1. The Hon’ble Supreme Court passed an order in Writ Petition (Civil) No.196/2001 constituting Central Vigilance Committee to be headed by Mr. Justice D.P. Wadhwa, a retired Judge of the Supreme Court to be assisted by Dr. N.C. Saxena, Commissioner earlier appointed by Court. The Committee was further required to look into the maladies affecting the proper functioning of the Public Distribution System (PDS) and to suggest remedial measures. In particular, the Committee was asked to focus on (a) The mode of appointment of the dealer; (b) the ideal commission or the rate 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 the food stock to be sold at the shops.
2. Hon’ble Supreme Court also directed that “while dealing the question of mode of appointment, the Committee shall also suggest as to a transparent mode in the selection of the dealers. The Committee shall also indicate as to how more effective action can be taken on the report of the Vigilance Committee already appointed”.
3. The Hon’ble Supreme Court’s direction was issued initially for the Government of Delhi to be followed on all India basis. This report deals with Delhi.
4. The constitution of the Committee was notified on 1st December, 2006. Since infrastructure was not in place for quite some time, the Hon’ble Supreme Court by an Order dated 17th April 2007 extended the time for the Committee to submit its report by 31st August 2007.
5. The committee, in pursuance of the Hon’ble Supreme Court’s order commenced its work in right earnest in spite of many hurdles and hiccups. The Committee held a series of meetings with all stake holders, invited representation/petitions from members of public, visited fair price shops and godowns of the Foods Corporation of India to examine their functioning, held consultations with the officers of the Department of Food and Supplies, Govt. of NCT of Delhi; Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India; Food Corporation of India (FCI); Delhi State Civil Supplies Corporation; National Informatics Centre (NIC); individuals connected with NGOs; and representatives of FPS (Fair Price Shop) Dealers Associations. The Committee also examined official and Court records connected with the items falling under its purview; and saw the demonstration of the systems sought to be put in place in Chhattisgarh, Karnataka, Maharashtra and Rajasthan. The Committee also studied various reports including that of Planning Commission, Dr. Kamal Nayan Kabra, Abhijit Sen etc.
6. To understand the functioning of the Helpline to record the grievances of the consumers, the Committee also visited Delhi University where Consumer Helpline is functioning. The Committee also looked at the Helpline of the Lt. Governor, Delhi. The Committee also visited office of the Circle FSO (Food and Supply Officer) to understand the functioning of Circle Inspector, F.S.O. and the distribution of food stock to individual FPS. Committee was told by the officers of FCI that in Delhi the food grains are directly lifted from FCI godowns and transported to the FPSs. This is a unique feature in Delhi as in other States food grains are lifted from FCI godowns firstly go to State godowns from where distribution to FPSs is made. The same system as in Delhi is prevalent in Mumbai and Thane regions. There are no State godowns in these two cities. The Committee, therefore, examined the system of PDS particularly transportation in depth in Mumbai and held discussions with the officials of the Department of Food & Civil Supplies of Mumbai.
7. Distribution of food in PDS is the joint responsibility of Central and the State governments. Central Government’s responsibility is for procurement, storage and transportation of bulk allocation of food grains to the State Governments through Food Corporation of India. Operational responsibilities, including identification of families below poverty line, issue of ration cards, door-to-door delivery, allocation of food grains and supervision & functioning of FPS rest with the State Governments.
8. PDS is inefficient and corrupt. There is diversion and black-marketing of PDS food grain in large scale. Subsidized PDS food grain does not reach the poor who desperately need the same. These poor people never get the PDS food grain in proper quantity and quality. FPS owner who is aware of bogus/fake ration cards uses these for black marketing of PDS food grains. False entries are made in the sale register/stock register and the accounts manipulated and fudged. PDS food grain is not given to the cardholder as per his entitlement in full quantity and yet he is made to pay excessive price than prescribed.
9. For combating corruption and strengthening the PDS there has to be an element of zero tolerance. The Committee has suggested induction of modern technologies i.e. computerization which may help in tying the loose ends and reduce the abuse of the system. PDS needs immediate reforms. There exists unholy nexus between the fair price shop owners, the inspectors and other officers in the hierarchical chain. Then the transporter is the other factor in this corrupt set up. A flourmill at times also becomes party to this structure built on corruption.
10. Four instances will show this nexus:
(i) 28 Fair Price Shops were visited by the Committee and all of them were found violating the Supreme Court Order and Control Orders and Department’s/DSCSC instructions in one form or the other.
(ii) Media team of a TV Channel followed a truck carrying PDS foodgrains on 25th April 2007 from Mayapuri Depot of FCI (Food Corporation of India). The truck was intercepted in the middle of night at the Delhi –Shaharanpur border. It was found to contain SFAs (Specified Food Articles) meant for five Fair Price Shops located in different circles in Delhi. An FIR was lodged with the Police Station, Nand Nagri on 26th April, 2007. SFAs and the truck were seized and the driver of the truck arrested. Fair Price Shops were sealed during night itself but when opened the following day these were found to contain bags of SFAs purportedly delivered to these shops on 25th April 2007 itself. It was a mystery as to how SFAs could be there in the FPSs when the SFAs loaded in the truck meant for those very FPSs had been seized in the night of that very day. Not only that. In case of one FPS even the FSO stated to have signed the opening of sale meaning thereby that SFAs had arrived in the shop and were ready for distribution to ration cardholders.
came to the knowledge of the Committee
that private godowns were spread all over Delhi at places like Pandav Nagar,
Karol Bagh, Alipur etc. where transporters would take the SFAs for storing in
those godowns instead of delivering to
FPSs and from there diverting the SFAs either to the open market or the flour mills. Committee noticed such a godown in Karolbagh and another at Bakoli Industrial Area, Alipur. Here, on the basis of information provided by the Legal Team of the Committee the godown at Bakoli was sealed by the Enforcement Branch of the Department. The team had noticed that wheat/rice meant for PDS was being stored in the godown. The Committee continued to inquire from the Department as to the steps taken to find out the ownership of the godown and the food grain stored therein and also as to who brought the food grain there. It is stated that at 3.00 A.M. on 3.8.07 Commissioner Food Supplies & Consumer Affairs received a telephone call that goods sealed in the godown were being taken out. Action was taken by the Enforcement Branch at 9.00 AM and by that time seven trucks loaded with foodgrains had already left. FIR was lodged with Police Station Alipur. Enforcement Branch found that that one of the two shutters of the godown was opened by removing the shutter hook in such a manner that the seal on the lock remained in tact. On inspection of the godown 1453 bags of wheat/rice meant for supply through PDS were allegedly been stored therein. This incident is also a pointer to the fact as to how SFAs could be found in the 5 shops where sting operation was carried by the TV channel on 25.4.2007.
(iv) On 7.8.2007, FCI informed the Commissioner, Food Supplies and Consumer Affairs, and General Manager, DSCSC that there has been diversion of PDS food grains by transporters/contractors engaged by DSCSC for lifting PDS food grains (wheat) from Mayapuri Godown of FCI. The letter gives details of the Truck Nos., FPS Nos., release order with date, number of bags loaded in the truck and the date of delivery of the food grain. These food grains were delivered to the four trucks on 2.8.2007 by FCI and sting operation was carried out by a TV channel which was telecast on 6.8.2007. The letter of the FCI mentioned that the trucks had been shown in the telecast diverting PDS food grains to private mills instead of delivering at fair price shops.
11. These four instances are enough to show the rampant corruption in the Department. Can anyone believe that the Department is unaware of godowns and such gross malpractices and illegalities? The only explanation is all round complicity of FPSs, transporters and the corrupt official of the Department/DSCSC.
12. The Committee examined the amount of wheat available in the open market during the year 2006 and also consumption of wheat in flour mills in Delhi. The consumption of wheat by the flour mills was more than the quantity of wheat available in the open market. It looked to us quite obvious that this shortfall of wheat available in the open marked and that consumed by flour mills was met through diversion of wheat meant for PDS. In fact in one sting operation by a TV Channel, a truck loaded with PDS foodgrains was apprehended while heading towards a flour mill regarding which prosecution is also pending for quite sometime.
13. Corruption has cropped up in the system because of various reasons. These could be attributed in part to the fact that the rules and circulars are not properly made widely known and there is no public awareness. It may be desirable to compile all the relevant rules/orders/laws pertaining to the PDS and the consolidated document to be known as PDS Code and given all possible publicity. The enforcement is weak and rather non-existent and then the foremost is that the public as a silent spectator who tolerates corruption. Moreover, corruption flourishes where there is no accountability. Modern technology can check corruption by enforcing the rules and regulations by making the system more transparent and reducing the scope of discretion on the part of officials in their dealings with PDS. Another cause for corruption in the PDS is due to the failed criminal Justice system. Criminal justice mechanism has to be strengthened. Moreover, there has to be a separate and independent mechanism to investigate the cases relating to infraction of PDS laws/orders.
14. Present Anti Hoarding Cell consisting of one Sub Inspector, one Head Constable and One Constable of Delhi Police under the Enforcement Wing of the Department is functioning for the last 6 years. In spite of various complaints against it, no replacement has been made by the Commissioner of Police even though request was made by the Commissioner, Food & Civil Supplies. In fact an explanation be called from Commissioner of Police as to why all this period the officers of the Anti Hoarding Cell were not recalled and new officers placed at the disposal of the Department. As a matter of fact, letter of the Central Government in this respect written on the request of the Committee has been ignored by the Commissioner of Police. PDS is no ordinary programme. PDS is an intrinsic part of Government’s policy for management of food economy in the country. TPDS has been launched by the Government with special focus on the poor. Importance of distribution of foodgrains under TPDS cannot be gainsaid and this must be realized by the Police.
15. On visits by the Committee to various Circle Offices it was found that the Food Supply Officer and Area/Circle Inspector are not aware of the circulars/instructions that are issued by the Department from time to time. In one case Circle Inspector was unaware of the existence of the Atta Chakki almost surrounded by three Fair Price Shops, when the existence of Atta Chakki is against the norms laid by the department. In yet another case Circle Inspector was unable even to locate the Fair Price Shop in his own area. The Committee also found that in many Circle Offices computer installed were not working and officers did all the work manually.
16. Transporters have been found diverting SFAs. Private godowns for hoarding SFAs have been found. Visits to various FPSs show violation of the instructions including the directions of the Hon’ble Supreme Court. There have been failures on the part of both, the Department and DSCSC, to monitor SFAs and distribution thereof to the ration card-holders on account of mal-practices indulged by the FPSs in connivance with the officials.
17. Five Regional Conferences of Food Secretaries of all the States were held during 2005-06. One Conference at National level of Food Ministers/Food Secretaries of all the States under the Chairmanship of the Central Minister was held to review the performance of TPDS and all the States/UTs were requested to take immediate necessary steps to curb leakage/diversion and also to improve the performance of TPDS. Consequent upon these Conferences, a Nine Point Action Plan was drawn and circulated to all the States/UTs to take necessary measures to curb leakage and to strengthen TDPS which includes review of BPL/AAY lists; strict action against the people responsible for mismanagement of PDS; involvement of Panchayati Raj Institutions (PRIs); display of BPL and AAY lists in the FPS; display of all information on website about the allocation and off-take of foodgrains; door step delivery of foodgrains; making timely availability of foodgrains to FPS; training of members of FPS level Vigilance Committees and computerization of TPDS operations. Vide letter dated 19th July 2006 State Governments were asked to send a detailed Action Taken Report on the Nine Points Action Plan.
18. State Government of NCT Delhi did furnish Status Report but the action appears to be as vague as it could be. The first point of the Nine Point Action Plan was that State should undertake a campaign to review of BPL/AAY list to eliminate ghost ration cards. On this Action Taken Report of the State Government is as follow:
“This Department has already & successfully completed the renewal of APL cards in all over Delhi. Before the renewal no. of APL cards were 36,26,824 and after renewal the card position decreased to 21,64,392. The matter of renewal/review of BPL/AAY cards is still under consideration of the Government.”
19. Action Taken Report by State Government is not what was required. It is rather an artful reply saying that State Government has verified APL Cards when the Action Plan required review of BPL/AAY cards to eliminate the ghost ration cards. It is known fact that there are bogus/fake ration cards in BPL including AAY category. It is so because of excessive subsidized amount to these categories, the difference between subsidized price and the market price being much more. The Committee asked the Commissioner Food Supplies and Consumer Affairs as to why steps were not taken to verify BPL/AAY cards. She said that the proposal has been sent to the State Government. It is difficult to appreciate and understand why State Government is sitting on such an important proposal.
20. There are various reports on the functioning of the PDS. It is a known fact that PDS has dubious distinction of being one of the most corrupt sectors in the country. Corruption is all pervasive in the entire chain involved in PDS. It continues to remain a formidable problem. It is true that some officers are doing good job but then most of the functionaries under them in the Department are typically callous and resort to corrupt practices. It is in fact a cancerous growth and has to be chopped off. Patch-work methods will not do. Central Govt. gives a whopping sum of Rs.28000 crores to subsidise food for the poor but till the recommendation given by the Committee are put in place poor will go on suffering at the hands of corrupt officials, dishonest FPS owners, treacherous transporters and possibly to a large extent by unscrupulous millers as well. The Committee has therefore, considered the appointment of a Regulator/Ombudsman, an independent agency to act as a watch-dog. Committee is of the view that that can be done under the Control Order. However, if required, Control Order can be suitably amended.
21. FPS owners have their own grievances that they do not receive food grains in time and in full quantity. They say that running the shop is not profitable and they earn very meager income. But then why there is a race to get an FPS? Obviously it is diversion of food grains to earn easy black money, which is a more profitable function. Similarly transporters quote minimum rates to carry food grains from FCI godowns to FPSs at a price less than the cost incurred by them. Why they do so? The answer is again obvious that they indulge in diversion of food grains. Other complaint of the shopkeepers is that Delhi State Civil Supplies Corporation (DSCSC) charges excessive amount per quintal for transporting the food grains from FCI godown to the FPSs while the actual transportation cost works out much less and in that process even earns profits. FPS owners queried as to why there were burdened with the administrative costs of DSCSC.
22. Before the recommendations of the Committee are put into place three immediate steps are required: -
i. Directions be issued to the State Government as well as to the Department of Food and Supplies, Govt. of Delhi, to set into motion immediate verification of BPL/AAY cards. This verification is to be done by an independent agency of repute within a fixed time bound period.
ii. Since both the Department and DSCSC failed in monitoring the movement of the trucks carrying PDS foodgrains, it is necessary that a third independent agency be given this charge. It is recommended that an officer of the Higher Judicial Service in the suppertime pay scale of Rs.22,850/- to Rs. 24,850/- be deputed in consultation with the Chief Justice Delhi High Court to the State Government in Department of Food & Supplies with full authority to exercise functions under the Essential Commodities Act 1955 and PDS Control Order 2001 and the Control Orders. He should be provided with requisite infrastructure.
iii. Present members of the Anti-Hoarding Cell be sent back and Anti Hoarding Cell be reconstituted to be headed by an Officer of the rank of DCP, who should have full authority to search & seizure, investigation and launching of prosecution. He should have a full force of subordinate officers of his choice and he should be provided with a flying squad.
23. Central Government gives to Delhi State Govt. subsidy amount of about Rs.375 crores annually for PDS. This amount, which is meant for the food for poor, has to be properly utilized. State Government must take all possible steps to clampdown on corruption in PDS.
24. During the course of meetings with officials of the State Government as well as Central Government, it was brought to the notice of the Committee that foodgrains are being allocated for a number of social welfare scheme, such as Mid-Day meal Scheme, Sampoorna Gramin Rozgar Yojana (SGRY), SC/ST Hostels, Annapoorna, National Programme for Adolescent Girls (NPAG) and Emergency Feeding Programme, etc. These programmes are being handled by different State Govt. agencies. However, the foodgrains are issued through the Department of Food and Public Distribution. The State Government may distribute all the foodgrains meant for different Schemes through FPS to make the distribution more accountable. It is to be noted that there are reports giving merits and demerits of TPDS. Some reports recommend universal PDS. It is not within the brief of the Committee to suggest as to whether TPDS has failed to achieve its purpose or if universal PDS is more advantageous. These are all policy matters.
25. The Committee is aware of the fact that there could be a situation where a household suffers from a drastic fall in its income below Rs. 49, 284/- thus entitling it to subsidised food under BPL category. The Committee has not given any recommendations with respect to such a household. However, the Committee would suggest that a person suffering shortfall in income should be given similar benefits as to a BPL ration cardholder. For this that person can apply to the department for a BPL ration card and can also take advantage of the Helpline. It has to be understood that there cannot be any limit to the number of BPL households. The Committee has though recommended periodical review of the BPL list. A certain household may no longer require assistance.
26. Based on the work done by the Committee, and in compliance with the Hon’ble Supreme Court’s order, a detailed report covering all issues tasked to the Committee is submitted. The report is in three parts. Part I is an executive summary of the Report. Part II contains the main body of the Report and examines each of the issues, duly chapterised, at length, identifying the weaknesses of the existing PDS in Delhi and makes detailed recommendations for toning up and streaming its functioning in Delhi. Part III of the Report contains relevant documents annexed to the Report.
27. The Committee has been able to work with a skeletal staff and has been able to submit its report within the time prescribed by the Hon’ble Supreme Court. In this process stupendous work has been done by the Legal Team headed by Mr. Dayan Krishnan, Advocate and assisted by advocates – S/Shri. K.G. Gopalakrishnan, T.V.S. Raghavendra Sreyas, Gautam Narayan and Pritam Baruah. Though the effort of the whole team has been remarkable, yet Shri T.V.S. Raghavendra Sreyas needs a special mention for the work he did with extraordinary zeal.
28. For the Committee to complete its task in the prescribed period it got full support and cooperation from the officers of the Central and State Governments and others. The Committee expresses its thankfulness to:
Shri. Nanda Kumar, Secretary, Food & Public Distribution, Ms. Anita Chaudhary the then Joint Secretary, Department of Food and Public Distribution, Government of India, and presently Additional Secretary, Ministry of Home Affairs, Government of India, Shri S.K. Srivastava, Joint Secretary, Ms. Anju Nigam, Director, Shri Rajiv Ranjan, Director and Shri Kalyana Sunderam, Dy. Secretary, all of Deptt. Of Food & Public Distribution, Govt. of India;
Ms. Neeta Bali, Chairperson, Delhi State Civil Supplies Corporation;
Ms. Nutun Guha Biswas, Secretary-cum-Commissioner, Department of Food Supplies & Consumer Affairs, Govt. of Delhi; Shri. D.P. Dwivedi, Additional Commissioner (Enforcement), Department Of Food & Civil Supplies, Govt. of Delhi;
Shri. Alok Sinha, CMD, FCI, Shri Asit Singh, G.M., FCI,;
Dr. B.K. Goirala, DG, National Informatics Centre, Dr. Ranjana Nagpal, Shri S.K. Sinha, and Shri C.L.M. Reddy, Senior Technical Directors in National Informatics Centre;
Prof. Sriram Khanna of Consumer Helpline, Delhi University;
Ms. Ila Patnaik and Dr. Ajay Shah, Senior Fellows of National Institute of Public Finance and Policy.
29. Shri S.C. Rawal, former Registrar of Delhi High Court, performed the functions of the Secretary to the Committee. He has been perfect in his job. He handled all the correspondence on behalf of the Committee and looked after the administration and staff attached to the Committee.
30. When the Committee was constituted, it had desired the services of the Police personnel. However, after a great deal of correspondence Shri L.S. Sandhu, Additional Commissioner of Police on his transfer from Andaman & Nicobar joined the Committee on 26th April 2007. His working in the Committee was extremely handicapped in the absence of supporting police staff.
31. The Hon’ble Supreme Court while constituting the Committee referred appointed Dr. N.C. Saxena as Member Convenor entitled to honorarium to pay and allowance of a Joint Secretary to the Government of India. However, the Committee has not been able to get any useful assistance regularly from Dr. Saxena. The Committee nevertheless had the benefit of the sixth report submitted by Dr. N.C. Saxena and Mr. Harsh Mander, to the Hon’ble Supreme Court in December 2005. The Committee also considered a note sent by Dr. Saxena giving suggestions for the Committee to consider. It appears to the Committee that the hands of Dr. Saxena are full in various activities and he has not been able to find sufficient time to assist the Committee. Dr. Saxena did not avail of any benefit for having been appointed to assist the Committee from the Government.
32. At the suggestion of Dr. Saxena the name of Shri Biraj Patnaik was recommended for appointment in the rank of Director in the Committee. On the recommendations made by the Committee Shri. Biraj Patnaik was appointed by the Government as Consultant in the consolidated amount Rs26,000/- p.m. However, Shri Biraj Patnaik declined to accept any remuneration and he said he would assist the Committee on an honorary capacity. Shri. Biraj Patnaik is, no doubt, a knowledgeable person and in the beginning he did show enthusiasm in assisting the Committee but after sometime this waned and his visits to the Committee became occasional. The Committee, therefore, could not be benefited from his experience and knowledge on the subject. It also appears that Shri Patnaik has various functions/activities/assignments in hand and travels a lot. The Committee does however, recognize the help Shri. Biraj Patnaik rendered to the Committee in the initial stages.
33. Last but not the least, the Committee expresses its deep gratitude to Shri. R.U.S. Prasad, former Secretary to the Government of India and also former Member of TDSAT (Telecom Disputes Settlement & Appellate Tribunal) with Justice (Retired) D.P. Wadhwa as Chairperson. Shri. Prasad has rendered purposeful assistance to the Committee. His experience has been extremely rewarding to the Committee. The very presence of Shri Prasad in the Committee in an honorary capacity on the request of the Chairman, facilitated the task of the Committee.
34. There has been overlapping on various points in the Report and that is so because attempt was made to make each chapter self-contained.
35. It is possible that there might have been some inadvertent errors, which have crept into the Report, but on the whole the Report is an attempt to present the correct picture of the ground realities keeping in view the directions of the Hon’ble Supreme Court.
36. Sum and substance of the recommendations are annexed to this Overview.
21st August 2007 (JUSTICE D. P. WADHWA)
CENTRAL VIGILANCE COMMITTEE
ON THE PUBLIC DISTRIBUTION SYSTEM
 TPDS (Targeted Public Distribution System) was launched by the Central Government in 1997 to target its focus on the poor population
 i. States should undertake a campaign for Review of BPL/AAY lists to eliminate ghost ration cards.
ii. Strict action should be taken against the guilty to ensure leakage free distribution of foodgrains. In this respect information asked for under clause 9 of PDS Control Order, may also be sent.
iii. For sake of transparency involvement of elected PR members in distribution of foodgrains, licences be given to SHG, Gram Panchayats, cooperatives etc.
iv.BPL/AAY lists should be displayed on all FPSs.
v. District-wise and FPS-wise allocation of foodgrains should be put up on web sites and other prominent places, for public scrutiny.
v.Wherever possible, doorstep delivery of foodgrains should be ensured by States, instead of letting private transporters/wholesalers to transport goods.
vi.Timely availability of foodgrains at FPS level and fixed dates of distribution to ration card holders should be ensured.
vii.Training of members of FPS level Vigilance Committees should be ensured.
viii.Proposals for funding training can be sent to the GOI.
ix. Computerization of TPDS operation be undertaken. Proposals may be sent to GOI