by the Department on the reports/recommendations of the Vigilance Committees.

 (iii).    To investigate, where necessary in the judgment of the Ombudsman/ Regulator, complaints on case-by-case basis after seeking the perspectives of parties involved and making an independent assessment of complaints;

(iv).    To seek resolution of complaints through application of extant law, rules and orders in complex cases based on his or her personal assessment of what is reasonable and fair;

(iv).    The Ombudsman/ Regulator will have jurisdiction to address and investigate, where necessary, complaints about, inter-alia, the following matters:

·        non-observance of the PDS Control Order by  FPS  owner.

·        short supply of Food grains/sugar/kerosene oil below entitlement;

·        supply of poor quality Food grains not matching the sample on display; and

·        diversion of Food grains to shops other than FPS.

·        the manner in which complaints received from the consumers/complainants including those on the toll free Helpline, have been dealt with by the concerned officials of the Department.

·        Action taken by officials of the Department on reports of Vigilance Committees.

(v)     It will be the responsibility of Ombudsman/ Regulator to devise and implement communication strategy to educate consumers as well as FPS owners about their rights and entitlements as well as various dos and don’ts of  Public Distribution System.

(vi)   It is made clear that the remedy to approach the Ombudsman/ Regulator would be in addition to and not in derogation of other remedies available in law.

9.                  Powers of Ombudsman/ Regulator

          The powers of the Ombudsman/ Regulator, inter-alia, would include:

A.                Public functionaries in the Department/Bihar State Civil Supplies Corporation Limited/Food Corporation of India, in charge of, or dealing with  Public Distribution System, must function with “due diligence”; that is, they must ensure that within the framework of the system, the consumers’ entitlements of Food grains etc., are made available to them on time through the distribution network.  Any deficiency or shortcoming on their part, with reference to the benchmarks, will render the functionary personally liable to action. The Ombudsman/Regulator will have the power to recommend and monitor departmental action in respect of errant officers keeping in mind the governing disciplinary rules.   In cases of violation of any laws in the matter of Public Distribution System, the Ombudsman/ Regulator can direct the concerned authorities to take action against the person/party. There cannot be any corruption in Public Distribution System unless there is complicity between FPSs, Department Officials and the Transporter. While the FPS owner and the Transporter can be prosecuted under Section 7 of the Essential Commodities Act, 1955 for violation of the provisions of law including the Public Distribution System (Control) Order, 2001, it is incongruous that the Department officials who are fully involved in the crime should be proceeded against only departmentally in the absence of sanction under Section 15A of the Essential Commodities Act, 1955. The Committee therefore recommends that Section 15A be suitably amended by deleting clause (b), which deals with public servants belonging to the State Governments. The Committee also recommends that till the legislature makes such an amendment as proposed, the State Government shall delegate the power of sanction for prosecution to the Ombudsman/Regulator. 

B.                 The Ombudsman/ Regulator can recommend payment of compensation to a complainant upto a maximum amount of Rs. 5,000/-, and/or supply of goods and services as required for resolving the complaint or/and issue cease and desist order. In case of complaints of a frivolous nature, the complainant will also be liable for similar action.   The amount mentioned above would be paid by the Department to the beneficiary at the first instance and would be recovered from the concerned officer.

C.                 The complaints received by the Ombudsman/ Regulator may be referred by him for a report from the District Vigilance Committee or FPS Vigilance Committee, as the case may be. It is clarified that this power of the Ombudsman/ Regulator to make a reference shall be in addition to and not in derogation of the powers of the Ombudsman/ Regulator to conduct an independent enquiry into complaints. While, the reports so received, will assist the Ombudsman/ Regulator in providing solution, these reports will not be binding upon the Ombudsman/ Regulator.

D.                The Ombudsman/ Regulator also may not entertain a complaint if the complaint is more than  90 days old which can, however, be relaxed by Ombudsman/ Regulator in his discretion in deserving cases and final  resolution of complaints will need to be prescribed for ensuring speedy and efficacious handling of complaints.

E.                 Time limits for addressing complaints, various stages involved in completion of investigation and final resolution of complaints will need to be prescribed by the Ombudsman/ Regulator for ensuring speedy and efficacious handling of complaints.

F.                  The Ombudsman/ Regulator will ensure that all codes/orders/regulations etc., are put on the website for the convenience of the consumers.

G.                The Ombudsman/ Regulator will have authority to suggest/recommend changes in operational matters to smoothen and simplify the operation of the system.

10.             Structure

The Ombudsman/ Regulator would need to be given a nucleus of staff to examine issues from both reactive and pro-active approaches.

11.             Funding

It will be the responsibility of the Government to provide funds for implementation of the foregoing recommendations including meeting administrative and operational expenses of the office of Ombudsman/ Regulator including the staff thereof. In this context it is relevant to point out that the Planning Commission provides funds under its plan programmes for monitoring and improvement in the management of supplies.

7.16       CONCLUSIONS

1.     The provisions regarding Vigilance Committees have been ignored if not flouted by the State Government. Either the Vigilance Committees envisaged under the PDS Control Order, 2001 have not been formed or they have not been meeting and performing their duties. This is because there is no accountability for any one to ensure that the meetings of the Vigilance Committees take place regularly. The PDS Control Order, 2001 provides that the meetings of the Vigilance Committees on Public Distribution System at the State, District, Block and FPS level shall be held on a regular basis. The date and periodicity has to be notified by the State Governments. However, the periodicity has to be not less than one meeting a quarter at all levels.

2.     The State Government is therefore duty bound to ensure that meetings of the Vigilance Committees at all levels take place at least once in three months. However, no authority has been made responsible for ensuring that such meetings take place. The State Government should fix the responsibly of the officials of the administrative machinery to convene the meetings and ensure the presence of the members. Rules can provide that any member who does not attend two consecutive meetings would be replaced. The Secretary of the Department of Food and Supply should be responsible for convening the meetings at the State level, the District Magistrate should be responsible for the District level Committee, Block Development Officer should be responsible for the block and FPS level committees.

3.     The State Government should make rules regarding furnishing of copies of the specified documents, namely ration card register, stock register, and sale register. Any ration card holder desirous of obtaining extracts from the records of the FPS owner can make a written request to such owner along with the fee specified by the State Government and the FPS owner has to supply the copies of the record within fourteen days from date of receipt of the request. Wide publicity should be given to these rules to educate the beneficiaries.

4.     The Public Distribution System Grieviance Commission is totally ineffective and a unneccesary burden on the Government. It is not well structured and does not have any powers to take any action. It should be immediately replaced by an Ombudsman/ Regulator.

 

 


 

Chapter 8

 

ENFORCEMENT

 

8.1     The Deputy Commissioner Ranchi informed the Committee members that sometimes surprise inspection teams are constituted to conduct surprise inspections of FPS shops. In such inspections team the inspectors/ marketing officers of one area are sent to inspect another area.  No record of the surprise inspections was shown to the Committee.

 

8.2     Chief Procurement officer of BSFC informed the committee that BSFC has its own flying squad and vigilance department which conduct periodically surprise inspections in the godowns of the BSFC but no document like or Inspection report was shown to the Committee. The Conditions of the Godown inspected by the committee also does not suggest that any inspection was ever done

 

8.3     Inspections by FCI Officials

The Government of India  decided that  a system of regular inspection be put up in place not only for FCI godowns but also for State Government/Authorised wholesale Godowns and thus issued instructions to FCI vide letter  dated 24th October 2007.  In pursuance to that FCI issued directions to all Regional General Managers vide Letter dated 31st October 2007 to inspect State Government /Authorised  wholsale godowns and to submit detailed report to the Headquarter and to State Government. Committee inquired from the FCI officials during meeting dated 21st December 08 whether they have conducted such inspections. Committee was informed that no such inspection has been conducted by the FCI officials in State of Jharkhand.

 

8.4      The TDPS is governed by the provisions of Essential Commodities Act 1955, the PDS Control Order 2001 and the control orders passed by the states under section 3 of the essential commodities act, 1955.

 

8.5     No system can be implemented properly unless there is a proper system of enforcement of the rules and regulations. An effective system of enforcement of the punitive and penal procedures of the Essential Commodities Act and the control orders has to be set up by each state to ensure compliance with their provisions.

 

8.6     Section 7 of the Essential Commodities Act provides penalties for the person contravening any order made under section 3.

 

8.7     The PDS (Control) Order,2001 provides that if any person contravenes any provisions of this Order under clauses 3, 4, 6 and 7, he shall be liable to punishment under Section 7 of the Essential Commodities Act.

 

8.8     The punitive provisions relate to the conditions of licence which incase of violation attract suspension or cancellation of the licence.

 

8.9     There are conditions imposed on a FPS licencee and their enforcement has to be ensured by the state.

 

8.10   Malpractices in the PDS continue because of lack of effective enforcement system.    Hon’ble Supreme court has issued the following directions to facilitate the supply of food grains-

1.           licencees, who

a.            Do not keep their shops open throughout the month during the stipulated time.

b.           fail to provide grain to BPL families strictly at BPL rates and no higher

c.            to keep the cards of BPL house holds with them

d.           make false entries in the BPL cards,

e.            engage in black marketing or siphoning away of grains to the open market and hand over such ration shops to such other person/organizations

          Shall make themselves liable for cancellation of their licences.The concerned authorities /functionaries would not show any laxity on the subject.

          The State Government shall permit the BPL household to buy the ration in installments.

2.                 Wide publicity shall be given so as to make BPL families aware of their entitlement of food grains.    

 

8.11        This order was passed on 2.5.2003 but no action has been taken by the State to enforce this order. It is therefore necessary that the special squads are set up by the State consisting of persons drawn from the administration and the police and should be placed directly under the District Magistrate. These squads should be responsible for launching criminal prosecutions and also for recommending departmental action for suspension or cancellation of licence, or imposing penalties No action has been taken against any official though it is admitted that no diversion of food grain is possible without the connivance of the officials of the department. It is also important that these squads also have the powers to recommend action against officials in whose jurisdiction violations are detected or who is found to be involved in diversion of food grain. The Committee feels that there should be dedicated Special squads in every District for enforcement of the penal provisions of the Essential Commodities Act, 1955. The Committee has suggested Zero Tolerance in the matter of enforcement in the Public Distribution System. Similarly a special squad should also be created at the State level for surprise checks whenever there is complaint requiring such action. Prosecutors should be specially trained for conducting cases under the Essential Commodities Act.

8.12        Special attention is also required to ensure speedy disposal of cases filed in courts. Special Courts may have to be set up in consultation with the High Court to ensure speedy disposal. 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 9

 

IDENTIFICATION OF BENEFICIARIES

 

9.1             In the State of Jharkhand BPL card holders were identified on the basis of survey done in the year 1997 and the same is applicable till now. It was noticed that the department implementing TPDS, i.e., Food and Civil Supplies Department did not conduct any survey to identify BPL/AAY households in the state. Instead, beneficiaries were covered under TPDS based on a survey conducted by the Rural Development Department (RDD) in 1997[23].

9.2             According to survey conducted by RDD only in rural areas in 1997, there were 23.94 lakh BPL families in Jharkhand. No survey was conducted in the urban areas to identify BPL/AAY population. A separate survey was to be conducted for identification for urban BPL households. Committee observed that the survey conducted in year 1997 was erroneous and as informed by the various officials and many residents of Jharkhand during meetings and public hearings, 50 % of people who are actually entitled to be included in the BPL list have been excluded. Thus, there is gross exclusion error in identification criteria. For example, Mr. Arun Kumar Sinha,   DC. District Ramgarh informed that main grievance of the Public was demand for new cards. He further informed that a 1997 identification criterion is followed. No new survey is being done. He also informed the committee that survey made in the year 2002 was even worst than this because list of 2002 survey does not included 50% of existing BPL Cards holders made under 1997 survey.  Official records show that in Hazaribagh district 16% and in Daltonganj District 41% BPL households deprived of benefit of the scheme as they were not issued ration cards.[24] It was also noticed that as per Census (2001), 29.76 lakh households in the State were categorized as BPL. However, allotment of food grains from the GOI was received only for 23.94 lakh households. Thus, 5.82 lakh households in the State were not covered. Thus, the data on which the beneficiaries were identified and categorized was old and, therefore, did not accurately reflect the numbers of BPL and AAY. Due to lack of accurate and current data, major irregularities and deficiencies in selection of beneficiaries resulting in denial of benefit to eligible beneficiaries and undue benefit to other beneficiaries were noticed However it is observed that The BPL list developed by Ministry of Rural development for 2002-2007 has been completed in many districts and is made online.

 

9.3             Committee asked about the criteria for identification of BPL in urban areas. It was informed by District Collector, Ranchi that the family whose income is Rs. 11500/- per annum is identified as BPL family in Urban areas. However, during telephonic conversation dated 9th February 2009 to seek some clarification with Mr. A. K Sinha, District Collector, Ramgarh District he informed the Committee that in urban areas the income criteria to identify BPL families is Rs 22,400/- which was the cut off income fixed by Planning Commission for categorization as BPL family. It was informed by District Collector Ranchi that to identify person as BPL local enquiry is conducted by Block Supply officer and then Circle Revenue officer also certifies the same. (Same was also informed to the Committee by Officials Present in the office, Mr. N.N. Pandey, Secretary Food & Supplies). No survey was conducted in urban areas to identify BPL/AAY. Ration cards were issued only on the basis of application.

 

9.4             The Minimum Daily wage in the State of Jharkhand is Rs. 93 which means that an unskilled labour earns Rs.2790/- per month (Rs. 93 X 30 days) and Rs. 33480/- per year. Thus it is submitted that the BPL beneficiaries of urban areas should be identified on the basis of minimum daily wage. For the sake of clarification it was mentioned that all those families whose annual income is lesser than what the daily wage labour earns should be identified as BPL in urban areas.

 

9.5             Committee observed that the survey conducted in year 1997 was erroneous and as informed by the various officials and many residents of Jharkhand during meetings and public hearings, 50 % of people who are actually entitled to be included in the BPL list have been excluded. The Deputy Commissioner,  Ramgarh District informed that main grievance of the Public was demand for new cards. He further informed that a 1997 identification criterion is followed. No new survey is being done. He also informed the committee that survey made in the year 2002 was even worse then this because list of 2002 survey does not included 50% of existing BPL Cards holders made under 1997 survey.  Official records show that in Hazaribagh district 16% and in Daltonganj District 41% BPL households are deprived of benefit of the scheme as they were not issued ration cards.[25]

 

9.6             However it is observed that The BPL list developed by Ministry of Rural development for 2002-2007 has been completed in many districts and is made online.

 

9.7             The PDS Control Order 2001 provides that the State Governments shall formulate guidelines for the purposes of identification of families living Below Poverty Line (BPL) including the Antyodaya families as per the estimates adopted by the Central Government.  Care will be taken to ensure that the families so far identified are really the poor.  Exercise of identification of BPL and Antyodaya families, wherever it has not been done already   to be completed within three months of the issue of the PDS Control Order, 2001.

 

9.8             The guidelines for implementing the TPDS issued by the Central Government  provides:-

 

Identification of beneficiaries of the Targeted Public Distribution System (TPDS) namely the population Below Poverty Line (BPL) and issue of food grains at specially subsidized rates are the most important features of the TPDS.  To work out the population Below Poverty Line (BPL) it is proposed to adopt the provisional estimates arrived at by the Planning Commission for the year 1993-94 adopting the methodology of constituted by the Planning Commission under the Chairmanship of Late Prof. Lakdawala (Expert Group).  According to the official methodology so far adopted, the number and percentage of Below Poverty Line population for 1993-94 works out to 14.98 crores persons and 16.82% respectively.  As per the Expert Group methodology this works out to 32.03 crores and 35.97%.  The Expert Group methodology according to the Deputy Chairman, Planning Commission gives “poverty estimates closer to ground reality” and as such it is proposed to adopt them for the Targeted PDS.

9.9       While these estimates give the number of persons and percentage of BPL population at State Level, identification at the micro level of the population Below Poverty Line can be done as indicated below :-

i)                   The quinquennial surveys made by the Ministry of Rural Areas and Employment for Implementation of IRDP, etc. on household living Below Poverty Line can be a basis.  However, the overall number identified should be limited within the population Below Poverty Line as fixed by the Union Planning Commission adopting the methodology of the Expert Group by Late Prof. Lakdawala.

ii)                 Gram Panchayats and Gram Sabhas should be involved in the initial identification of eligible families.

iii)               Final identification should be made after verification of doubtful cases.

iv)               As regards urban population, slum dwellers will generally qualify for the Below Poverty Line.  Applications, if any, received from non-slum areas should be verified to identify eligible beneficiaries.

v)                 The thrust will be to include only the really poor and vulnerable sections of the society such as landless agricultural labourers, marginal farmers, rural artisans / craftsmen such as potters, tappers, weavers, blacksmiths, carpenters, etc. in rural areas and slum dwellers and persons earning their livelihood on a daily basis in the informal sector like porters, coolies, rickshaw pullers and hand-cart pullers, fruit and flower sellers on the payment etc. in urban areas.

vi)               The above criteria is indicated only by way of illustration and is in no way an exhaustive list of those who could be brought within the ambit of the Below Poverty Line.  The total number identified, however, should be within the limits of Below Poverty Line population indicated by the Planning Commission.

 

9.10      The perusal of these guidelines would show that that the Survey made by the Rural Development Department of this State could be a basis but the overall number of BPL identified by the State had to be limited within the limits prescribed for BPL by the Union Planning Commission adopting the methodology of the Expert Group headed by Late Prof. Lakdawala.

9.11      To work out the population below the poverty line under the TPDS, there was a general consensus at the Food Minister’s conference held in August 1996, for adopting the methodology used by the expert groups set up by the Planning Commission under the Chairmanship of Late Prof. Lakadawala.  The BPL households were determined on the basis of   population projections of the Registrar General of India for 1995 and the State wise poverty estimates of the Planning Commission for 1993-94.    The total number of BPL households so determined was 596.23 lakh.  Guidelines for implementing the TPDS were issued in which the State Governments had been advised to identify the BPL families by involving the Gram Panchayats and Nagar Palikas.  While doing so the thrust should be to include the really poor and vulnerable sections of the society such as landless agricultural labourers, marginal farmers, rural artisans/craftsmen such as potters, tappers, weavers, black-smith, carpenters etc. in the rural areas and slum dwellers and persons earning their livelihood on daily basis in the informal sector like potters, rickshaw-pullers, cart-pullers, fruit and flower sellers on the pavement etc. in urban areas. The Gram Panchayats and Gram-Sabhas should also be involved in the identification of eligible families.  

 

 9.12     The number of BPL families has been increased w.e.f. 1.12.2000 by shifting the base to the population projections of the Registrar General as on 1.3.2000 instead of the earlier population projections of 1995.  With this increase the total number of BPL families is 652.03 lacks as against 596.23 lack families originally estimated when TPDS was introduced in June 1997.

 

9.12             The food allocation to the State is made by the Centre according to the numbers of BPL estimated on the basis of the finance of the Expert Group headed by Late Prof. Lakdawala.  As a result, each BPL family in the State which are entitled to 35 Kg of grain per month is getting only a reduced quantity of 25 Kg of grain for month.

9.13             The Control Order 2001 provides that the State Governments shall get the list of BPL and Antyodaya families reviewed every year for the purposes of deletion of ineligible families and inclusion of eligible families.

9.14             It was admitted before the Committee by the State Government functionaries that no such review of BPL families is being done in the State of Jharkhand.  This provision was made keeping in view the fact that the number of BPL families in any State can not be static.  Some families have an increased income during the course of time and become ineligible for the benefits given to the BPL.   Similarly, some families have loss of income or new families come into existence during the course of time that may be entitled to the benefit given to BPL.  Over a period of time, these numbers have grown since 1997.  The position has changed drastically and at present there are a large number of BPL families who do not have any BPL card or any card at all where as there are also a large number of families enjoying the benefits of BPL though they have sufficient incomes to disentitled them to the BPL benefits.

9.15        The Control Order 2001 provides that the State Government shall ensure that no eligible applicants is deprived of a ration card under the PDS.  Apparently, due to the absence of proper criteria and the absence of review large number of people entitled to the benefits under the PDS have been denied such benefits.

9.16        It further provides that the State Government shall conduct periodical checking of ration card to weed out ineligible and bogus units in ration card.  Ration card shall be valid for a period of five years from the date of its issue unless it is suspended or cancelled earlier.  A ration card shall be issued afresh or reviewed after fresh verification of and such other checking as may be prescribed by the State Government in this regard.

9.17        No such exercise has been undertaken by the State Government.  There is no checking for weeding out of ineligible or bogus ration cards or bogus units in ration cards has been undertaken by the state.

9.18        The Control Order 2001 also provides that elimination of bogus ration cards as well as bogus units of ration cards shall be a continuous exercise by the State Government to check diversion of essential commodities.  This exercise has never been undertaken and hence there is a complete failure on the part of the Government to reach at a correct estimation of BPL families in the State.

9.19        High exclusion error means a low coverage of BPL households. Large inclusion errors imply that the APL households receive an unacceptably large portion of subsidized grain.

9.20        The Committee has dealt with various aspects of the ‘identification of beneficiaries’ in its  report of State of Orissa and the same may be referred and read as part of this report.

9.21        The state is also proposing to introduced a scheme for the BPL population whereby food grain  is given at Rs 2. This has led to a serious clamour for BPL cards . These schemes which seem to be driven by political motivation rather than any desire to ensure food security need to be carefully monitored. Increasing the BPL population to unrealistic levels is not only a drain on the resources of the State but may also act as a serious disincentive to hard work on part of the population of the State.

 

Recommendations

1.     The Committee recognizes the fact that it is not an expert body to prescribe identification guidelines and is therefore not venturing into any such task. However, the Committee recognizing the critical nature and importance of identification and the fact that exclusion and inclusion error are a very serious malady afflicting the PDS, recommends that the expert body constituted by the MORD in terms of the order of the Supreme Court dated 14 February 2006, give its recommendations in a time bound manner and each State within a time frame fixed by the Hon’ble Court prescribe transparent criteria of its own for identification keeping in mind local conditions.

2.     Once such guidelines are in place, as suggested in the Delhi report, a time-bound door-to-door drive to identify genuine beneficiaries and eliminate wrongful exclusions and bogus cards  would be necessary which is to be conducted by a reputed independent agency.  The agency will also simultaneously conduct a consumer satisfaction survey, which will enable the department to bring in necessary improvements to the system.

3.     There would be an amnesty period of four weeks where persons holding bogus cards could surrender them without liability. However on the expiry of this period the above mentioned intensive door to door verification would be conducted and during that verification if any bogus card is detected both the holder as well as the officers who had recommended the bogus card would be prosecuted under Section 7 and other Sections of the Essential Commodities Act, 1955 without exception. The Officers can be proceeded against departmentally and severely punished. Widest possible publicity must be given to the amnesty scheme. 

 

 

4.     There is a need to revisit income criterion prescribed for the BPL category.  The government/MORD committee may also consider using consumption criteria that is to say calorie intake per person per day as an indicator of poverty as the minimal objective to be achieved by TPDS is to ensure that every poor person gets two square meals a day. This is recommended in as much as a purely income based criteria may in certain circumstances be misleading in terms of actual determination of persons below the poverty line. However the estimation of poverty should not be made on a criteria which is less than the minimum wage fixed by the state for agricultural labourers or the wage fixed by the Central Government under Section 6 of the NREG Act 2005[26]. It may not be out of place to point out that in several states the minimum wage for agricultural labour is in the range of Rs 100 and even the NSSO in its estimate fixes the estimate of expenditure  at Rs 20 per capita per day which works out to Rs 100 per day per family (a family is taken as 5 members).

5.     The abovementioned Committee set up by the MORD is essentially to devise a criteria for identifying the correct beneficiary in a rural setting. For the urban scenario however a different criteria will have to be devised. The committee in its report on Delhi  had suggested that the basis for determination as to whether a person is BPL or not should be based on the minimum wage payable to an unskilled workman in the area i.e to say if the person is earning below this amount he would be deemed to be below the poverty Line.

 

6.     The Committee is also reiterating its suggestion/recommendation made in the Delhi report that the concept of APL be abolished. Reference may be made to the said report for a detailed analysis of the said recommendation and it may be added that the committee in its visit to various states ate has found that the concept of APL is serving no useful purpose for food security but is instead only a diversion tool.

 

 

 

 

 

 

 

Chapter 10

 

COMPUTERISATION IN THE STATE OF JHARKHAND

 

10.1        The general awareness of the beneficiaries, high literacy and strong grass root level organisation (PRI) and strong vigilance Committee are the important factors to reduce leakages. Strong Political commitment and careful monitoring by the bureaucracy are the key elements for successful PDS. Leakages happen due to wrong identification, theft and diversion of grain by officials involved in distribution system.  It requires strong political commitment and participation of the people in delivery process. The nexus between officials, the mafia and ration shop dealers must be broken in order to reduce leakages. Monitoring and accountability of TPDS can be improved by automation and computerisation of the PDS system. TPDS needs to be strengthened by means of the effective use of IT including introduction of unique biometric smart cards.

 

10.2        On 4.3.2006 the Department of Information Technology, Jharkhand Mantralaya issued tender documents inviting bids from interested parties for the design and implementation of a web based application software which was to be developed for the Department of Food, Public Distribution and Consumer Affairs, Govt. of Jharkhand. It was proposed that the said application should be accessible to clients through the internet.

 

10.3        The invitation for technical and commercial bids, a copy of which has been supplied to this committee, mentions the fact that the system as operating in the State, is plagued by problems such as,

 

(i)          bogus ration cards,

(ii)        inefficient monitoring and improper distribution of foodgrains at various levels,

(iii)      lack of transparency and accountability regarding the delivery of essential commodities,

(iv)      the delay in transmission of information at all stages.

 

10.4        In order to deal with the aforesaid problems, the Department required that a complete web-based management information system (MIS) be developed which would provide the application software for a centralised database and processing and decentralised input and output.  The document states that the proposed application software should provide for,

 

(i)          the management of inventories at various levels, from the FCI to retail level,

(ii)        registration and renewal of households for the issue of ration cards,

(iii)      registration and licensing of dealers,

(iv)      allotment of essential commodities by the FCI to dealers,

(v)        monitoring and distribution of ration to households,

(vi)      identification of beneficiaries,

(vii)    monitoring demand, allocation and off-take of essential commodities,

(viii)  maintaining details of inspections, cancellation, legal action against PDS dealers and government functionaries.

 

10.5        It was proposed that the software would be tested on a trial basis for three months in one district and after its acceptance by the Department of Information Technology it would be replicated in other districts of the State.

 

10.6        On 7.4.2008, Shri. R.S. Sharma, Secretary, Information Technology, informed IANS (Indo-Asian News Service) that as a part of the ongoing effort to computerize the PDS operations in the State, a web based software has been developed, through which information about the dispatch of commodities from the godowns of the Food Corporation of India to the Fair Price Shops in the State will be displayed on the official web site of the Government. The web site will also display the list of the BPL beneficiaries, prices of the essential commodities.

 

10.7        In the State of Jharkhand there are 32,620 Villages. Out of which 14,667 numbers of villages have been electrified (i.e. only 45% of villages)[27]   However by year 2010, 29000 villages will be electrified as per the Rajiv Gandhi Electricity Scheme. The work is in progress and is undertaken by NTPC and DVC ( Damodar Valley Corporation ).

 

10.8        The Committee was informed that there are Pragya Centres at Panchayat level which are computer equipped and the data about various schemes of Government is maintained there. Pragya Centres are the Computer Centres which were opened by the State Government at Panchayat level.  Presently there is no internet facility in Jharkhand Blocks. Only the district NIC office has internet facilities.

 

10.9        Mr. Deepak Kumar, District information officer NIC,Ranchi  informed that District offices are set up at every District of Jharkhand. He informed that Connectivity is available at the BIC Centers through V-SAT and Lease line of BSNL. He further informed that NIC district office handles computerization of revenue records and other Government Schemes like NREGA. PDS data has not been computerized but can be done in the same manner as they do for NREGA scheme. He showed the NREGA Software and the various heads under which data is recorded for that scheme.

 

10.10      It is observed that The BPL list developed by Ministry of Rural development for 2002-2007 has been completed in many districts and is made online. The computerization has been done by NIC. Many districts of Jharkhand have their own official website set up  by NIC e.g.  Sahebganj, Chatra, Palamu, Ranchi, gumla, Logardaga, latehar, dhanbad,Giridh, chaibasa etc

 

10.11      The Committee visited the godowns of BSFC at Kudru and found that there was no electricity available in the godowns.  The Committee is recommending end to end computerization of the Public Distribution System which requires that the BSFC godowns should be electrified.  It is not that there was no electricity available in the area.  It appears that efforts have not been made by BSFC for getting electricity connection for their godowns.  It was also observed that there was no internet connectivity in the BSFC godowns.  There was not even a telephone line.  The provision of a telephone line with broadband internet connection in the godowns is essential for having end to end computerization of the Public Distribution System.

 

10.12      Observations

 

10.12.1   A perusal of the bid document reveals that the system that is proposed to be implemented is a very basic one, which depends largely on manual data entry at each stage of the distribution chain.  Thereby the objective of reducing human intervention is clearly not achieved in the system and therefore the possibilities of diversion through incorrect entries continue to exist, the only difference being that instead of maintaining the information on paper it is being fed into a computer and posted on the Internet.

 

10.12.2   The system developed on these lines which although will be able to deal with the lack of transparency and access to information by posting data on the Internet, does not address the extremely crucial aspect of verifying the authenticity/integrity of the data which is being manually fed and stored on the central database. 

 

10.12.3   Furthermore, the system clearly does not provide for weeding out of bogus cards.

 

10.13      Issues to be examined:

              Level of access to telecommunication services in the rural/remote areas of the State, i.e. is necessary infrastructure are available at the district/block/panchayat levels.

 

10.14      The proposed computerization program of the State of Jharkhand does not even meet the basic requirement of the PDS Control Order 2001 which requires that the State Government shall ensure monitoring of the functioning of the Public Distribution System at the FPS Level through the computer network of the NIC installed in the District NIC Centre. For this purpose, computerized codes shall be issued to each FPS in the district.

 

10.15    The proposed system only enables the people to find the dispatch status of ration items for the various fair price shops. It, however, has no provision for monitoring of the functioning of the fair price shops. The system does not envisage computerization of the godowns, Automation of the weighing systems at the godownsor or the computerization of the distribution system at the fair price shops.

 

10.16      The Committee is submitting a separate report on computerization of the Public Distribution System, which may be read as a part of this report.

 

 

 

 

 

*****

 

 

 

 

 

 

Chapter 11

RECOMMENDATIONS

 

1.                 Public Distribution System (PDS) is corrupt and inefficient.  It has to be totally revamped. To stem the rot end to end computerization would appear to be the only answer. The Committee has submitted a separate comprehensive report on Computerization.  Immediate action is required to be taken on that report. In order to ensure that there is no diversion, complete automation of the system and linking of weighment systems with automated allocation and distribution mechanism is of utmost importance. Transparency in allotment of food stock to be sold at FPS can be brought about by the computerization suggested by this Committee in its report on Computerization. 

 

2.                 Immediate steps are required to be taken to take over the activities of Bihar State Food Corporation (BSFC) by the State or by constituting a separate Corporation of its own.

 

3.                 There is  an acute  shortage of storage capacity of PDS food grains with the FCI and with the State.  Ideally the State should have a storage capacity of 2.5 times of the monthly allocation.  The shortage of storage space results in delays and backlog and also damage to the food grains.  There is an urgent need to build more storage capacity for PDS food grains. The Committee found large quantity of insect infested grain in a godown in Ranchi. The State must immediately remove infested grain from the godowns and have the godowns disinfected.

 

4.                 The officials of the FCI and the Managing Director of BSFC both stressed the need for more railway terminals for unloading food grains from the railway rakes.

 

5.                 Considering the viability of FPS cannot possibly be achieved by increasing the commission payable to the FPS owners, the licensees of FPS must be have a kirana shop running along with that.  This fact, in fact should be incorporated in the license as a condition. District Magistrate has to ensure that FPS owner running kirana shop does not indulge in money lending and if there is any incident of money lending, license should be revoked.

 

6.                  No fresh licenses have been granted in the State since 1997 as the number of existing licensees is already in excess of the required numbers.  The number of FPS licensees should be rationalized.  Fresh licenses should be granted in a transparent manner in accordance with rules framed for grant of license.  The license for an FPS should be granted to an existing kirana shopkeeper. As stated above running of a kirana shop should be a condition for FPS license.

 

7.                 Whenever there is a vacancy, it should be properly advertised.  The applications received should be scrutinized by the officials of the Food & Supply Department.  Objections should be invited from the general public and the bodies responsible for vigilance.  Spot verification should be done by the officials of the Department.  Thereafter eligible applicants should be considered for grant of license by a departmental committee constituted for the purpose.  Political influence in the grant of license should be scrupulously avoided.

 

8.                 In order to add to the viability of the FPS to some extent,

a)        There should be a minimum of 500 cards attached to every FPS in the urban area and 300 cards with every FPS in the rural area.

b)       Door step delivery of the food grain has to be provided by the State without any charge in order to minimize the expenses of the licensee on transportation and handling.  Timely delivery of food grains in full quantity has to be ensured.  The licensee should be required to deposit the cost of food grains only when the food grain is available for delivery.

c)        The licensee should be allowed to deposit the money through e-banking to eliminate the cost towards bank charges.

d)       The state has introduced the distribution of PDS food gains on fixed dates.  It violates the provisions of the PDS Control Order 2001 and also the directions issued by the Supreme Court.  The FPS licensee must keep the shop open on all days except weekly holidays and other recognized holidays during the prescribed period

 

9.                 The beneficiary must have the facility of drawing his ration in installment as provided in the PDS Control Order.

 

10.             Vigilance Committees at all levels should be constituted immediately and their functioning should be ensured by fixing the responsibility on the officials.  Secretary Food & Supply Department should be made responsible for ensuring that the meetings of the State level committees take place on schedule.  The District Collector should be responsible for ensuring the meetings of the District level committees.  The Block Development Officer should be made responsible for the meetings of the Block level and FPS level committees.  Rules should also provide that any member who does not attend two consecutive meetings is likely to be replaced.

 

11.             There should be special squads in every district for enforcement of the Public Distribution System.  The squads should be responsible for conducting raids, surprise checking, conducting prosecution, recommending departmental action against the officials, taking action against the defaulting officials under the Essential Commodities Act 1955, Prevention of Corruption Act 1988 and the Indian Penal Code.

 

12.             Special courts may be set up by the State in consultation with the High Court to expedite the disposal of cases under the Essential Commodities Act.  Specially trained prosecutors should be deployed for prosecuting such cases. 

 

13.             A  Public Distribution System Grievance Commission has been set up by the State ostensibly under the cover of an order of the Supreme Court when there is no such order directing the constitution of the Commission.  Moreover, it has not served any purpose. The Public Distribution System Grievance Commission should be wound up. The Committee recommends setting up of an Ombudsman/Regulator.

 

14.             There should be a complaint mechanism and the State should set up a 24 hrs helpline where the beneficiary can lodge his complaint.   There should b e a system of the follow up of the complaint.  The Ombudsman/Regulator should look into the complaints received through the helpline and take appropriate action against the defaulting licensees and the officials concerned.

 

15.             District Collector shall be duty-bound to ensure that PDS food grain is delivered in every FPS shop in rural area. This would be in addition to the duty cast on the district authority responsible for implementing the Public Distribution System to ensure that the stocks allocated to the fair price shops are physically delivered to them within the stipulated time.

 

16.             There is need to revisit income criterion prescribed for the BPL category.  The government/MORD committee may also consider using consumption criteria that is to say calorie intake per person per day as an indicator of poverty as the minimal objective to be achieved by TPDS is to ensure that every poor person gets two square meals a day.  This is recommended in as much as a purely income based criteria may  in certain circumstances be misleading in terms of actual determination of persons below the poverty line.  However, the estimation of poverty should not be made on a criterion which is less than the minimum wage fixed by the state for agricultural labourers or the wage fixed by the Central Government under Section 6 pf the NREG Act 2005.   It may not be out of place to point that several states the minimum wage for agricultural labour is in the range of Rs.100 and even the NSSO in its estimate fixes the estimate of expenditure at Rs.20 per capita per day which works out to Rs.100 per day per family (a family is taken as 5 members).

 

17.             The above mentioned Committee set up by the MORD is essentially to devise a criterion for identifying the correct beneficiary in a rural setting.  For the urban scenario how ever a different criteria will have to be devised.  The Committee in its report on Delhi had suggested that the basis for determination as to whether a person is BPL  or not should be based on the minimum wage payable to an unskilled workman in the area i.e. to say if the person is earning below this amount he would be deemed to be below the poverty line. 

 

18.             Once such guidelines are in place, as suggested in the Delhi report, a time-bound door-to-door drive, to identify genuine beneficiaries and eliminate wrongful exclusion and bogus cards, is to be conducted  by a reputed independent agency.  The agency will also simultaneously conduct a consumer satisfaction  survey, which will enable  the department  to bring  in necessary improvements to the system.

 

19.             The State  has formulated a scheme of giving rice to BPL category @ Rs.2/- per Kg.  This would increase the demand for BPL cards.  There must be careful monitoring of the scheme to ensure that extra BPL cards do not result in depriving real beneficiaries who are the targets under the TPDS.  The scheme seems to be driven by political motivation rather than any desire to ensure food security.  Increasing BPL population in this unrealistic manner is a drain on the resources of the State and may also act as a serious disincentive to hard work on the part of the population of the State.

 

20.             Public Distribution System food grains should be transported only in tamper proof bags like HDPE bags instead of jute bags and PDS commodities should be supplied to the beneficiaries in small packages of 5 Kgs. and 10 kgs.

 

21.             Mobile vans for distribution of PDS food grains have proved their utility in many States.  They can be used in the State for distribution of food grains wherever necessary.

 

22.             A proper vigil has to be kept on transportation of the PDS food grains.  GPS system can be used for tracking movement of trucks carrying PDS food grains.    State of Chhatisgarh has adopted this system.  Similarly Indian Oil Ltd.  is also using this technology.  The State of Jharkhand can adopt this system till computerization as suggested by the Committee, is achieved.

 

23.             The Committee is reiterating its suggestion made in the Delhi report that the concept of APL be abolished or in any case be limited.

 

24.             The whole Public Distribution System must work on zero tolerance basis.  No one can be permitted to draw any benefit of any nature by diverting the PDS food grains meant for the poor.  It must also be understood that FPS is not meant for the benefit of the owner of the FPS but for the beneficiaries.

  



[1] http://www.jharkhandonline.gov.in/

[2] Speech of Arjun Munda in National development council meeting in new Delhi, June 2005, http://planningcommission.nic.in/plans/planrel/pl51ndc/51jharkh.pdf

[3] http://www.jharkhandonline.gov.in/

[4] Annual Report 2007-2008, pg 29 , Department of Food and Public Distribution (Government of India)

[5]Annual Report 2007-2008, pg 27 , Department of Food and Public Distribution(Government of India)

[6] Document supplied by Department of Food , Public Distribution  and Consumer Affairs during meeting with Secretary dated22.12.08

[7]http://fcamin.nic.in/dfpd/EventListing.asp?Section=Storage%20and%20Warehousing&id_pk=3&ParentID=0

[8] http://www.jharkhand.gov.in/New_Depts/foodc_AreaLevell.html

[9] http://www.jharkhand.gov.in/New_Depts/foodc/foodc_foodprob.html.

[10] http://www.jharkhandonline.gov.in/New_Depts/foodc/foodc_fr.html (dtd. 21.1.2009)

[11] Statement of Nandu Prasad in Public Hearing dated 24th December 2008 in Hazaribagh.

[12] http://www. Jharkhand.gov.in/New_Depts/foodc_foodprobs.html.

[13] Annagada Public Hearing dated 23rd December’08, Visit Report of Jharkhand.

[14] CAG Annual Report of Jharkhand , Chapter III at page 57

[15] CAG Audit Report 2005-2006

[16] Presentation given by Department of Food , Public Distribution and Consumer Affairs  during visit (22.12.2008-24.12.2008)

[17]  CAG Annual Report 2005-2006 .

[18] CAG annual Report for state of Jharkhand for year 2005-06

[19] Eleventh Five Year Plan report of Planning Commission at pg 137

[20] Extract of Report of the Working group on PDS and food security for the 10th Five Year plan (2002-2007)

[21] Visit Report of Jharkhand dated 23rd December 08 and 24th December 08

[22]  PEO, Performance Evaluation of Targeted Public Distribution system-2005, (at pg vi and 50).

[23] CAG, Audit Report (civil and Commercial) for the year ended 31st March 2006

[24] CAG report of the State of Jharkhand  (food and civil supply department) 2005-06

[25] CAG report of the State of Jharkhand( food and civil supply department) 2005-06

[26] Section 6 of the NREG reads : (1) Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central Government may, by notification, specify the wage rate for the purposes of this Act ;

Provided that different rates of wages may be specified for different areas:

Provided further that the wage rate specified from time to time under any such notification shall not be at a rate less than sixty rupees per day.

  (2) Until such time as a wage rate is fixed by the Central Government in respect of any area in a State, the minimum wage fixed by the State Government under section 3 of the Minimum Wages Act, 1948 for agricultural, shall be considered as the wage rate applicable to that area.

[27] http://www.jharkhandonline.gov.in/