Public Distribution System goes wrong

The Government of India has launched several initiatives towards ensuring food security to its citizens. They include the public distribution scheme (PDS), the mid-day meal program for school children, the National Rural Employment Scheme, and several others to help people below the poverty line. The well-founded plans lack the desired execution by the various governments in charge of these schemes. At the other end of the spectrum, there are millions of hawkers in all major cities termed illegal traders by the municipalities but serving the food needs of millions of urban poor and lower middle class. They are self employed serving a cause.

What is missing is an integrative, co-evolutionary innovation strategy based on end-to-end logistics and supply-chain that would lead to high service quality food solutions to millions of people by combining innovations in several of the ecosystem elements and also their convergences.

A Recipe For Riot

Consider the several schemes announced by various governments over the years that were meant to put an end to hunger or eliminate poverty. What is singularly lacking in all these ideas is the execution of an ideal supply-chain that could have functioned at a national level.

The PDS operates under the joint responsibility of the Central and State governments. The Central government, through the Food Corporation of India, has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the state governments. The operational responsibility including identification of families below the poverty line, and issue of ration cards rests with the state governments.

The Mid-Day Meal Scheme was launched by the Ministry of Human Resource Development with effect from August 15, 1995, for the benefit of students in primary schools. It involves provision of lunch free of cost to school-children on all working days. The key objectives of the program are: protecting children from classroom hunger, increasing school enrolment, improved socialization among children belonging to all castes, addressing malnutrition, and social empowerment through provision of employment to women.

The Department of Food & Public Distribution makes allocation of annual requirement of food grains under the scheme to the Department of School Education & Literacy, Ministry of Human Resource Development. About 120 million children are so far covered under the Mid-day Meal Scheme, which is the largest school lunch program in the world.

The State of Karnataka introduced the provision of cooked meals in 2002. It has successfully involved private sector participation in the program. One successful venture is Akshaya Patra, which started with leadership from ISKCON. The Foundation gets a corpus from the state government but meets a major share of its costs with donations from private corporations and individuals in the city.

The program is managed with an ultra modern centralized kitchen that is run through a public/private partnership. Food is delivered to schools in sealed and heat retaining containers just before the lunch break every day. The program contains one of the best menus in school meal programmes in India with tasty sambar, rice, vegetables and some curd on most days.

National Rural Employment Generation Act (NREGA) is an important Central law having a large demographic and geographical spread. It assures livelihood guarantee to the entire population above 18 years of age residing in rural areas of the country. The act gives the right for 100 days of guaranteed employment in manual/unskilled work in rural areas.

What Went Wrong

All the four schemes mentioned above are good initiatives but all of them have issues in implementation. The main problems with the system are the inefficiency in the targeting of beneficiaries and the resulting leakage of subsidies. Several opportunities to manipulate the system exist with widespread collusion across the supply chain.

The Planning Commission had the following to say on the PDS system in its 2005 report, “For every Rs. 4 spent on the PDS, only `1 reaches the poor.” The Supreme Court-appointed vigilance committee has slammed the PDS for “rampant corruption, black market and diversion involving a vicious cartel of bureaucrats, fair-price shop owners and middlemen”. Similar comments are available in the press for NREGAS and mid day meal programs.

The lower income groups in the country spend a higher proportion of their income in making purchases from hawkers mainly because their goods are accessible and affordable. Had there been no hawkers in the cities the plight of the urban poor would be worse than what it is at present. In this way one section of the urban poor, namely, hawkers, helps another section to survive. Hence though hawkers are viewed as a problem for urban governance they are in fact the solution to some of the problems of the urban poor. But hawking is not a licensed activity in most cities.

Over the past few decades there has been a substantial increase in the number of hawkers in the major Indian cities. Mumbai has the largest number of street vendors numbering around 250,000. Kolkata has more than 150,000 street vendors. Ahmedabad and Patna have around 80,000 each and Indore, Bangalore and Bhubaneshwar have around 30,000 street vendors. The Cuisines by the sidewalks is a successful story from Kolkata which can be copied to advantage.

Recognition of hawking as a profession would also benefit the municipalities. They would be able to officially enforce levies on hawkers. This would provide additional revenue for cash strapped municipalities. They would also be entitled to loans from public institutions thus reducing the hold of moneylenders over them.

An Integrated Supply Chain

The business processes can be identified, streamlined, standardized and automated or semi-automated using IT and sensor networks. Modernization and integration of PDS, midday meal program, vocational training programs under NREGAS, hawkers, and small food outlets using communication technologies would lead to a blockbuster industry serving the poor and creating millions of jobs for not so well educated. NREGAS can be used for training chefs, cooks, hawker owners, PDS employees, school employees, etc. Standardized and automated kitchens and IT enabled and GPS equipped push carts can be developed. The push carts can be built following standardized design and equipped with solar or gas run refrigerators and ovens. The entire process can be monitored, executed and controlled using a call center (See diagram).

The missing link here is sophisticated kitchens with chefs and cooks equipped with automated cookers, refrigerators, and ovens distributed all over the city. The location and capacity of the kitchens can be determined using standard optimization techniques from the demand estimates. Now the supply chain consisting of the PDS and kitchens and the schools participating in the midday meal program needs trained manpower. The vocational training centers can be funded through the NREGAS to train cooks, chefs, sales people, servers and millions of other jobs required for the supply chain operate well, given the perishable nature of the supply chain.

Depending on the demand one can find the optimum number and locations of the kitchens to serve the community. The processes can be streamlined using sensor networks, smart cards, cloud computing, and mobile vans equipped with heaters and refrigerators. One can use modern kitchens such as the Akshaya Patra with the help of NGOs and corporate. This new ways of meeting the food security will get rid of the prevalent corrupt practices and can be made smart and green.

The governance model for this supply-chain can be worked out with an assemblage of NGOs, Corporate, Government and Associations. Making this work is a challenge but the rewards and impact would be tremendous. It would help to give a new direction to the current system which is corrupt and not working. The new system can be designed using new technologies such as smart cards, wireless, smart kitchens technologies, new designs for push carts equipped with refrigerators and ovens, hygiene indicators and several others. In fact a McDonald’s kind of outlets can be opened to avoid traffic issues with push carts.

The Impact

Given the perishable and hygienic nature of the supply-chain, the products are made in the day and ends by night. This requires careful demand forecasting, routing and rerouting of the supplies and monitoring the anti-social activities. The program needs trained logistics and IT manpower and millions of other jobs. Several product and process innovations are needed and there are opportunities for several small and big private entrepreneurs. This is a unique opportunity for people from all walks of life: Governments, NGOs, Big business houses and small entrepreneurs and micro finance and other FIIs to come together to make this program successful.