Anna Chakra and SCAN for Reforming PDS System | 07 Dec 2024

Source: PIB 

Why in News? 

Recently, the Union Minister of Consumer Affairs, Food and Public Distribution and New & Renewable Energy, launched “Anna Chakra” and the SCAN (Subsidy Claim Application for NFSA) portal with the aim to modernize India's Public Distribution System (PDS). 

• This will enhance the efficiency of the PDS supply chain and streamline the subsidy claim process, benefiting millions of citizens reliant on food security programs. 

What is Anna Chakra and the SCAN System? 

• About Anna Chakra:: 
  • Anna Chakra is a pioneering tool for optimizing the supply chain of the PDS  in India.  
  • It has been developed in collaboration with the World Food Programme (WFP) and the Foundation for Innovation and Technology Transfer (FITT) at IIT-Delhi. 
  • This initiative employs advanced algorithms to identify optimal routes for the transportation of food grains.  
• Key Features: 
  • Enhanced Efficiency and Cost Savings: Optimizes the PDS logistics network to ensure timely delivery of essentials while achieving annual savings of Rs 250 crores through reduced fuel consumption, time, and logistics costs. 
  • Environmental Sustainability: Minimizes transportation-related emissions by reducing transportation distance by 15-50% and contributing to a reduced carbon footprint. 
  • Wide Coverage: Optimization assessment spans 30 states, benefiting approximately 4.37 lakh Fair Price Shops (FPS) and 6,700 warehouses within the PDS supply chain. 
  • Seamless Integration: Linked with the Railways' Freight Operations Information System (FOIS) via the Unified Logistics Interface Platform (ULIP) and integrated with the PM Gati Shakti platform, enabling geo-location mapping of FPS and warehouses.
• About SCAN System: 
  • The SCAN portal is designed to streamline the subsidy claim process for states under the National Food Security Act (NFSA) 2013.  
  • It modernizes PDS operations for better fund utilization, aligns with government tech initiatives to reduce leakages, and enhances food security for 80 crore people with environmental and economic benefits. 
• Key Features: 
  • Unified Platform: Provides a single-window system for states to submit food subsidy claims, streamlining the process for all stakeholders. 
  • Automated Workflow: Ensures end-to-end automation for the release and settlement of subsidies, enhancing efficiency and transparency. 
  • Rule-Based Mechanism: Utilizes rule-based processing for claim scrutiny and approval by the Department of Food and Public Distribution (DFPD), expediting settlements. 

What is PDS? 

• About: 
  • The PDS is an Indian food Security System established to address food scarcity by providing foodgrains at affordable prices 
  • It operates under the National Food Security Act (NFSA), 2013, ensuring food security for nearly two-thirds of India’s population based on Census 2011 data. 
• Nodal Ministry: 
  • Ministry of Consumer Affairs, Food, and Public Distribution. 
• Evolution of PDS: 
  • The Public Distribution System (PDS) in India originated during World War II as a wartime rationing measure and evolved through several phases.  
  • In the 1960s, PDS expanded in response to food shortages, with the establishment of the Agriculture Prices Commission and the FCI to ensure domestic procurement and storage. 
  • By the 1970s, PDS became a universal scheme, and in 1992, the Revamped Public Distribution System (RPDS) aimed to strengthen and expand PDS reach in remote areas.  
  • The Targeted Public Distribution System (TPDS), launched in 1997, focused on the poor by categorizing beneficiaries into Below Poverty Line (BPL) and Above Poverty Line (APL) households.  
  • The Antyodaya Anna Yojana (AAY), launched in 2000, further targeted the poorest families.  
• Management:  
  • It is jointly managed by the Central and State/UT Governments, with distinct responsibilities. 
  • The Central Government, via the Food Corporation of India (FCI), handles procurement, storage, transportation, and bulk allocation of foodgrains. 
  • State Governments manage local distribution, identify eligible households, issue ration cards, and supervise Fair Price Shops (FPSs). 
• Commodities Distributed:  
  • PDS primarily provides wheat, rice, sugar, and kerosene. Some states also distribute items like pulses, edible oils, and salt. 

What Initiatives Have Been Taken to Reform the PDS System in India? 

• One Nation One Ration Card (ONORC):  
  • ONORC enables portability of ration cards across the country. It allows beneficiaries to access subsidized food from any FPS nationwide, benefiting migrant workers and seasonal laborers.  
  • It enhances inclusivity, transparency, and efficiency through biometric authentication and digital payments. 
• Universal PDS: 
  • Tamil Nadu has implemented a Universal PDS, where every household is entitled to subsidized food grains, ensuring comprehensive coverage across the state. 
• Technology Related PDS Reforms: 
  • SMART-PDS Scheme: In 2023, the Government of India approved the SMART-PDS scheme for the period 2023-2026.  
    • It aims to maintain and upgrade the technology used in the End-to-End Computerization and Integrated Management of PDS (ImPDS). 
  • Computerized Fair Price Shops (FPS): Many FPS have been computerized through the installation of Point of Sale (POS) machines, which authenticate beneficiaries and record the quantity of subsidized grains issued. This automation reduces the scope for fraud and ensures transparency in distribution. 
  • Aadhaar and Direct Benefit Transfer (DBT): Aadhaar integration in TPDS has enhanced beneficiary identification, reducing errors and eliminating duplicates.  
    • DBT ensured cash transfers to beneficiaries, offering flexibility to purchase food grains from the open market while reducing reliance on ration shops. 
  • GPS and SMS Monitoring: GPS tracking has been used to ensure that food grain trucks reach designated FPS without diversion, while SMS alerts notify citizens about the dispatch and arrival of TPDS commodities, promoting transparency and public participation. 

What are the Challenges Related to PDS? 

• Identification of Beneficiaries: There are significant inclusion and exclusion errors in identifying beneficiaries. Many eligible households are left out, while non-eligible households receive benefits. 
  • Studies have shown that the PDS suffers from nearly 61% error of exclusion and 25% error of inclusion. 
• Corruption and Leakages: Corruption and leakages are widespread, with food grains being diverted to the open market or sold at higher prices. This undermines the effectiveness of the system. 
  • A recent study by International Food Policy Research Institute (IFPRI) and the Indian Council for Research on International Economic Relations (ICRIER) highlights that approximately 28% of subsidized grains meant for the poor in India are lost to leakage, resulting in an estimated financial loss of Rs 69,108 crore to the government. 
• Storage and Distribution: There is a lack of adequate storage facilities, leading to wastage and spoilage of food grains. Additionally, the distribution network is inefficient, causing delays and losses. 
• Quality of Food Grains: The PDS often distributes inconsistent and poor-quality food grains, and its focus on free rice and wheat fails to meet the diverse nutritional needs, particularly of children under five. 

Way Forward 

• End-to-End Digitalization & Monitoring: There is a need to use blockchain and IoT to track the supply chain and implement real-time stock updates. AI analytics can help detect irregularities and prevent theft. 
  • Upgrade FPS with biometric authentication, electronic weighing scales, and digital payment systems, also there is a need to implement QR codes for quality certification and create a public monitoring dashboard. 
• Portable Benefits & Migration Support: Strengthen One Nation One Ration Card (ONORC) with better interstate coordination and real-time tracking. Facilitate temporary ration card registration for seasonal migrants. 
• Storage Infrastructure Modernization: Upgrade to modern silos with IoT-based quality monitoring. Develop decentralized, tech-enabled storage and promote public-private partnerships for infrastructure. 
  • Establish disaster response protocols with prepositioned stocks and mobile PDS units. 
• Nutritional Security: Turn select FPS into nutrition hubs with pulses, oils, and fortified items. Introduce E-Rupee nutrition vouchers for vulnerable groups and include millets in PDS, as in Karnataka and Odisha.