CENTRAL VIGILANCE COMMITTEE ON PUBLIC DISTRIBUTION SYSTEM

REPORT ON THE STATE OF HARYANA

Justice Wadhwa Committee on Public Distribution System

STATE OF HARYANA INDEX Chapters A B 1 2 3 4 5 6 7 8 9 10 11 Preface Broad Overview Introduction Legal Regime Distribution of Foodgrain Mode of Appointment of Dealers Viability Identification of BPL Beneficiaries Computerisation Enforcement, Vigilance and Complaint Mechanism Distribution of wheat flour/atta to PDS beneficiaries Recommendations Appendix 71-80 81-83 65-70 Topics Page no. 1-9 i- xiv 1-2 3-17 18-31 32-39 40-48 49-54 55-59 60-64

PREFACE In Writ Petition(C) No.196/2001 Peoples Union for Civil Liberties V/S Union of India and Ors., Honble Supreme Court of India by Order dated the 12.7.2006 constituted a Committee to be headed by me to look into maladies affecting the proper functioning of the Public Distribution System (PDS) and to suggest remedial measures. The operative portion of the order reads as under: After having heard learned counsel for the parties, we find that there is practically no monitoring over the sums allotted for the Public Distribution System (in short PDS) by the Central Government, and its utilization. The amount involved we are told is in the neighborhood of Rupees Thirty Thousand Crores annually. Certain suggestions have been given by Mr. Colin Gonsalves, learned senior counsel as to the modalities to be adopted in such cases. At the present stage we feel it would be necessary to constitute a Central Vigilance Committee headed by a retired Judge of the Court to be assisted by Dr. N.C. Saxena, the Commissioner earlier appointed by this Court. We requested Mr. Justice D.P. Wadhwa to head the Committee. The Committee shall look into the maladies which are affecting the proper functioning of the system and also suggest remedial measures. For this purpose the

1.

Committee shall amongst other things, focus on:a) b) The mode of appointment of the dealers, The ideal commission or the rates payable to the dealers, and

c)

Modalities as to how the Committees already in place, can function better,

d)

Modes as to how there can be transparency in allotment of the food stocks to be sold at the shops.

While dealing with the question of the 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. It goes without saying that the same shall be in addition to the legal remedies available to any citizen in setting law into motion. We request the Committee to give its report within period of four months so that further instructions/directions can be given. The Committee would invite suggestions from general public, organizations and would consider the suggestions, if any received in the proper perspective. Honble Courts direction was initially given for the Government of Delhi to be followed on an all India basis.

2.

3.

Committee submitted report on Delhi on 21.8.2007. By order dated 10.01.2008, Honble Court, while accepting the report, directed the Committee to undertake a similar exercise in terms of earlier order for the entire country.

4.

5.

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 Honble Court again and again. It was only after a peremptory Order dated 25.8.2008 was passed by the Honble Court that the Department started taking steps for creating necessary infrastructure. It was only thereafter that the The Honble Court Committee could start functioning in right earnest.

extended the time for submitting the report till April 2009.

6.

The Committee submitted its report for the States of Uttarakhand, Jharkhand, Orissa and Karnataka. Thereafter, the Honble Court has been pleased to extend the time further till December 2009. The Committee has since submitted the report on the State of Andhra Pradesh, Bihar, Gujarat and Rajasthan. The Honble Court has further extended the tenure of the Committee till 30.6.2010The Committee is presently submitting its report on the State of Haryana.

7.

The Committee has already submitted a separate comprehensive report on Computerization of PDS. Some States have shown interest towards computerization of PDS. It is the mandate of the Public Distribution State Governments shall ensure System (Control) Order 2001 that

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 Centres. For this purpose computerized codes shall be issued to each FPS in the district. Nothing appears to have been done towards this.

8.

PDS is undoubtedly the largest food distribution network of the kind in the world. While procurement, storage in FCI godowns and allocation of food grain to the states is in the hands of the Central Government, distribution

is done through the Fair Price Shops licensed by the State after identifying BPL and AAY population as per the estimation fixed by the Planning Commission.

9.

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 but the whole system is built 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 (during the course of the visit of the Committee to various places it was found that an equal and perhaps more corruption is present in the distribution of kerosene oil). The system lacks transparency, accountability, monitoring and enforcement. Survey is not being conducted regularly and properly, with the result that people Above Poverty Line (APL) have been issued Below Poverty Line (BPL) cards and those eligible for BPL cards have been ignored.

10.

There is also a menace of bogus cards. Immediate measures are required to reduce diversion of food grains. Delivery systems under the PDS have to be improved so that the actual beneficiary gets its due entitlement at fixed price, fixed quantity, fixed time and of wholesome quality. Innovative methods are required to improve the system. The whole system has to be totally revamped and modern technology appears to be the only answer. Rather it is a matter of deep regret that in a surplus State of wheat like Haryana there is large scale of diversion of PDS food grains meant for the poor.

11.

Haryana and Union Territory of Chandigarh are in the process of introducing, on a pilot basis, a smart card data base system to deliver food items under the PDS. Project is to be financed by the Central

Government. Through smart card, Central Government aims to increase transparency and remove corruption from the much maligned PDS. It is stated that in Haryana about 53 lakh people will be issued the smart card. Central Government have recently constituted a Unique Identification

Authority of India (UIDAI). The mandate of UIDAI is to issue unique ID number to every resident of the country. It is stated that if PDS

authorities, in their domain make UID number of the ration card holders and their family members as mandatory, they can clear up their data base of bogus ration cards. UIDAI would re commend that all State

Governments should start working and actively participate with the UIDAI so as to clean up their data bases and improve their delivery system. 12. In answer to a question that about 1.5. crores bogus ration card holders were milking the PDS and could UID help such situations, Mr. Nandan Nilekani, Chairman, UIDAI, replied UID by itself will not solve the issue. The application of UID in a given context will solve it. If a state decides to have UID in all its ration cards, then somebody who has a ration card with the UID cannot come again on another ration card with another UID. So UID will ensure there are no duplicates. We are providing a capability to agencies to re-engineer their public service deliveries but the decision to re-engineer has to be theirs. 13. There is a complete mess in the state in the functioning of PDS and the whole system is mired with corruption. After the Release Order is issued by District Supply Officer to CONFED to lift food grain from FCI or other agencies, there is no system of checking if the food grain reaches the FPS and it is allotted to the beneficiaries in right quality, quantity and in time. There is no check if the FPS has issued all the PDS food grain allocated to it and without their being any check Release Order for the next month is issued as a matter of course. 14. CONFED is misfit for handling distribution of PDS food grain. It has no trucks of its own. Tender process for appointing transporters is faulty.

Even the tenderers have no trucks of their own and they have to hire private trucks. These transporters quote rates which are less than the market rates. To illustrate on 6th March 2009 tender was issued and 6 applications were received. Within District 6.90 per quintal Out of district 11.50 per quintal. The rates of transportation in the previous year were Rs.13 per quintal for within district and out of district 20.50 per quintal. It is pertinent to The transporter names Hamida was

appointed in District Mewat and his rates for transportation of grain were:

mention that the rates for the previous year was double the rate of the current year. 15. No doubt that FPS is not a profitable proposition. But it is also apparent that the FPS owners are not interested in selling other grocery items from the shop. No amount of increase in commission even by 100%, to an FPS owner will make his shop viable for him to earn sufficient income. An FPS owner can certainly add to his income by selling grocery items from his shop but, it would appear, greed overtakes to make a quick buck from the black-market and to share his ill gotten income with corrupt officials, politicians and transporters. There is no prohibition from the State for the FPS owner to sell other non-PDS items from his shop. Diversion is

lucrative business considering the vast difference between the PDS foodgrain price and the market price. 16. Committee has suggested that in order to combat corruption and strengthening PDS there has to be a zero tolerance approach. Everything appears to be fine on paper but its implementation is faulty.

17.

During its visit to the State of Haryana, Committee visited State capital Chandigarh, eight districts Ambala, Kurukshetra, Rohtak, Faridabad, Mewat, Palwal, Bhiwani and Hissar. Apart from meeting officials of the State, FCI, State agencies, the Committee met a cross section of people.

These included NGOs, FPS owners, transporters and beneficiaries. The Committee also inspected FPSs, wholesale godowns, godowns of State agencies and FCI. Committee also visited offices of the Department of Food & Civil Supplies in some of the districts. The Committee got full cooperation from the officers of the State Government, State agencies involved in the procurement and distribution, CONFED (the authorized wholesaler in the state) and FCI.

18.

Committee

records

its

appreciation

of

the

assistance

rendered.

Committee met various officials of the State Government. The Committee had public meetings at Kurukshetra, Rohtak, Mewat and Hissar. The

Committee also had informal meetings with various stake holders at Ambala, Faridabad, Palwal and Bhiwani. Due publicity had been given of the visit of the Committee. Committee wishes to record its appreciation

of the help and assistance rendered by Mr. A.R. Godara, Addl. Director, Department Food & Civil Supplies, Government of Haryana to the functioning of the Committee. Mr. Godara has however, retired before the Committee could finalise its report.

19.

Participants in the meetings with the officers at various places are as under:Chandigarh Mr. Dharamvir, Chief Secretary, Haryana; Mr. L.S.M. Salins, Principal Secretary (Food & Supplies Department); Mr. Avtar Singh, Commissioner, Food & Civil Supplies & CMD, CONFED; Mr. A.R. Godara, Addl. Director Food & Sup0p-lies and Mr. Arun Gupta, General Manager, Food Corporation of India. Ambala - Mr. Samir Pal Sarow, Dy. Commissioner, Mr. Y. Puran Kumar, S.P.; Mr. G.P. Sikri, DFSC; Mr. Surinder Arora, AFSO; Mr. Brham Pal Rana, Chairman, Zial Parishad; Karnail Singh, Distt. Manager, CONFED;

Mr. Vinod Kumar, DM(B), CONFED, Chandigarh and Mr. Sandip Singal, D.M, FCI, Karnal. Kurukshetra Mr. Narinder Singh, Addl. Deputy Commissioner; Mr, A.R. Godara, ADFS; Mr. Ashok Bansal, SDM Thanesar; Ms. Manjula

Dahiya,DFSC; Mr. Dhan Singh, D.M.,CONFED; Mr. B. Devanand, D.M., FCI; Mr. Vinod Kumar, GM(B), CONFED, Chandigarh and Mr. Prem Singh,BFSO,Ambala City. Rohtak Mr. P.C. Meena, Dy. Commissioner; Mr. A.S. Mann, A.D.C.; Mr. A.R. Godara, A.D.F.S.,CMD; Mr. Vinod Kumar, G.M. CONFED,

Chandigarh; Mr. Parmodh Sharma, D.F.S.C.; Mr. D.K. Singla,D.M. CONFED; Mr. K.C. Garg, D.M.,FCI; Mr. Harbans Lal, Manager Procurement,FCI and Mr. Mahavir Sharma, Asstt. Registrar,G.M Coop. Store. Faridabad Mr. Barjinder Singh, Dy. Commissioner; Mr. Pushpender

Singh Chauhan, SDM; Mr. A.R. Godara, Addl. DFC, Chandigarh; Mr. Vinod Kumar, GM, CONFED; Mr. Ram Avtar, DFSC; Mr. Anil Malik, DM, CONFED, Faridabad and Mr. K.K. Barua, Area Manager, FCI. Mewat (Nuh) Mr. Mehtab Singh, Dy. Commissioner; Mr. S.S. Dalal, Addl. Dy. Commissioner; Mr. Atul Dwivedi, SDM; Mr. Inder Pal B ishnoi, SDM; Mr. K.K. Goyal, DFSC and Mr. Ashwani K. Gaur, Dy. Director. Palwal Mr. M.K. Mahajan, Dy. Commissioner; Mr. Ram Niwas, DSFC; Mr. Shankar Lal Gupta, AFSO; Mr. Amrik Singh, DSP and Mr. R.D. Mehra, Distt. Manager, CONFED. Bhiwani Mr. Vikas Gupta, Dy. Commissioner; Mr. R.C. Bidhan, ADC; Mr. Azad Singh, DFSC; Mr. A.K. Goel, Dy.DF&SS(HR),Ch.D; Mr. Kamal Singh DPRO; Mr. K.K. Varsmnei, DPO & ADC; Mr. Dharam Pal Singh, Manager(D),FCI; Mr. L.R. Jain, Area Manager,FCI, Hissar; Mr. Subhash Singh , Distt. Manager, HAFED and Mr. T.K. Mittal, D.M., CONFED.

Hissar Mr. O.P. Sheoran, Dy. Commissioner; Mr. Amardeep Jain, SDM; Mr. D.P. Singh, City Magistrate; Mr. Pankaj Nain, ASP; Mr. Dharmvir Goyat, Distt. Food & Supply Controller; Mr. D.C. Sharma; DFSO; Mr. Subhas Sihed, Asstt. Food & Supply Officer; Mr. S.S. Bishn oi, Distt. Manager, CONFED; Mr. B.S. Bhati, Area Manager, FCI; Mr. Jaivir Singh, Asstt. Controller Legal Meteorology and Mr. Jaipal Singh, Inspector, Legal, Meteorology. 20. Members of the Committee who visited the State are Ms. Meenakshi Chauhan, Ms. Naomi Chandra and Mr. Shohit Chaudhry (being members of Legal Team), Mr. K.K. Mittal, Director and Mr. J.K. Bhutani, Section Officer. Mr. S.C. Rawal, a former Registrar of Delhi High Court and appointed as Secretary by the Chairman, has been performing functions of the Secretary of the Committee. Dr. N.C. Saxena, however, could not

offer any assistance to the Committee perhaps due to his other engagements.

21.

The Committee is submitting its report which has been divided into various Chapters like distribution of food grain, appointment of FPS dealers, viability, identification of BPL, wheat flour (atta), coupon system, diversion of foodgrains, vigilance, enforcement & complaint mechanism and

computerization . Overview has been given of the PDS in the State and recommendations made. An attempt has been made to make each Chapter self-contained and there is possibly a repetition at various places. Delhi (Justice D.P Wadhwa) Chairman Central Vigilance Committee on Public Distribution System

Broad Overview
1. There are 21 districts in the State of Haryana. There are 9570 (2751 Urban and 6819 Rural) Fair Price Shops (FPS) catering to 54,32,815 ration cards. The population of the State of Haryana as per 2007 census was 2.39 Crores and the projected population as on 31.10.2008 was 2.44 Crores. As per the Planning Commission there are 7.29 lakh families living below the poverty line in the State. However, the survey revealed that there are about 11.97 lakh (BPL + AAY) families below poverty line. The State of Haryana is a wheat surplus State. 2. The Central Vigilance Committee visited the State of Haryana from 5 th 12th, August, 2009 and 29th November to 1st December, 2009. Chandigarh and discussed various issues concerning PDS The Committee during the visit met the officials of the State Government in in the State. The Committee also studied of the functioning of the Public Distribution System in the following districts of the State- Ambala, Kurukshetra, Rohtak, Faridabad, Mewat, Palwal, Bhiwani and Hissar. The Committee interacted with the State Government officials, District officials, Officials of FCI, CONFED, Consumers, FPS dealers, NGOs, Self Help Groups, Consumer Organizations and Media etc., to assess the working of the PDS in the State. The Committee found that Public Distribution System in the State has failed miserably. There is a large scale diversion from wholesale distribution to retail distribution. 3. It seems that the Public Distribution System in the State needs to be analysed by the senior level functionaries of the department and drastic

changes need to be done to make the PDS in this food surplus State workable. During the visit the Committee examined the following aspects of the PDS regarding the Implementation of the Government Rules and Regulations and Control Order and the compliance of the directions of the Honble Supreme Court concerning PDS :i. Distribution of Food grains. ii. Mode of appointment of FPS dealers. iii. Viability of FPSs. iv. Functioning of Vigilance Committees. v. Enforcement and complaint mechanism. vi. Identification of Beneficiaries. vii. Issuing of ration cards. viii. Role of officials of the Department at different levels concerning PDS. ix. Computerisation. 4. During the visit of the Committee public meetings were organized at different places to know the grievances of stake holders concerning PDS. The views expressed by the people during these public meetings are mentioned at the end of the report as Appendix. 5. On the basis of the observations and findings the Committee has made some recommendations in the report which are enumerated in separate chapters. The Committee has analyzed various aspects affecting PDS in the State in different Chapters which are as under:6 Distribution and Transportation of the Food grains :-

6.1

The State of Haryana is a wheat surplus State. The Central Government under its decentralized procurement policy has allowed certain agencies of the State Government to procure wheat on its behalf. The FCI is the agency of the Central Government for procurement of food grain. In Haryana the State Food and Supplies department, HAFED, FCI Haryana Region, Haryana Warehousing Corporation, CONFED and Haryana Agro Industries Corporation have been allowed to do procurement on behalf of the FCI in the ratio of 20%, 33%, 20%, 9%, 9%, and 9% respectively. All these agencies procure wheat from the farmers who come to the Mandis set up by Haryana Agricultural Marketing Board and store it in their godowns.

6.2

The State agency CONFED is responsible to lift the foodgrain from the procuring agencies and to deliver the same at the doorstep of the Fair Price shops. The CONFED does not have its own trucks and it appoints transporters through Tender process. The transporters appointed through tender process usually do not have sufficient trucks and usually they have one or two trucks of their own and rest of the trucks is hired by them. The Committee observed that the transporters quote less than the actual rates to get the Contract. This clearly gives inference that they recoup the losses by diverting the foodgrain.

6.3

For Instance in Mewat District, On 6th March 09 tender was issued and 6 applications were received. The transporter named Hamida was appointed and his rates for transportation of grain were Within District 6.90 per quintal Out of District- 11.50 per quintal

6.4

The rates of transportation in the previous year were Rs. 13 per quintal for within district and out of district 20.50 per quintal. It is pertinent to mention that the rates for the previous year was double the rates of the current year. The transporter himself quoted such low prices and later in August he refused to Continue as transporter even at the cost of forfeiting his security amount.

6.5

Committee on perusal of transporters file observed that the transporters usually have one or two vehicles. Officer of CONFED informed the Committee that as the number of vehicles are not sufficient the transporter hires trucks for supply of foodgrain to FPS. As the private trucks are hired by the Transporters to carry and transport foodgrain the question arise that why the private truck owners transports the foodgrain in lesser rates than the market rates. These facts give direct inference about the Diversion of the foodgrains during transportation. Similar facts were observed while perusing transportation files pertaining to other districts.

6.6

Further, it is to be noted that no officer of CONFED accompanies the truck while transportation of the foodgrain from procurement agency to the fair price shops. There is no monitoring by the CONFED officers on the transportation of foodgrains. Once the foodgrain is lifted and loaded in the truck from the godowns of the procuring agencies it is totally in the hands of the transporters. The transporter and whether he delivers the full quantity at fair price shop or not.

6.7

The Department officials are duty bound to check whether the foodgrain have reached the fair price shop or not. The department has to certify

that the 100 % foodgrain has been delivered by the transporter and give the same to the CONFED before the bills pertaining to same is cleared. However, the Committee observed that the department officials are not checking the delivery of the foodgrain by CONFED appointed transporters at the fair price shops. This clearly indicates the connivance of CONFED officers, department officials and the transporters. diversion of foodgrain. 6.8 The Committee observed that the shops are not opened for distribution of food grains and other items through out the month. It was also observed that the time schedule adopted by the Department for distribution is not proper. The time schedule for deposit of the money by the FPS dealers, issuing of release orders, lifting from the State agencies by CONFED and distribution by CONFED to the FPS dealers has been fixed in such a way that the actual duration for distribution for the FPS dealer is only 10-15 days. This is in violation of the direction of Honble Supreme Court. 6.9 Presently the APL beneficiaries entitled to 35 kg foodgrain however, it was found that they are not getting any foodgrain. The BPL beneficiaries in some districts are getting 28 kg and in some districts they are getting 31 or 32 kg foodgrain. However, AAY beneficiaries are getting 35 Kg foodgrain. 6.10 In the State of Haryana there large number of labours from different States keep migrating in search of work. The Committee feels that there should be some provision of food security for the migrant labour who come in search of job or work from their native places temporarily. They Strict Penal actions should be taken against officers and transporters if found guilty of

could be registered as temporary residents and provision should be made for providing PDS food grains etc. to them also. 6.11 The Committee during the visit to the State came across many cases of damaged/ rotten foodgrain supplied to the consumers under PDS. It was informed by the District Officials that generally the quality is proper however at some places the grain is damaged because of the nonavailability of storage space with the procurement agencies in Haryana. They have to store the foodgrains sometimes in the open. The Committee feels that State Government must take immediate steps for creating storage space so that the foodgrains is not damaged and the proper quality is available to the consumer though PDS. 7 Quality Control / Joint Sampling of food grain The Committee during the visit observed that joint sampling of foodgrain is not done by the agencies at the time of lifting of the food grains. No sample is provided to the FPS dealers. This is again violation of the Public Distribution System (Control) Order, 2001 which provides for the mandatory display of samples by the FPS dealer in his shop. The samples are essential to ensure that the same quality is being distributed by the FPS dealer which has been delivered by the wholesale agents. Though the clause 9(v) and 10 (1) imposes duty on FPS dealers and CONFED to display samples of foodgrains, same was found to be not followed all the districts visited by the Committee. It was observed that the provisions of the Control Order are not implemented properly and the officers responsible for monitoring the same shall be made accountable for such lapses. 8 Mode of Appointment of Dealers :-

8.1

As per Clause 2(k) of the Haryana Public Distribution System ( licencing and control Order, 2009 the District Food and Supplies Controller of the concerned district. Clause 2 (i) of the Haryana Public Distribution System (licencing and control Order, 2009 provides that the Lincence of a fair. The license of a fair price shop shall be granted for a minimum number of 600 ration cards not exceeding 1200 ration cards, but in rural areas a village shall be treated as one unit for this purpose and as such the license for the fair price shop may be issued even for less than 600 ration cards of the village.

8.2

The Haryana PDS control Order 2009 of the State provides that Licensing authority shall call for applications through local publicity and munadi in the local area of the Fair Price Shop. A committee comprising District Food and Supplies Controller, Inspector Food and Supplies concerned and the Sarpanch of village in rural area and District Food and Supplies Controller, Inspector Food and Supplies concerned and Municipal Councilor in urban area shall recommend to the licensing authority the name of the eligible applicant as per these priorities/ preference. However, it was observed by the Committee that the procedure of appointment of FPS dealer is vice versa. The persons having political links first get recommendations from the Sarpanch or Municipal councilor and apply for the licence. The department on obtaining the applications publicize the vacancy through

munadi which is mere formality. Such persons are given time to show list
of 600 families and on submission of the list he is given lincence. It is only on the basis of the resolution of Panchayat, the FPS dealership is given. It was also seen that in practice recommendations of local politicians, MLAs, Municipal Councilors, Sarpanch and other influential people are the only

qualification for getting FPS licences. Other conditions as prescribed in the Haryana State Control Order of 2002 and latest order of 2009 are not followed while granting the FPS dealership. No vacancy is advertised. 8.3 The provisions of the Haryana Control Order 2009 recognizes and gives legitimacy to political interference in appointment of dealers by making the Sarpanch and the Municipal Councilor as members of the rural/urban committees appointed for recommending the applicants for allotment of licences for Fair Price Shops. The Committee is of the view that political involvement in the grant of licences has to be completely eliminated. 8.4 Clause 2(h) Provides the eligibility condition for the applicant. Provides that a person having 10+2 or its equivalent qualification, not less than 21 years of age and is a resident of the locality for which the fair price shop license in applied for. However, in case of a Group like Self Help Group and Sakshar Mahila Samooh, the condition of 10+2 pass and age will not apply; The Order provides for preference to unemployed graduates while granting FPS licence. The Committee is of the view that as the FPS is not a viable unit giving preference to unemployed graduates serves no purpose. As the income of FPS dealer is not much they indulge in malpractices to make profits. 9 9.1 Viability of Fair Price Shops :During the visit to the State the Committee visited number of shops in various Districts. The Committee feels that stand alone FPS is not profitable. There was a general demand to increase the commission of

the FPS, at some places there was also a demand from FPS dealers that a fixed salary may be given to them for running the FPS. 9.2 The Committee is of the view that since any amount of increase in commission would not make an FPS viable, it is, therefore, necessary that FPS dealers should sell grocery items along with PDS items. The condition should be that in the Grocery / Kirana shop, the sale should only be non PDS commodities. The Committee feels that the condition should be put in the licence that FPS owner must have a running Kirana / Grocery shop. In case of default or non compliance with the condition, the FPS licence should be revoked. 9.3 Efficient retailing would require pre-conditions 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. 9.4 The Order provides for preference to unemployed graduates while

granting FPS licence. The Committee is of the view that as the FPS is not a viable unit giving preference to unemployed graduates serves no purpose. It is a well documented fact that the FPS owner is in business for the purpose of diversion or for political influence or other influence that he can wield by being an FPS retailer. There is massive corruption woven around it where the participants are the shop keeper, officials of the Department / Corporation, transporters and last but not the least the

politicians. The Committee is of the view that the reservation for various categories provided in the Haryana Public Distribution (Licensing and Control) Order, 2009 appears rather unnecessary. FPS licences should be allotted to persons of the locality who are already running kirana/ grocery shop or have the capability to do so. Though there is a clamour for allotment for FPS, the stand alone FPS does not rehabilitate or support sustenance of any category or gender. It rather breeds corruption. 10 10.1 Enforcement, Vigilance and Complaint Mechanism :There is no separate system of implementation of enforcement and vigilance in the PDS as currently there is no separate cell for the purposes of monitoring PDS. It is recommended that a separate division of enforcement and vigilance of PDS be started in the State in order to deal with the specific problems of PDS. 10.2 The rate, at which action is taken against the errant FPS dealers and errant officials, is abysmally low. Thus there is no effective deterrent to stop malpractice in PDS. It is necessary that there should be special squads for enforcement of PDS. The squads should be responsible for conducting raids, surprise checks, conducting prosecutions, recommending Departmental action against the officials and taking action against the defaulting officer under the Haryana PDS Control Order 2009, Essential Commodities Act 1955, Prevention of Corruption Act, 1988 and Indian Penal Code. The Haryana PDS control Order 2009 provides that if any Licencee contravenes any of the terms or conditions of the license or of any control order issued under the Act the licence shall be suspended immediately without giving any notice. The licensing authority shall take

strict action which included forfeiture of the security deposit in full and suspension of licence; cancellation of the license and forfeiture of the security deposit in full; or registration of criminal case as per provisions of the Act. However, it was observed that no action is taken by the officials against errant FPS dealers. PDS operation should be based on the principle of zero tolerance. Any infraction of the Rules and Regulations or Instructions should invite strict action not only against the FPS owner but also the concerned officials. 10.3 The Committee found that most of the FPS dealers do not have proper weights and mostly the certificates are obtained without actually checking the weighing machines. The officials of the Legal Metrology department should also be made accountable for any act of omission or commission in fulfilling their duties. 10.4 The State should set up Vigilance Committees at the State and District levels also to keep an eye on the Public Distribution System. Date, Place and time for the meeting of the committees should be fixed in advance. Vigilance Committees at various levels be strengthened by including the NGOs, Self Help Group, Consumer Organisations and the educated youth in the Vigilance Committee at various levels. The meetings of the Vigilance Committees must be convened regularly. 10.5 The Village/ FPS level committee should also meet regularly every month. Minutes of the meetings of the vigilance committees should be recorded. Follow up action should be reviewed in the next meeting.

10.6

There is no effective and systematic complaint redressal mechanism for the common people. In the absence of a customized complaint redressal system, most of the grievances of the common man go unheard and unattended, encouraging the corrupt practices by the dealers and the officials. It is recommended that an effective complaint redressal system for PDS related grievances be initiated wherein the beneficiaries may register and also follow up their complaints.

10.7

State should set up a 24 hours toll free helpline where a beneficiary can lodge his complaint. The toll free number should be printed or stamped on the Ration Card. There should be a system of the follow up of the complaints including the complaint. A post of Ombudsman/Regulator should be created for PDS. The Ombudsman/Regulator should look into complaints received through the helpline and take appropriate action against the defaulting licencees and the officials concerned.

11 11.1

Indentification of Beneficiaries During the visit to the State there was a general complaint that the deserving people are not having the ration cards and those who are well to do and prosperous are included the BPL category. There are large scale exclusion and inclusion errors in the survey done for identification of BPL families. Committee feels that to make the PDS purposeful it is most essential that survey should be done by an independent agency which can work without any political interference and the survey is conducted without any fear and favour. The Committee feels that Registrar General of India may be entrusted this work of identification since they have

necessary experience in such work and also be perceived as a neutral agency. 11.2 The Committee also feels that the State Government should have periodical checking of ration cards and there should be continuous process to weed out bogus cards as provided in para 2 of the Annexure to the Public Distribution System (Control) Order, 2001. It is also suggested that a list of the BPL families should be displayed at the FPS. 11.3 The committee was informed that the correct figures have not been collected during the a 2004 BPL survey due to which there was discontentment amongst the public. Hence the survey was cancelled and fresh survey was ordered. The fresh survey was entrusted to Exservicemen. This survey was completed in 2007. 11.4 As per the Planning Commission there are 7.29 lakh families living below the poverty line in the State. However, the survey revealed that there are about 11.97 lakh (BPL + AAY) families below poverty line. Since the number of BPL families found in the survey was more than the estimates of the Planning Commission, the State decided in year 2008 to treat 3.83 lakh families as State BPL. The BPL cards issued within the limits prescribed by the Planning Commission are named as Central BPL. By an order dated 04.09.2008 it was decided that the State will collect the APL and BPL allocation and distribute it amongst the Central BPL and State BPL equally at 35Kg.per month per ration card. The difference in cost between the APL wheat and State BPL wheat will be borne by the State. The quota of the BPL has since been reduced to 33 Kg. per family

per month. BPL card holders are given wheat @ Rs.4.84 per Kg. AAY families are being distributed 35Kg. wheat per month @ Rs.2.10 per Kg. 12 Use of ration card as an identity:The Committee during the visit to the State observed that ration card is not only used as identity card but is required for availing benefits under various schemes of the Government. This is in violation of the provisions of Public Distribution System (Control) Order, 2001 issued by the Central Government. The Committee feels that ration card should be de-linked from all other schemes and steps should be taken to ensure that it is not used as an identity card. 13 13.1 Awareness among Beneficiaries The Committee during the visit to the State found that there is lack of awareness in the people about their rights and entitlements. Committee is of the view that awareness is very important. 13.2 To create awareness among the people it must be ensured by the District administration that a press release is issued at the beginning of the month indicating the quantity issued to be FPSs, entitlement of various categories of the beneficiaries, rates of the commodities to be charged by the FPS dealer so that people can know their rights and entitlements. To further enlighten the peoples of their rights and entitlements, pamphlets, posters must be published and widely circulated. create awareness among the people. Local TV channels may also be requested to show all these above mentioned details on their scrolls to The for the proper functioning of the PDS

13.3

A Public hearing for PDS on the lines of the Lok Adalat ( Electricity/ telephone/ water) must be convened at a designated place, time and day every 2/3 months where general public can seek to resolve outstanding issues pertaining to the PDS. These may include those relating to their category / entitlements, non-issuance of the cards, bifurcation of cards, wrong inclusion of APL, complaints regarding under-weighment etc. PDS Lok Adalat so constituted should be presided over by District Judge or a Judicial Officer nominated by him not less than the rank of Additional Judge and should include the Collector of the District and the District Food and Supply Controller. A system of accountability must be put in place to ensure the implementation of decisions taken during these hearings.

14

Computerisation:The Committee during the visit to the State observed that the

computerization process has been started.

It was informed that the first

phase of computerization has been completed in most of the districts and the second phase is being implemented in 7 districts. The Committee feels that end to end computerization is essential for improving the Public Distribution System. The Committee has already submitted a detailed report on computerization to Honble Supreme Court for improving the functioning of PDS. State Government should take up the computerization of PDS on the lines as suggested by the Committee in its report. **************

CHAPTER 1 INTRODUCTION
1. Haryana lies in northern India and is bordered by the Indian states of Delhi, Rajasthan, Uttarakhand, Himachal Pradesh, Uttar Pradesh and Punjab. It has a population of 2,10,83,000 and an area of 44,212 sq km. 2. Haryana became a new state of India on 1st November, 1966 with Chandigarh as its capital, and since then it has made progress to become one of the most prosperous states of India. Haryana's geographical proximity to the national capital New Delhi and, a well developed telecom and transport infrastructure, are its major strengths in the economic field. 3. The population of the State of Haryana as per 2007 census was 2.39 Crores and the projected population as on 31.10.2008 was 2.44 Crores. There are 21 districts in the State with 6955 villages out of which 6764 villages are inhabited. There are 9570 (2751 Urban and 6819 Rural) Fair Price Shops (FPS) catering to 54,32,815 ration cards. 4. As per the Planning Commission there are 7.29 lakh families living below the poverty line in the State. However, the survey revealed that there are about 11.97 lakh (BPL + AAY) families below poverty line. 5. In order to study the Public Distribution System in the State of Haryana, the Committee visited Chandigarh and held discussions with the Chief

Secretary, Principal Secretary Food and Supplies Department and other Senior Officers of the Department. The Committee visited the office of the Haryana State Federation of Consumers Co-operative wholesale Stores Ltd., popularly known as CONFED which is the agency responsible for door step delivery of the PDS food grains to the Fair Price Shops. 6. The Committee visited Chandigarh and the Districts of Ambala,

Kurukshetra, Rohtak, Faridabad, Mewat, Palwal, Bhiwani and Hissar. Public meetings were held to get suggestions from the general public, Fair Price Shop owners, Municipal Councilors, Surpanch, NGOs, Self Help Groups, Consumer Organisations etc. Meetings were also held with District Officials and field staff of the Food and Supplies Department. 7. The State of Haryana and the Union Territory of Chandigarh have been selected for the pilot projects on computerisation of the Public Distribution System. The Committee invited the team of officers from the State responsible for the pilot project along with the representative of Expedien_E-Solutions who gave a presentation of the proposed system. The Committee obtained a copy of the Detailed Project Report (DPR) and visited the PR Center at Ambala where the work on the computerisation project is in progress.

CHAPTER 2 LEGAL REGIME

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 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 exist in the Act and the Control 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 trade and

then imprisonment cannot be less than 6 months subject to, adequate and special reasons. iv. A person who attempts to contravene or abets any contravention of the Control Order is similarly liable (Section 8). 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. vii. viii. Section 10 deals with offences by Companies. Section 10A has made any offence punishable under the Act cognizable. 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, license or other document, the burden of proving that he has such an authority, permit, license or other document, shall be on him. 2.2 The Public Distribution System (Control) Order, 2001: 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. 2.3 Haryana Public Distribution System (Licensing and Control) Order, 2002 The State of Haryana issued the Order dated 18.04.2002, regulating the sale and distribution of essential commodities, known as the Haryana Public Distribution System (Licensing and Control) Order, 2002 on. This order (herein after referred to as the Haryana Control Order, 2002) provided inter alia for the (i) Identification of families living below poverty line by the Rural Development Department and Swarn Jayanti Sehri Rozgar Yojna Departments in rural and Urban areas respectively, (ii) Issue of ration cards to APL, BPL and AAY families (green yellow and pink) respectively and periodical review and checking of ration cards, (iii) Licensing for regulating the sale and distribution of essential commodities and the responsibility and duties of the Fair Price Shop owner, (iv) Monitoring the Public Distribution System including functioning of the Fair Price Shops by the State Government, (v) Power of search and seizure, (vi) Appeal and (vii) The licence fee payable by the Fair Price Shop owner for grant of licence and its renewal.

2.4

Some amendments were made to the Haryana Control Order, 2002 by Haryana Public Distribution System (Licensing and Control) Amendment Order, 2003.

2.5

As per instructions dated 7.4.2005 joint samples ought to be taken at the time of lifting the grain from the godown by a committee comprising of the District Food and Supply Controller/ District Food and Supply Officer/ Assistant Food and Supply Officer, concerned District Manager/ Assistant District Manager CONFED, Chief Analyst of the Food and Supply Department and representative of the depot holders Association so as to ensure that supply of good quality of wheat to the beneficiaries.

2.6

The Director and Special Secretary, Government of Haryana, Food and Supplies Department issued instructions vide Order dated 21.09.2005, to all the District Food and Supply Controllers for making the Public Distribution System efficient. These instructions inter alia provided the following : (i) That the provisions of Haryana Public Distribution System (Licensing and Control) Order, 2002 be strictly enforced and if any depot holder is found guilty action should be taken against him immediately. (ii) (iii) Local person should be given preference at the time of issue of a licence. While giving the licence for a depot it should be ensured that the applicant is educated so that he can maintain proper records of the work relating to the depot. (iv) It should be ensured that the applicant for FPS depot has sufficient space to store the food grain, Kerosene oil and sugar.

(v)

The licence for the depot should be given on the recommendation of the Panchayat. In case such a recommendation is not there, the depot may be allotted on the recommendation of the local MLA/MP.

(vi) (vii)

The depot holder should not be less than 18 years of age. It should be ensured that licence for a depot is not issued on less than 600 cards in the urban areas. In rural areas the licence for a depot may be issued taking a village as a unit even if the number of cards is less than 600. However no depot should have more than 1200 cards attached to it so that the beneficiaries do not have to travel long distance to get to the depot.

(viii)

The Fair Price Shops should remain open from 8.00 am to 12.00 noon and 5.00 pm to 9.00 pm in summer and 9.00 am to 1.00 pm and 3.00 pm to 6.00 pm in winter.

(ix) (x) (xi)

Detailed instructions on distribution and transportation of food grain under the Targeted Public Distribution System have also been issued. Directions were issued to the District Food & Supply Controllers to ensure that the release orders are issued in time. In order to ensure supply of ration to the consumer in time every depot holder shall deposit the cost of BPL and AAY grain as per his entitlement with the District Manager CONFED/ Co-operative Consumer Depot from 25th to 30th for the distribution for next month. In case the depot holder does not deposit the money as per his entitlement action will be taken against him under the Haryana Public Distribution System (Licensing and Control) Order, 2002.

(xii)

District manager CONFED/ Consumer Co-operative Stores will give information to the District Food and Supply Controller by the 2 nd day of each month about the depot holders who do not deposit the money by the due date.

(xiii)

The District Manager CONFED/ Consumer Co-operative Stores will ensure door step delivery of PDS food grain to the depot holder by the 10th of every month and will give a certificate to the District Food and Supply Controller by the 15th that delivery has been made at the door step of the FPS.

(xiv)

In villages the door step delivery of food grain should be made in the presence of the village sarpanch and two panches and signatures of the Sarpanch and the two panches be obtained and kept in the concerned office of the CONFED.

(xv)

The District Manager CONFED will give information about the delivery of food grain at the door step of the FPS to the District Food Supply Controller in advance by giving a route chart. A copy of the same will be sent to the Deputy Commissioner/ Sub Divisional Officer.

(xvi)

The District Food Supply Controller will give information in this regard to the Deputy Commissioner/ Sub Divisional Officer by phone so that strict vigil can be kept on the transportation of the food grain.

(xvii)

It is the duty of CONFED to ensure that after lifting the food grain from the godown delivery at the depot is made on the same day.

(xviii) The employee/ representative of CONFED accompanying the vehicle which goes to delivery the food grain will make an entry of the quantity issued to the depot holder in the stock register of the depot holder with his signatures. Besides this he will also make an entry of the place from where the food grain was lifted and the number of the vehicle in which the food grain was delivered. (xix) The District Food and Supply Controller and the District Manager CONFED will review the lifting and distribution of food grain in meetings twice a month and will ensure that there is no diversion of

food grain during transportation. Information about this will also be given to the Deputy Commissioner/ Sub Divisional Officer. (xx) The contractor of CONFED will be paid the transportation charges by the CONFED only after the District Food and Supply Controller certifies that the food grain has reached the depot. (xxi) Participation of Panchayati Raj institutions has been ensured in keeping a vigil on the distribution of ration items by the depot holder. (xxii) The Vigilance Committees have been reconstituted which will have the following members:RURAL AREAS 1. Sarpanch 2. Schedule Caste Panch Schedule 3 caste URBAN AREAS Municipal Councilor Ex- Municipal Councilor

(If the Sarpanch is from Woman representative a panch nominated by the Sub Divisional Officer from other caste) Village Patwari

If there is no Patwari in the village, village panchayat can nominate a school teacher or an anganwari worker in his place. (xxiii) The vigilance committee so constituted has to ensure distribution of PDS items in its presence and the depot holder will get the allotment for the next month only on production of a certificate from the vigilance committee. (xxiv) The participation of the Panchayati Raj institutions has been ensured by involving the Gram Panchayats in issue of licence for the depot in rural areas on the resolution of the Gram Panchayat; attestation of D-1

forms for issue of ration cards, addition or deletion of units in the ration cards; proper distribution of the PDS commodities; Gram Panchayat has to certify the receipt of PDS commodities at the depot and has to verify the stock register for proper distribution; Gram Panchayat will submit a report to the Panchayat Samiti once a month about the working of the Public Distribution System. The Panchayat Samiti will oversee the working of the Public Distribution System and hear complaints; the Panchayat Samiti will submit a report to the Zila Parishad once in three months about the working of the Public Distribution System. The Zila Parishad will have a meeting with the District Food and Supply Controller every month about the availability of essential commodities; (xxv) The Deputy Commissioner will review the lifting and distribution of the PDS commodities every month in the meeting of the District Grievances Committee and if there is any complaint it will be decided at the spot. 2.6 There is a provision of maintaining a PDS Diary which keeps a record of inspections being conducted by the Inspectors. All the officers are required to send their PDS diary to the head office by 15th of every month. Every Inspector/Sub-Inspector who have been assigned depots and all Assistant Food Supply officer have to check the depots in his area from 15th to 25th of every month. At the time of checking the concerned officer has to make entry in 25 ration cards about the checking done in that month. A certificate has to be given in the PDS diary that no duplicate entry of any ration card has been made in the sale register. A certificate of the vigilance committee has to be attached with the PDS diary.

2.7

Haryana Public Distribution System (Licensing and Control) Order, 2009 The State has issued the Haryana Public Distribution System (Licensing and Control) Order, 2009 on 13.07.2009 superseding the Haryana Control Order, 2002. The new order inter alia provides for the grant of licence to the dealers, licensing authorities, procedure to be followed for issue of FPS licence, responsibilities and duties of FPS dealers, requirements and forms of accounts to be maintained by FPS dealers. The procedure for issuance of ration cards and use thereof has been provided in the new order. The Control Order also provides for the enforcement procedure in the form of powers of entry, search and seizure. There is a provision of appeal against the order of the licencing authority and requirement of submission of returns by the licencee. The involvement of Panchayati Raj Institutions and Muncipal Committees / Councils have been recognized in the new Control Order, 2009 in grant of licence to the FPS dealers.

2.8

Appointment of Fair Price shop dealer As per Clause 2(k) of the Haryana Public Distribution System ( licencing and control Order, 2009 the District Food and Supplies Controller of the concerned district. Clause 2 (i) of the Haryana Public Distribution System (licencing and control Order, 2009 provides that the Lincence of a fair. The license of a fair price shop shall be granted for a minimum number of 600 ration cards not exceeding 1200 ration cards, but in rural areas a village shall be treated as one unit for this purpose and as such the license for the fair price shop may be issued even for less than 600 ration cards of the village.

2.9

Clause 5. (I) Licensing authority shall call for applications through local publicity and munadi in the local area of the Fair Price Shop. If any

applicant is a graduate he shall be preferred. The order of preference of all eligible applicants shall be as under:1. 2. 3. 4. 5. 2.10 Self Help Group or Sakshar Mahila Group; Unemployed female/ male graduate; Scheduled Caste female/ male; Backward Class (A) female/ male; Ex-serviceman.

A committee comprising District Food and Supplies Controller, Inspector Food and Supplies concerned and the Sarpanch of village in rural area and District Food and Supplies Controller, Inspector Food and Supplies concerned and Municipal Councilor in urban area shall recommend to the licensing authority the name of the eligible applicant as per these priorities/ preference.

2.11

Clause13. (I) No holder of a license issued under this order shall contravene any of the terms or conditions of the license or of any control order issued under the Act. If he contravenes any of the said terms or conditions, without prejudice to any other action that may be taken against him, the licence shall be suspended immediately without giving any notice. If the licensing authority is satisfied that the licensee has contravened any of the conditions of the license or is not performing his responsibility and duties properly, the licensing authority shall take one or more actions against the licensee as mentioned below:(i) forfeiture of the security deposit in full and suspension of licence:

Provided that the licence may however, be validated and suspension revoked by depositing the amount of security by the licencee; (ii) (iii) cancellation of the license and forfeiture of the security deposit in full; registration of criminal case as per provisions of the Act: Provided that no order with regard to above mentioned penal action shall be made under this clause unless the licensee has been given a reasonable opportunity of being heard. 2.12 Clause 2(h) Provides the eligibility condition for the applicant. Provides that a person having 10+2 or its equivalent qualification, not less than 21 years of age and is a resident of the locality for which the fair price shop license in applied for. However, in case of a Group like Self Help Group and Sakshar Mahila Smooh, the condition of 10+2 pass and age will not apply; 2.13 Clause-9 of the Haryana PDS control Order 2009 provides that responsibilities and duties of the Fair Price Shop Licensees shall include

inter alia(i) sale of essential commodities as per the entitlement of ration card holders at the retail issue price fixed by the State Government under the Public Distribution System; (ii) (a) (b) display of upto date information on a notice board at a prominent place in the shop on a daily basis regardinglist of Below Poverty Line and Antyodaya beneficiaries; entitlement of essential commodities;

(c) (d) (e) (f) (g) (h)

scale of issue; retail issue price; timings of opening and closing of the Fair Price Shop; stocks of essential commodities received during the month; opening and closing stock of essential commodities; and authority for redressal of grievances/ lodging complaints with respect to quality and quantity of essential commodities under the Public Distribution System;

(iii)

maintenance of record of ration card holders (Above Poverty Line, Below Poverty Line and Antyodaya) stock register, issue or sale register;

(iv)

furnishing of copies of specified documents namely, ration card register, stock register, sale register to the office of the Gram Panchayat or Nagar Palikas or Vigilance Committee or any other body authorized for this purpose;

(v) (vi)

display of samples of foodgrains being supplied through the Fair Price Shop; production of books and records relating to the allotment and distribution of essential commodities to the inspecting agency and furnishing of such information as may be called for by the authority;

(vii)

account of the actual distribution of essential commodities and the balance stock at the end of the month to the concerned Sub Inspector Food and Supplies/ Inspector Food and Supplies/ Assistant Food and Supplies Officer and District Food and Supplies Controller with a copy to the Gram Panchayat/ local municipal body;

(viii)

opening and closing of the Fair Price Shop as per the prescribed timings displayed on the notice board;

(ix)

the ration card holder shall not be denied the supply as per entitlement of essential commodities lying in stock with Fair Price Shop Owner under the Public Distribution System;

(x)

the Fair Price Shop Owner shall provide the relevant extract of the record maintained by him to the beneficiary on payment of Rs. 10/only;

(xi) (xii)

the Fair Price Shop Owner shall not retain ration card after the supply of essential commodities; the Fair Price Shop Owner shall use only such weights and measures which are duly verified by the Legal Metrology Department, Haryana;

(xiii) (xiv)

the Fair Price Shop Owner shall keep the complete records of the PDS items for at least two years in his/ her safe custody; the Fair Price Shop Owner shall give information every month about the allocated PDS item, the quantity distributed by him to the eligible consumers and the balance stock etc. to any two members of the Vigilance Committee otherwise on supply of PDS item shall be given to the Fair Price Shop Owner for the next month. He shall also obtain satisfaction certificate from the Vigilance Committee regarding satisfactory distribution of all allotted items in the previous month;

(xv) (xvi)

the Fair Price Shop Owner shall be responsible for making all essential entries in the ration cards; the Fair Price Shop Owner shall store and sell essential commodities only at the place specified in the license;

(xvii) behave with the consumers cordially and with due courtesy.

2.14 Clause 15 (1) of the Haryana

PDS control Order 2009 provides the of each

licensee shall submit to the licensing authority concerned a true return in Form C so as to reach him not later than the fifth day month, of stocks, receipts and deliveries of each of the essential commodities pertaining to the preceding month. Clause 15 (2) says notwithstanding anything contained in sub-clause (1), the State Government or the Director of Food Supplies or the Collector of the District or the licensing authority may direct the licensee to submit a return in a form prescribed by that authority. 2.15 Observations It was observed during the visit to various districts in the State that the instructions issued by the State Governments are not being followed properly. Some of the observations are as follows:(i) Timings of shops are not maintained. During the visit of the

Committee in village Arya Nagar in District Hissar, it was found that both the FPSs in the village were closed at about 10.30 am on Tuesday. Similar was the position in village Ghaseda District Mewat where the Committee found that the FPS run by one Mr. Zakhir was closed at 10.50 am on Sunday i.e. 29th November, 2009 (a working day for PDS). BPL beneficiaries complained that they are given only 30 kg wheat once in three months. The shop opens once or twice a month and shopkeeper always says that ration has not been allocated

to him. The villagers complained that ration, if at all distributed, is distributed after the 15th of the month. Most of the villagers are working as labourers and they dont have sufficient money to buy the ration in one go. (ii) Many card holders of the village of BPL and AAY category complained that they had not received their entitled ration for the month of October and November, 2009. The officers of the Department who accompanied the team did not have an answer to the same. It was evident that there is no accountability of the field staff for nondistribution by the FPS dealers. It was also told by the villagers that there is a political interference in the allotment and functioning of FPS. (iii) The role of Vigilance Committees in PDS is only on paper. It was

observed that Vigilance Committees are not functioning properly. The Utilisation Certificate is signed by the Members of the Vigilance Committee without actually verifying the factual position. Generally Vigilance Committee member do not remain present during the distribution of PDS items by the FPS dealers. The Committee was not shown any records pertaining to the meetings of Zila Parishad with District Food & Supply Controller. (iv) The recommendation / resolution of Gram Panchayat regarding the FPS licence is not based on merit and is based on extraneous considerations. The DSO at Palwal informed that the political interference is to such an extent that many FPSs in the area are run by 20-25 people belonging to 2-3 families of a village who have political

connections. Even the Municipal Councilors have FPSs in their name or in the name of their relatives / dependents. (v) Representatives of CONFED do not accompany the vehicle which delivers the food grains to the depot holder. The same was confirmed by the various CONFED officials that the Committee met during its visit. (vi) Sealed samples are not being issued to CONFED and thereby to the FPS dealers. This affects the quality of the food grain that ultimately reaches the beneficiaries. (vii) As per the guidelines of Honble Supreme Court of 2003 the distribution of PDS commodities by the FPS dealers should be through out the month. In view of the time schedule being adopted if the payment is made in time, the release orders are issued accordingly and delivery is also made in time, it remains open only 15 days for distribution. Thus it is a clear violation of the directions of the Honble Supreme Court. The Committee feels that the time schedule should be adopted in such a way that the FPSs are open for distribution of commodities through out the month.

CHAPTER 3 DISTRIBUTION OF FOODGRAIN

3.1 Public Distribution System 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 food grains to States and Union Territories and maintenance of buffer stocks. State and Union Territory Governments are responsible

for identification of

BPL and AAY families; issuance of ration cards to

eligible families; storage in state/UT godowns; licencing and supervision over fair price shops; distribution of ration to ration card holders through the Fair Price Shops and eliminating leakages/ ghost cards etc. 3.2 The Food and Supplies Department Haryana is headed by the Financial Commissioner and Principal Secretary to the Government of Haryana and there is a Director Food and Supplies. At field level the District Food and Supplies Controller heads the hierarchy and the District Food and Supply Officers and other officers are answerable to him. 3.3 The State of Haryana is a wheat surplus State. The Central Government under its decentralized procurement policy has allowed certain agencies of the State Government to procure wheat on its behalf. The FCI is the agency of the Central Government for procurement of food grain. In Haryana the State Food and Supplies department, HAFED, FCI Haryana Region, Haryana Warehousing Corporation, CONFED and Haryana Agro Industries Corporation have been allowed to do procurement on behalf of the FCI in the ratio of 20%, 33%, 20%, 9%, 9%, and 9% respectively. All these agencies procure wheat from the farmers who come to the Mandis set up by Haryana Agricultural Marketing Board and store it in their godowns. 3.4 The food grain (wheat) is procured by the various agencies at the Minimum Support Price (MSP) and stored on behalf of the FCI. The Central Government makes allocation to the State under the Public Distribution System as per its entitlement. The rest of the grain is utilized for other schemes of the Central Government or is sent to other deficit

States as per the directions of the Central Government. The FCI reimburses the State agencies for the price paid and storage costs. 3.5 The Committee visited the godowns of the FCI and Food and Supplies department to see the conditions of storage. It was observed that the godowns owned by the FCI have scientific storage system. However, due to very heavy procurement in the last season a huge quantity of wheat was still stored in the Mandis by all the agencies. Some wheat was stored in covered sheds while a lot of wheat was stored in the open and even on roads inside the Mandis by creating temporary platforms of wooden crates. There is an urgent need for creating more storage space in the State. 3.6 There was no system of weighment of grain either in the Mandi or in the godowns of the Food and Supplies Department visited by the Committee at Ambala, Rohtak and Bhiwani. The trucks are weighed at private weigh bridges (Dharam Kanata) and after loading they are again weighed at the same weigh bridge. 3.7 No one accompanies the trucks from the godowns to the FPS. There is no system of checking after the food grain reaches the Fair Price Shops and before it is distributed to the beneficiary. Hence there is no check that the entire quantity of grain reaches the Fair Price Shop. 3.8 There is absolutely no system of preparing samples at the godowns of the State agencies. During the visit to the Mandi in Bhiwani where the stock of the Department of Food & Supplies, Government of Haryana was there for distribution through CONFED, it was found that no samples are prepared for giving to the wholesalers and FPS dealers. The concerned officers of

the State Government and the DM, CONFED, Bhiwani were requested to follow the joint sampling system while lifting the food grains and sample should also be given to the FPS dealers at the time of delivery. State Government officials were requested to issue necessary instructions in this regard to all the agencies involved in this process. No samples were found at any of the Fair Price Shops visited by the Committee. Mr. Ajay Jain Advocate, General Secretary Yuva Shakti, at Ambala and Mr. Suresh Valmiki a social worker at Rohtak complained of the poor quality of wheat supplied at the Fair Price Shops. Diversion takes place in two ways, one by selling the PDS grain in black market and secondly by substituting good quality of grain by poor quality. The system of joint sampling must be enforced at all the storage points and samples must be displayed at the Fair Price Shops so that the consumer can check the quality of food grain supplied to him. 3.9 The Committee found that the FCI has electronic weighbridges at their godowns. At the time of delivery of food grain to the CONFED a gate pass is issued in which the number of bags loaded in the truck is mentioned. The gate pass is prepared manually. A weigh check memo is prepared in the computer system when the truck is finally weighed but copy of the weight check memo is not supplied to the truck driver. The Committee feels that that the truck driver should be supplied a copy of the weigh check memo. 3.10 CONFED is the agency of the state authorized to receive the PDS grain from the FCI or the other agencies authorized by the Government for procurement and transport the same to the Fair Price Shops. CONFED is headed by a board of Directors and a Managing Director. The District

Manager (DM) is the Head of District Office, besides him there are salesmen and storekeepers also. The CONFED is fully responsible for delivery of the food grain at the doorstep of the FPS. The storekeeper is supposed to make entries of the food grain in the stock register of each and every depot holder. However, since no officer of the CONFED actually accompanies the truck such entries are not being made. CONFED has to submit daily statement of delivery of food grain to the DM, DFSC, respective SDMs and area inspector/ AFSO. The cost of transportation is added in the sale price of food grain except AAY wheat which is being borne by the State. In Rohtak City the transportation is being done by Co-operative Store. They also have an FPS. other FPSs. 3.10 Tenders for transportation are invited every year. A Centralised advertisement inviting tenders of door step delivery of food grain and levy sugar are called through Director, Public Relations, Haryana which is published in 3-4 leading newspapers of Hindi and English. Wide publicity of NIT is given and notice of NIT is also displayed/ exhibited at prominent places like the offices of DC, ADC, SDM, DFSC, BDPO, Tehsildar etc. 3.11 District Level Transport Committee under the Chairmanship of Deputy Commissioner has been authorized to open the tenders, make negotiations and finalize reasonable and workable transportation rates. The other members of the committee are ADC, SDM, DFSC, and DM CONFED. The committee recommends the rates to the Managing Director CONFED for final approval. As per instructions negotiations are to be conducted by the committee with the lowest tenderer (L-1)only. The Committee observed that there is no difference in the functioning of this FPS as compared to

3.12

There is no fool proof system for the monitoring of transportation of food grains from the State godowns to the FPS. Only a gate pass is issued to the truck / vehicle carrying food grains and a banner having marking PDS GRAIN is put on the front side of the truck.

3.13

The State makes allocation to every district and the District Food and Supplies Controller (DFSC) makes the allocation for every Fair Price Shop as per the number of ration cards attached to the shop. The allocation orders are sent to CONFED.

3.14

On the basis of entitlement, Fair Price Shop owner deposits the cost of food grain with the authorized bank in the account of CONFED from the 25th to 30th every month. CONFED in turn lifts the food grain from the godowns of FCI/ State Agency and delivers the stock at the door step of the Fair Price Shop. The Committee was informed that food grain reaches the shops by 10th of the month of supply. However, the Committee observed in Mewat district that following schedule is followed : for the payment and allocation of grain

1. Usually the payment is received from FPS dealers by 5th -7th day of the month and same takes 3-4 days in clearance by bank. 2. By 10th or 12th day of the month the Release Order is issued by DFSC 3. Lifting by CONFED starts from 11th or 13th day of the month from the godowns of the procurement and storage agencies in Haryana for which the Release Order. 4. Foodgrain is delivered at the fair price shops latest by 20th day of the month.

3.15

The Committee found that the system is violative of the directions of the Supreme Court which require that the Fair Price Shops should remain open through out the month and that the beneficiary should be allowed to draw ration in installments. The system effectively ensures that the distribution of ration has to take place only between the few days when the delivery is made to the Fair Price Shop and when he has to close his balance to deposit money for the next month. This system also encourages corruption as the depot holder has the opportunity to tell the beneficiary in the beginning of the month that no stock has been received. A poor beneficiary is always likely to spend most of his earnings immediately on receipt of wages at the beginning of the month and may not be left with enough money to buy ration after the 10th of the month. Since ration is distributed for a limited number of days the shops do not remain open throughout the month.

3.16

There were general complaints of short supply by the Fair Price Shop owners. The Committee inspected several Fair Price Shops. At one of the shops in Faridabad, it was found that the Fair Price Shop owner was supplying only 28 kg. wheat to every BPL family, instead of their entitlement of 33 Kg. per month. He was also not making any entry of the quantity supplied in the ration cards. In Topkhana colony of Ambala one FPS owner Ishwar Chand had stored PDS grain at three different premises. There were complaints against one FPS owner Pawan Kumar of Chhibba village in Ambala that he used to open his shop before 8.00 AM

or on Sundays only and did not open his shop on all the working days during prescribed timings. 3.17 The Committee was also informed during public hearing and visit to various urban colonies and villages in districts that the FPS dealer makes the false entries in the ration cards of the beneficiaries without actually giving the commodity. 3.18 In the year 2004 a BPL survey was conducted in the State. In this survey all the information about the social and economic conditions of all the families was collected on a 13 point scale. When the information collected by the survey was sought to be verified through the Gram Sabhas it was found that ineligible families having good means were going to be included in BPL list while eligible families were being left out. It was found that correct figures have not been collected during the survey due to which there was discontentment amongst the public. Hence the survey was cancelled and fresh survey was ordered. The fresh survey was entrusted to Ex-servicemen. This survey was completed in 2007. 3.19 As per the Planning Commission there are 7.29 families living below the poverty line in the State. However, the survey revealed that there are about 11.97 families below poverty line (BPL + AAY). The category wise break up of the families is as under 3.20 Ration Cards as on 30.06.2009 Ration Cards 42,35,869 Units 1,87,80,946 Colour of Ration Card APL Green

Category

STATE BPL Center BPL AAY TOTAL

*3,83,361 *5,28,399 *2,85,186 54, 32,815

16,33,481 24,45,855 12,43,240 2,41,03,522

Green with stamp Yellow Pink

3.21

Since the number of BPL families found in the survey was more than the estimates of the Planning Commission, the State decided in year 2008 to treat 3.83 lakh families as State BPL. The BPL cards issued within the limits prescribed by the Planning BPL. Commission are named as Central By an order dated 04.09.2008 it was decided that the State will

collect the APL and BPL allocation and distribute it amongst the Central BPL and State BPL equally at 35Kg.per month per ration card. The difference in cost between the APL wheat and State BPL wheat will be borne by the State. 3.22 The allocation of wheat to the state of Haryana category wise is as under CATEGORY ALLOCTION (In Mt per month) APL BPL AAY SCALE (In Kg. per card per month) 7501 (from 7/08) + 35 15,000 Addl. Allocation 17,381 (from June 08) 35 10,235 (from 4/08) 35

3.23

The quota of the BPL has been reduced to 33 Kg. per family per month. BPL card holders are given wheat @ Rs.4.84 per Kg. AAY families are

being distributed 35Kg. wheat per month @ Rs.2.10 per Kg. Wheat is supplied to AAY families at Rs. 2.10 per Kg. charged on account of VAT (Value Added Tax). 3.24 During the public meetings a demand was repeatedly raised that family norm for distribution should be replaced by the earlier system of fixing entitlement for every individual. It was stated the present system leads the consumers to artificially divide their families in order to obtain more quantities of PDS commodities specially Kerosene Oil. It was stated that there are many ration cards with only one or two members and they do not require 33Kg. wheat every month. They actually draw less ration and the rest is sold by the Fair Price Shop owner in the black market. In the earlier reports, this Committee has mentioned that the individual norm has merit. The Government may consider reverting to an individual as a unit for allotment of Public Distribution grain. 3.25 Mr. Vinod Mittal of the Flour Mills Association represented in Ambala that the flour mills in the State are prepared to give fortified atta at no extra cost and will charge only for grinding and packing. The official informed the Committee that the experiment of giving atta was tried at some places in Haryana earlier but it was stopped due to large scale diversion involved in the process. 3.26 It was a general agreement that atta(wheat flour) if obtained after properly grounded wheat and delivered in sealed polypacks would be good proposition and it would also save wheat going into black marketing. As the shelf life of wheat flour is only 30-45 days, a proper time line is required to be followed for distribution. Government of Indias (additional 10 paise are

instructions on this subject dated 17th January, 2008 have to be followed scrupulously. 3.27 In order to get a ration card for the first time, the consumer has to apply in the prescribed form D-1 either in the office of District Food and Supplies Controller/ Assistant Food and Supplies Officer/ Inspector Food and Supplies in whose jurisdiction he resides. The application forms are available in the Office of DFSC/AFSO/IFS. Along with the application he has to submit two attested passport size photographs of his family. The applicant has to give an affidavit declaring that he has not got prepared any ration card anywhere in India earlier and names of the members of his family are not included in any of the ration cards. He also has to declare his permanent address and disclose his place/ places of residence during the last five years. He has to give an undertaking that if any information is found to be false, he would be liable for action as specified in the rules/Act. The consumer is given a slip indicating the date when he should contact the concerned office for getting the ration card. The Sub Inspector/ Inspector verifies the particulars by physically visiting the residence of the applicant and making necessary inquiries. He also consults the voter list and census records before making his recommendations. The DFSC/AFSO issues the ration card and paste one photograph of the family on the same. 3.28 Mr. Raj Kishore a Municipal Councilor informed the Committee in a Public Meeting at Faridabad that an applicant had to pay Rs. 500/- 1000/- for getting a ration card.

3.29

It was informed by the District officials in Hissar that APL ration cards can be issued to the applicants after verification by the Area Inspector.

3.30

The ration card has become a valuable document. It serves as an identity card. It is required for availing benefits under various other schemes of the government. This is in gross violation of the provisions of the Public Distribution System (Control) Order, 2001 issued by the Central Government. Ration card should be de-linked from all other schemes and steps should be taken to ensure that it is not used as an identity card. The Committee also further suggests that in place of ration

card a food entitlement card may be issued which can be used supply under Public Distribution System. The Committee

only for food

also feels that it is

appropriate if the name of TPDS is changed to FOOD FOR POOR SCHEME. 3.31 The Committee found that many ration cards in the State had Rubber Stamp for changing the category. In fact all the persons in the State BPL category have a stamp on the Green ration cards instead of having Yellow ration cards. The Committee was informed that the ration cards were issued in the State in 2005. Fresh BPL survey was finalized in 2007. At that time instead of issuing new ration cards rubber stamp was affixed to change the category. A list of all those who were earlier in APL category and were found to be eligible for BPL ration cards was prepared separately and their ration cards were marked with rubber stamp to change their entitlement. Similarly if any person in BPL or AAY category was found to have an improved status and fell in APL category his card was accordingly stamped as APL.

3.32

The State agency CONFED is responsible to lift the foodgrain from the procuring agencies and to deliver the same at the doorstep of the Fair Price shops. The CONFED does not have its own trucks and it appoints transporters through Tender process. The transporters appointed through tender process usually do not have sufficient trucks and usually they have one or two trucks of their own and rest of the trucks is hired by them. The Committee observed that the transporters quote less than the actual rates to get the Contract. This clearly gives inference that they recoup the losses by diverting the foodgrain. For instance in the District of Mewat, there are three transporters i. One for Nuh, ii. One for Firozpur Zirkha, Nagina, Punhan covering 193 FPS in total. iii. One for Hathin On 6th March 09 tender was issued and 6 applications were received. The transporter named Hamida was appointed and his rates for transportation of grain were Within District 6.90 per quintal Out of District- 11.50 per quintal The rates of transportation in the previous year were Rs. 13 per quintal for within district and out of district 20.50 per quintal. It is pertinent to mention that the rates for the previous year was double the rates of the current year. The transporter himself quoted such low prices and later in August he refused to Continue as transporter even at the cost of forfeiting his security amount. Again on 29.8.2009 fresh tenders were issued for Sub division Nuh. All tender form were rejected due to higher rates and Tender Committee authorized D.M to get the work done for Sept and Oct 09 only on and below the last year rates i.e Rs. 13.00 within District and

Rs. 20.50 out of district due to the election code in force . Later again on 29.10.09 and 8.11 2009 November fresh tenders were issued for period of 2009 to March 2009. Transporter named Harkesh was

appointed on the rate as follows: Within district: 12.50 per Q foodgrain Out of district 20 .00 per Q foodgrain 3.33 Committee on perusal of transporters file observed that the transporter Harkesh have only two vehicles both having capacity of 9 ton. Officer of CONFED informed that as the number of vehicles are not sufficient the transporter hires trucks for supply of foodgrain to FPS. As the private trucks are hired by the Transporters to carry and transport foodgrain the question arise that why the private truck owners transports the foodgrain in lesser rates than the market rates. These facts give direct inference about the Diversion of the foodgrains during transportation. Similar facts were observed while perusing transportation files pertaining to other districts. 3.34 Further, it is to be noted that no officer of CONFED accompanies the truck while transportation of the foodgrain from procurement agency to the fair price shops. There is no monitoring by the CONFED officers on the transportation of foodgrains. Once the foodgrain is lifted and loaded in the truck from the godowns of the procuring agencies it is totally in the hands of the transporters. The transporter and whether he delivers the full quantity at fair price shop or not. 3.35 The Department officials are duty bound to check whether the foodgrain have reached the fair price shop or not. The department has to certify

that the 100 % foodgrain has been delivered by the transporter and give the same to the CONFED before the bills pertaining to same is cleared. However, the Committee observed that the department officials are not checking the delivery of the foodgrain by CONFED appointed transporters at the fair price shops. This clearly indicates the connivance of CONFED officers, department officials and the transporters. 3.36 During the visit to various Districts of the State, the Committee inspected the files of CONFED regarding the tender for transportation. The Committee observed that there is no minimum requirement of trucks for the transporter who apply for tender. There are some transporters who have only 2-3 trucks have been given the contract for transportation. These transporters hire the vehicles from the market for transporting the food grains. Besides, the rates quoted are very low and finally the The Committee feels that the contract is awarded on such rates that practically it may not be possible to undertake the work at such low rates. transporters who are given the contract at such lower rates may be indulged in malpractices. It was also seen that the same contractor is given the contract in the Districts continuously for years. Therefore, it is necessary that some basic criteria may be fixed so that only those who qualify those criteria / conditions can apply for tender. The condition of minimum number of trucks, minimum turnover etc., may be prescribed. The Tender Evaluation Committee must ensure that the transporter who is handling the transportation in the district for the last two years is not given the contract for the third year. This may be mentioned as one of the condition in the tender notice.

3.37

There is a general complaint regarding the less allocation of kerosene oil to APL families which are not using LPG. BPL and AAY families is 9 litre per month. purpose in rural areas. It was informed that APL It was observed by the families are given three litre kerosene oil per month while the allocation to Committee that in Haryana generally kerosene oil is not used for cooking Rather people use the kerosene oil for lighting purposes as there is no 24 hour electricity supply is available. In urban areas also generally people cook on LPG and kerosene oil is used for lighting purposes. cooking purposes. However, poor people and migrant labour etc. who Most of the kerosene oil allocated to the FPSs is Government lives in the outskirts of the city use kerosene oil to some extent for diverted in the black market. One of the reason for this black marketing is non-availability of open sale kerosene oil in the market. should take steps to allow the open sale of kerosene oil at reasonable price, so that those who are in need of kerosene oil can get the same in the open market and need not to encourage diversion / black marketing. Separate licences for open market sale can be issued by the oil companies once a policy decision is taken by the Government of India.

CHAPTER 4 MODE OF APPOINTMENT OF DEALERS

1. The Committee was informed that all appointments of licencees for Fair Price Shops have so far been made on the basis of the Haryana Control Order of 2002. Only a few appointments have been made after the coming into force of the new Haryana Public Distribution System (Licensing and Control) Order, 2009 which came into effect from 14.07.2009 2. Clause 5 of the Haryana Control Order 2002 provides that The District Food and Supplies Controller of the concerned District shall issue a licence for regulating the sale and distribution of the essential commodities and shall indicate the duties and responsibilities of the Fair Price Shop owner. 3. No qualifications are prescribed in the Haryana Control Order 2002 for FPS licence. No procedure is prescribed. The Committee was informed that as per existing norms an FPS must have a minimum 600 cards attached to it. Whenever the number of cards with any FPS exceeds 1200 a new FPS is created. However, in rural areas a new FPS can be issued a licence

treating the village as a unit. In such a case the FPS can have lesser number of cards attached to it. 4. The Committee inspected the files pertaining to appointment of FPS dealers in the district of Ambala. The DFSO explained that in rural areas, whenever there is a vacancy for an FPS, the applicant is recommended by the Gram Panchayat. The vacancy is advertised and applications received are scrutinized at the DSO/AFSO level. Licence is granted by the DFSC keeping in view the recommendation of the Gram Panchayat. 5. The Committee inspected the file of Bhupender Singh s/o Jaspal Singh, Village Tandwal, Tehsil, Barara. It was found that the Gram Panchayat passes a resolution which is forwarded in original to the District Food & Supplies Controller by the Block Development & Panchayat Officer. In the case of Bhupinder Singh, the resolution was passed by the Gram Panchayat on 06.11.2008 and it was forwarded by the Block Development & Panchayat Officer on 18.11.2008. Bhupinder Singh submitted an application to the DSFC in Form A on 20.11.2008. Along with application, he filed an affidavit stating that he wanted a ration depot at village Tandwal and that he has not been awarded any ration depot / FPS for foodgrain or any other controlled commodities in the State of Haryana either in his name or in the name of his dependents or to any other set up in which he or his family members / dependents have any financial interest that he or any of his family members are not running any FPS and that he had not submitted any application earlier. members had not been penalized for That he was not of controlled working in any factory / firm full time or part time. That he or his family distribution commodities. That he had never been convicted by any court of law.

That he has not directly or indirectly any ration depot running in the State. And that he undertakes to abide by the rules. certificate of his educational qualification. 6. The application was marked to the Assistant Food & Supply Officer (AFSO) for verification. After verification, he was granted the licence. 7. The DFSO explained that in urban areas, whenever there is a vacancy, a request is made to the DPRO for advertising the vacancy. The persons desirous of having the FPS licence apply along with the necessary documents. The applications are sent to the DFSO or Supply Inspector. The officer submits a report on the application according to its merits. On receipt of the report, necessary action is taken for grant of licence to the deserving candidate keeping in view that the applicant should be able to get 600 cardholders to draw ration from his shop. If the applicant is able to register 600 cardholders, he submits a list to the AFSO / Inspector for verification. Licence is issued to the applicant on the recommendation of the AFSO / Inspector. 8. The Committee inspected a file on Chhaya Srivastava d/o Krishan Mohan Srivastava, r/o house NO.2052/2 Tagore Garden, Naraingarh Road, P.OBaldeve Nagar, Ambala City. The application was submitted on 06.04.2007. It was forwarded to AFSO, Ambala City for verification, Alongwith the application there was a recommendation from Ms. Vinita Sharma, Municipal Councilor, Ward No.1, Ambala City. Affidavit and other documents were filed along with the application. On 08.04.2007, request was made to the DPRO for advertising the vacancy. The publicity was He also submitted the details of his family members and a copy of his ration card and a

done though munadi (beating of drums) on the afternoon of 20.04.2007. It appears that another application of one Jamil Ahmed s/o Mohammad Yousuf, was also received. However, the licence was ultimately awarded to Ms. Chhaya Srivastava. 9. It appears that the receipt of the second application by Jamil Ahmed was a mere formality. The Committee asked the DFSO as to how Chhaya Srivastava came to know about the vacancy and applied for the same, to which no satisfactory answer was given. 10. The Committee desired to see more application files for grant of licence to clear the doubts. In spite of several requests, the officials did not produce other files. One other file was brought, but when the Committee started scrutinizing the same, it was found that there was only one application in the file and the rejected applications were not on the file. The officials stated that they had not brought the complete file. In spite of repeated requests, the file was not shown to the Committee again. 11. The findings of the Committee at Ambala were confirmed by inspection of files in the District Kurushetra. The Committee inspected two files of allotment of FPS in village Pipli and in tehsil Thanesar. One Rajesh Kumar s/o Om Prakash applied for an FPS in village Pipli. His application was recommended by the Sarpanch. The report of the DSO showed that after the receipt of this application, publicity was done by the munadi (beating of drums). No other application was received. Rajesh Kumar was required to give the name of 600 card holders who were prepared to take the ration from him. After he submitted the list, he was allotted the FPS. The

similar position was seen by the Committee regarding the allotment of shops at District Mewat, Bhiwani and Hissar. 12. One Anshul Garg s/o Sh Naresh Kumar Garg applied for a FPS in Ward No.1, Ladwa. His application was recommended by Shri Ramesh Gupta, MLA of Thanesar. The application was marked to the AFSO for report on 22.12.2006. According to the report of the AFSO, there were 6250 ration cards in Ladwa and 10 FPS were functioning. However, 6600-6800 D-1 forms had been distributed out of which some were still pending and more ration cards were likely to be issued. Thus, the condition of 600 ration cards was fulfilled. Anshul Garg was issued a letter to get the names of 600 card holders who were prepared to draw ration from his shop. The AFSO submitted report on 20.01.2007 stating that Anshul Garg had fulfilled the requisite conditions and submitted a list of 600 card holders. He was allotted the FPS vide order dated 30.1.2007. 13. Prince Khurana s/o Sh Suraj Prakash applied for an FPS in Ward No.1, Kurukshetra on 07.2.2008. His application was recommended by the Municipal Councilor and MLA. Publicity was given by munadi and FPS was allotted to Prince Khurana after completing the requisite formalities. Similarly, in the case of Shri Narendra Behl s/o sh Jagdish Rai, the FPS was allotted on the recommendations of MLA, Thanesar and in the case of Sh. Sanjeev Kumar s/o Suresh Kumar, the application was recommended by the Municipal Counselor and allotted without any publicity. 14. In Faridabad, the Committee visited Sector -3 and found that that one Sh. Surinder Yadav and his father, Ram Sudhar Yadav were both having FPSs in the same district. Discussions with officials also revealed that there

were instances where the son of a Sarpanch had been granted a licence for an FPS on the recommendation of the Sarpanch. The Committee was informed that a decision had been taken about 15 years ago, to treat a son who is living separately from his father and is not dependent on his father as a separate entity. It is for this reasons that the explanations to Clause 4 (3) of the Haryana Public Distribution System (Licensing and Control) Order, 2009 defines family as including all those persons whose names have been entered in the ration card of a fair price shop owner or who are dependent upon him. 15. Though the applicant is required to give a declaration to the effect that he has not been awarded any ration depot / FPS shop for foodgrain or any other controlled commodities in the State of Haryana either in his name or in the name of his dependents or to any other set up in which he or his family members / dependents have any financial interest that he or any of his family members are not running any FPS and that he had not submitted any application earlier shops are allotted to the family members of the existing FPS dealers because of the unrealistic interpretation given to the family. This leads to the corrupt practice of an influential family having several FPS licences. The Government should take a fresh look into this aspect and remove this anomaly by redefining the family to include son/daughter/brother/sister/ daughter in law/ wife/widow of a brother etc. 16. In District Hissar, during the discussion with the District officials it was informed that an unemployed graduate was allotted one FPS in the rural area on the recommendation of the Sarpanch. The allotment made to him because the earlier FPS owner had resigned. Based on the number of

cards, a rough calculation showed the income from sale of food grains, kerosene oil and sugar after deducting expenses as less than Rs.1000/-. It was not stated as to how the allottee would be able to run the shop and whether he was told that he would not have enough income and infact suffer loss. 17. The Committee found that allotment is on political considerations. The Sarpanch is more powerful than an MLA and he has direct approach to the Chief Minister. It is only on the basis of the resolution of Panchayat that the FPS dealership is given. It was also seen that in practice, the recommendations of local politicians, MLAs, Municipal Councilors, Sarpanch and other influential people are the only qualification for getting FPS licences. Other conditions as prescribed in the Haryana State Control Order of 2002 and latest order of 2009 are not followed while granting the FPS dealership. No vacancy is advertised. There are no qualifications for the applicant. 18. The Haryana Public Distribution System (Licensing and Control) Order, 2009 came into effect from 14th July 2009. Clause 5 of the Control Order of 2009 is as under :19. Licensing Authority shall call for applications through local publicity and

munadi in the local area of the Fair Price Shop.

applicants shall be as under:i. Self Help Group of Sakshar Mahila Group ii. Unemployed Female / Male graduate ; iii. Scheduled Caste female / male

If any applicant is

graduate he shall be preferred. The order of preference of all eligible

iv. Backward Class (A) female / male; v. Ex-serviceman. 20. A Committee comprising District Food and Supplies Controller, Inspector Food and Supplies concerned and the Sarpanch of Village in rural areas and District Food and Supplies Controller, Inspector Food and Supplies concerned and Municipal Councilor in urban area shall recommend to the Licensing Authority the name of the eligible applicant as per these priorities / preference. The licensing authority shall appoint such recommended applicant as Fair Price Shop Owner within the next 7 days. Appeal against the decision of the licensing authority shall lie before the Deputy Commissioner within a period of fifteen days of issue of the orders of the Licensing Authority. The Deputy Commissioners shall decide the appeal within 30 days. final. 21. The provisions of the Haryana Control Order 2009 recognizes and gives legitimacy to political interference in appointment of dealers by making the Sarpanch and the Municipal Councilor as members of the rural/urban committees appointed for recommending the applicants for allotment of licences for Fair Price Shops. The Committee is of the view that political involvement in the grant of licences has to be completely eliminated. 22. Applications for FPS licences should be invited through publication in the local news papers. Wide publicity should be given so that all persons desirous of applying come to know about the vacancy. The orders of the Appellate Authority shall be

23.

It is a well documented fact that the FPS owner is in business for the purpose of diversion or for political influence or other influence that he can wield by being an FPS retailer. There is massive corruption woven around it where the participants are the shop keeper, officials of the Department / Corporation, transporters and last but not the least the politicians. The Committee is of the view that the reservation for various categories provided in the Haryana Public Distribution (Licensing and Control) Order, 2009 appears rather unnecessary. FPS licences should be allotted to persons of the locality who are already running kirana/ grocery shop or have the capability to do so.

24.

Though there is a clamour for allotment for FPS, the stand alone FPS does not rehabilitate or support sustenance of any category or gender. It rather breeds corruption.

CHAPTER 5 VIABILITY
5.1 Viability of FPS 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. 5.2 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 determinants of viability of Fair Price Shops. 5.3 Programme Evaluation Organisation under Planning Commission in its evaluation Report on TPDS defined Viability of FPS to mean an annual return of 12% or more on the working capital.1 5.4 Average gross income of an FPS is calculated as an average of the total margins generated from the sale of sugar, kerosene, 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.

PEO, Performance Evaluation of Targeted Public Distribution System-2005, (at pg vi and 50).

5.5

The PEO report, 2005 brings out the importance of kerosene in the income composition of the FPS. The Report states that the income from kerosene almost equals the combined share of income generated from sale of BPL rice and wheat and thus speaks of the importance of keeping kerosene within the PDS retail trading to improve their viability.

5.6

The State of Haryana provided the Committee with the following calculation with respect to viability of FPS.

Economics of Depot Commodi Average Scale of Total ty number Distributi lifted of ration on quantity cards Wheat SBPL=41 CBPL=57 AAY =31 Sugar 33 Kg 33 Kg 35 Kg Margin Amount Total earned of empty margin/inco A/c of bag me grain (In Rs) 43.19 Rs777.42 Rs. Rs. 1554.84 Qtls @ Rs 772.42 18/-per @Rs. 9/Qtl. per bag of 50 Kg 2.58 Qtls Rs Rs. 50/- Rs. 100.57 50.57@ @ Rs. Rs 19.60 10/- per Per Qtl. bag of 50 Kg. 1290 Lts Rs. 165/Rs. 274.23 + per Kl. 372 Lts =1662 lts. i.e. 1.662 Kl. Rs.1929.64

K. Oil

SBPL, 2 Kg CBPL and AAY= 129 SBPL, 10 Lit. CBPL and AAY = 129 APL non 3 Lit. LPG holder=1 24

Total

Sr. No. 1. 2. 3. 4.

Details of Expenditure Towns Villages Rent of Shop 700.00 300.00 Elect/Water Charges 150.00 150.00 Stationary 50.00 50.00 Transportation charges of 30.00 45.00 sugar Total 930.00 545.00 Margin 1929.64 1929.64 Net earning 999.64 1384.64

1. The following is the viability of few FPS visited by the Committee in the State of Haryana 1. FPS Dealer Somnath, PDS License No. 31, Ward No. 19, Arya Nagar, Rohtak. There were 700 cards attached to the FPS APL 583, Central BPL 21, State BPL 88, AAY 8. Commodity Wheat Sugar Kerosene Gunny Total Quantity 38.77quintals 2.34 quintals 2919 litres 83 bags Commission Income Rs.18/697.86 Rs.19.60/45.86 Re. 0.16/467.04 Rs.12 per bag 996.00 2206.76 Amount 450 0 100 30 580 1626.76

Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total

Net Income (Income Expenditure)

Apart from running an FPS, the FPS dealer was also carrying on a business of a property dealer. He stated that he had not received sugar since the last 4

months. The officials in turn stated that the same was indeed correct and the allocation was delayed but the FPS dealer was assured that they would get their complete quota. 2.FPS Dealer Harish Chand, Authority No. KKDE/U/159, Kurukshetra District. There were 1106 ration cards attached to the FPS BPL 98, APL 1008. Commodity Wheat Sugar Kerosene Gunny Total Quantity 32.34quintals 1.96 quintals 4004 litres 261 bags Commission Income Rs.18/582.12 Rs.19.60/38.41 Re. 0.16/640.64 Rs.10 per bag 2610.00 3871.17 Amount 1000 500 100 30 1630 2241.17

Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total

Net Income (Income Expenditure)

Apart from running the FPS, the dealer was also running a business of purchasing and selling cars and was also running a separate shop selling cellular phones. 3. FPS Dealer Deepak Prakash Jain, Shop No. PDS No. 18, Ward No. 5. He is running the FPS since 1999. There were 1169 cards attached to the FPS Central BPL 49, State BPL 64, AAY 104, APL 952 Commodity Wheat Sugar Kerosene Gunny Quantity 73.69quintals 4.34 quintals 5026 litres 157 bags Commission Income Rs.18/1326.42 Rs.19.60/85.06 Re. 0.16/804.16 Rs.10 per bag 1570.00

Total Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total Amount

3785.64

200 30 100 30 360 3425.64

Net Income (Income Expenditure)

There were two brothers who were running the shop. They stated that they had 6 members in their family and apart from the FPS, they also worked as agents for getting licenses made for persons. They also stated that their father was a Chartered Accountant. They stated that they should also be supplied rice and dal, as was the case in Delhi, to make their shop more viable. 4. FPS Dealer Naresh Nagwan, PDS No. 145, Ward No. 2, Rohtak There were 729 cards attached to the FPS APL - 351, Central BPL 157, State BPL 173, AAY 48. 1053 Commodity Wheat Sugar Kerosene Gunny Total Quantity 125.7quintals 7.56 quintals 4833 litres 267 bags Commission Rs.18/Rs.19.60/Re. 0.16/Rs.11.50 per bag Income 2262.60 148.17 773.28 3070.50 6254.55

Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total

Amount 600 0 100 30 700

Net Income (Income Expenditure)

5554.55

The FPS dealer stated that he was satisfied with running the FPS and also worked as an electrician. 5. Patram, PDS No. 274, Ward No. 2, Rohtak. There were 903 cards attached to the FPS APL - 619, Central BPL - 92, State BPL 150, AAY 42. 1857 Commodity Wheat Sugar Kerosene Gunny Total Quantity 94.56quintals 5.68 quintals 4697 litres 201 bags Commission Rs.18/Rs.19.60/Re. 0.16/Rs.12.50 per bag Income 1702.80 111.32 751.52 2512.50 5078.14

Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total

Amount 1000 0 250 30 1280 3798.14

Net Income (Income Expenditure)

Apart, from running the FPS, the dealer also used to work part-time in a factory with his brother during off hours. He had 4 members in his family. 6. FPS Dealer Kaushalya Devi, FPS No. 1347, Faridabad. There were 683 cards attached to the FPS APL 550, BPL 133. Commodity Wheat Sugar Kerosene Quantity 43.89quintals 2.66 quintals 2980 litres Commission Rs.18/Rs.19.60/Re. 0.16/Income 790.02 52.13 476.80

Gunny Total

94 bags

Rs.7 per bag

658.00 1976.95

Expenditure Rent Electricity Stationery & Miscellaneous Charges Transportation Total

Amount 1000 0 100 30 1130 846.95

Net Income (Income Expenditure) The husband of the FPS dealer had a job in a private firm. 5.7

The Fair Price Shops in Haryana are governed by the Haryana Public Distribution System (Licensing and Control) Order, 2009. Under this control order a FPS license can be granted for a minimum number of 600 ration cards not exceeding 1200 ration cards, but in rural areas a village shall be treated as one unit for this purpose and as such the license for the FPS may be issued even for less than 600 ration cards of the village. Clause 5 of the said Order states that the this control order can be granted to a Sakshar Makhila help Group or a cooperative society or a corporation. license under Smooh or Self

5.8

As seen above and as stated by the Committee in its earlier reports, a stand alone FPS is not profitable and even if the Commission is increased to 100%, it will not result into sufficient income for the FPS dealer. It is a matter of common knowledge that in order to augment his income, an FPS owner diverts PDS food grains in the black market and shares the ill-gotten money with the officials of the Department.

5.9

The Committee is of the view that since any amount of increase in commission would not make an FPS viable, it is, therefore, necessary that FPS dealers should sell grocery items along with PDS food grain items. The condition should be that in the Grocery / Kirana shop, the sale should only be of non PDS commodities. The Committee feels that the condition should be put in the licence that FPS owner must have a running Kirana / Grocery shop. In case of default or non compliance with the condition, the FPS licence should be revoked.

5.10

The FPS licence is to be granted to a person having a Kirana/Grocery shop and belonging to the particular locality or has sufficient means to run a Kirana/Grocery shop along with FPS food grains. The Committee is of the view, therefore, the stand alone FPS is not feasible.

5.11

Conclusions / Recommendations

1. Increase in commission will put an unnecessary burden on the State exchequer or on the consumer if it is passed on to the consumers. It should rather be the condition of the license that FPS owner must run grocery / kirana shop. His inaction to do so should entail cancellation of license to run FPS. The authorization of FPS should be given to grocery / kirana shop in that area itself and it should also be seen that owner himself resides in that area. The FPS dealers were also of the opinion that other PDS commodities such as rice and dal should be supplied and allowed to be sold in order to increase the income. A stand alone FPS should not be allowed as it is an 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 made the supply

units for 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. 2. There has been a general suggestion that the commission of the fair price shops should be increased to approx 2.5% to 10%. However, the Committee reiterates its stand which it stated in its Delhi report 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. 3. It was observed by the Committee that some FPS dealers have very few beneficiaries attached to their shops while other have a large number of beneficiaries. Number of ration cards attached to shop has a direct bearing on the income of FPS. There have been a number of demands that each FPS should have sufficient number of ration cards attached to it. Thus, there should be rationalization of cards for each FPS. There is a need for rationalization of the number of beneficiaries attached to the FPS to make the shops financially viable. 4. Efficient retailing would require pre-conditions 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.

CHAPTER 6 IDENTIFICATION OF BPL BENEFICIARIES 6.1 Till 1992, the PDS was a general entitlement scheme for all consumers, without specific targets. The Revamped Public Distributed System (RPDS) was launched in 1992 in 1775 blocks in tribal, hill and drought prone areas. PDS as it stood earlier, had been widely criticized for its failure to serve the population Below the Poverty Line (BPL), its urban bias, limited coverage in the States with high concentration of the rural poor and lack of transparent and accountable arrangements for delivery of ration. 6.2 In June 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with focus on the poor. Under the TPDS, States are required to formulate and implement foolproof arrangements for identification of the poor for delivery of food grains and for its distribution in a transparent and accountable manner at the FPS level. 6.3 The scheme, when introduced, was intended to benefit about 6 crore poor families for whom a quantity of about 72 lakh tonnes of food grains was earmarked annually. The identification of the poor under the scheme is done by the States as per State-wise poverty estimates of the Planning Commission for 1993-94 based on the methodology of the Expert Group on estimation of proportion and number of poor chaired by Late Prof. Lakdawala. The allocation of food grains to the States/UTs was made on the basis of average consumption in the past i.e. average annual off-take

of food grains under the PDS during the past ten years at the time of introduction of TPDS. 6.4 The quantum of food grains in excess of the requirement of BPL families was provided to the States as transitory allocation for which a quantum of 103 lakh tonnes of food grains was earmarked annually. Over and above the TPDS allocation, additional allocation to States was also given. The transitory allocation was intended for continuation of benefit of subsidized food grains to the population Above the Poverty Line (APL) as any sudden withdrawal of benefits existing under PDS from them was not considered desirable. The transitory allocation was issued at prices, which were subsidized but were higher than the prices for the BPL quota of food grains. 6.5 Keeping in view the consensus on increasing the allocation of food grains to BPL families, and to better target the food subsidy, Government of India increased the allocation to BPL families from 10 kg. to 20 kg of food grains per family per month at 50% of the economic cost and allocation to APL families at economic cost with effect from. 01.04.2000. The allocation of APL families was retained at the same level as at the time of introduction of TPDS but the Central Issue Prices (CIP) for APL were fixed at 100% of economic cost from that date so that the entire consumer subsidy could be directed to the benefit of the BPL population. 6.6 The number of BPL families has been increased with effect from. 01.12.2000 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 lakh as against 596.23 lakh families originally estimated when TPDS was introduced in June 1997. The number of families below poverty line (BPL+AAY) as per the planning Commission estimates for the State of Haryana has been fixed at 7.33 Lakhs. 6.7 Clause 3 of the Control Order 2001 provides that the State Governments shall identify families living Below Poverty Line as per paragraph 1 of the Annexe to this Order. Para (1) of the Annexe to the Control Order, 2001 provides Guidelines for the purpose of identification of families living below the poverty line (BPL) including the Antyodaya families. It provides that the State Government 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 shall be taken to ensure that the families so far identified are really poor. Exercise of identification of BPL and Antyodaya families, wherever it has not been done already to be completed within three months of the issuance of the Control Order, 2001. 6.8 (i) The guidelines for implementing the TPDS issued by the Central Government provide: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 the expert group on estimation of proportion and number of poor headed by Prof. D.T. Lakdawala.

(ii)

According to the

official methodology, 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. 6.9 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 headed by Late Prof. Lakdawala. ii) Gram Panchayats and Gram Sabhas should be involved in the initial identification of eligible families. iii) iv) Final identification should be made after verification of doubtful cases. 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 criterion is indicated only by way of illustration and is not an exhaustive list of those who could be brought within the ambit of the Below Poverty Line. Commission. The total number identified, however, should be within the limit of Below Poverty Line population indicated by the Planning

6.10

The perusal of these guidelines would show that the Survey made by the Rural Development Department of the State could be a basis but the overall number of BPL identified by the States 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.

6.11

The State of Haryana has through the survey of 2007 determined the BPL and AAY beneficiaries on a 13 point scale. The survey was conducted by the rural Development and Urban Development Departments. Since the number of BPL families found in the survey was more than the estimates of the Planning Commission, the State decided to treat 3.83 lakh families as State BPL. By an Order dated 04.09.2008 it was decided that the State will collect the APL and BPL allocation and distribute it amongst the Central BPL and State BPL equally at 35Kg.per month per ration card. The difference in cost between the APL wheat and State BPL wheat will be

borne by the State. The quota of the BPL has since been reduced to 33 Kg. per family per month. BPL card holders are given wheat @ Rs.4.84 per Kg. AAY families are being distributed 35Kg. wheat per month @ Rs.2.10 per Kg. 6.12 The concept of State BPL is in consonance with the recommendations of this Committee in its Delhi report where it had been recommended that APL be abolished and if the Honble Court is of the view that it may not be possible to abolish APL category altogether, it may consider limiting APL category to households whose annual income is Rs. One Lakh. The category may be called Marginally Above Poverty Line (MAPL). This limit may however, be revised as and when required on a rational basis by the government. 6.13 There was a general complaint in all the public meetings during the visit of the Committee to various Districts of the State, and also while the Committee visited the villages to meet the beneficiaries that the BPL survey had not been conducted properly. Many deserving families had been left out from the BPL list and many well to do families had obtained BPL or even AAY cards. It was alleged that the survey teams did not visit the consumers instead they met the Sarpanch and made the BPL lists under political influence. The Committee is of the view that though some of these complaints may be motivated, it is necessary for the State Government to have a periodical check of ration cards and this should be continuous process as provided in Para 2 of the Annex to The Public Distribution System (Control) Order, 2001.

6.14

The Committee is of the opinion that some independent agency who has experience in this field should be entrusted with the task of identification of BPL families. This wrong identification / inclusion / exclusion errors has been found by the Committee in many of the States visited. Therefore, it is suggested that Registrar General of India (RGI) which is entrusted with the task of Census after every 10 years should be given this task in all the States of the union. It is hoped that the survey / identification by such an organization will be free of errors and without any extraneous considerations rather on merit and only the deserving families will be included in the BPL category.

CHAPTER 7 COMPUTERISATION
7.1 The Public Distribution System (Control) Order, 2001 provides that the State Government shall ensure monitoring of the functions of the Public Distribution System (PDS) at the Fair Price Shop (FPS) level through the computer network of the National Informatics Center (NIC) installed in the District NIC centers. For this purpose computerized codes shall be issued to each FPS in the district.2
2

Para 6(6) of the Annex to the Public Distribution System (Control) Order, 2001

7.2

The

Committee

has

already

submitted

detailed

report

on

Computerisation of PDS which may be read as part of this report. The present chapter deals specifically with computerisation of PDS in the State of Haryana. The State of Haryana and the Union Territory of Chandigarh have been selected for the pilot projects on computerisation of the Public Distribution System. The Committee invited the team of officers from the State, officers from HARTRON responsible for implementation of the project and the representative of Expedien_E-Solutions who gave a presentation of the proposed system. The Committee obtained a copy of the Detailed Project Report (DPR) and visited the PR Center at Ambala where the work on the computerisation project is in progress. 7.3 The proposal is to issue smart cards to each level of the distribution chain, i.e. the transporter, the FPS dealer and the consumer. In Haryana the agency which is performing the task of transportation of food grains from the godown to the FPS dealer is the CONFED. 7.4 In the proposed system, when the CONFED transporters take delivery from the godown, Depot Holder wise distribution information (i.e. the FPS details and quantity allotted) are loaded on the transporters smart card using the STT and 2 receipts are generated one for the transporter and the other is the copy for the godown in charge. In this system only data entry is made and the weight of the stock loaded on the truck is not cross checked using an electronic weigh bridge in conjunction with the smart card. In order to eliminate human intervention to the maximum extent electronic weigh bridges should be used at all whole sale storage points and the stock loaded in the trucks should be checked using the electronic weigh bridge in conjunction with the smart card. 7.5 When the truck reaches the FPS to deliver the stock, the CONFED transporter inserts his card in the Depot Holders STT. Stock gets

automatically transferred in the Depot Holders terminal, the transaction report gets stored in the Transporters card and 2 receipts are generated, i.e. one for the FPS dealer and the other for the transporter. 7.6 The consumer comes to the FPS for purchase of food grains, inserts his smart card in the STT, place his finger on the terminal for bio-metric verification. After the details are verified, the entitlement and price payable are displayed on the terminal. The FPS dealer thereafter completes the transaction by issuing the desired quantity to the consumer and the details of the transaction are loaded on the smart card and a paper receipt is simultaneously issued to the consumer. The system does not provide for authentication by the consumer, prior to the completion of the transaction as confirmation that the correct quantity of the stock has been issued to him. 7.7 The system should verify the card of the consumer on its being inserted in the STT and there should be no need to verify the biometric details at this stage. It is only after the desired quantity is entered by the FPS dealer in the STT and the same is received by the consumer, should the consumer be required to authenticate the transaction by placing his finger on the designated spot on the STT, thereby confirming that the transaction has been completed to his satisfaction. If he does not do so it would signify that there is some deficiency in the transaction and the transaction would not be completed and recorded on the STT or the smart card. 7.8 The Committee was informed that first phase of this project has been completed in most of the districts and now second phase is being implemented in seven districts. 7.9 First Phase of Computerization:

During first phase of computerization plan of the department, a network of 40 computer systems at HQ and LAN of 3 computer systems was established in each district. Training was imparted on Office Automation and Internet to 240 officials ( 10 officials of each district and 50 officials of Head Quarter). 7.10 Second Phase of Computerization: At the time of the visit of the Committee to the PR Center at Ambala D-1 forms which are the original application forms for obtaining a ration card were being scanned and images of the same were being fed into the computers. The work was being implemented by SIFY. The Committee was informed that after all the D-1 forms are scanned the family details of each form would be fed in the system in the forms designed for this purpose. Tender process for appointing the contractor for acquiring the necessary hardware and implementation of the smart card project has started. Once the contractor is appointed and the hardware is in place the software modules prepared by the NIC will be tested and implemented.

7.11 Integrated information System for Foodgrains Management (IISFM) i. Government of India has made a project namely "Integrated information System for Foodgrains Management" (IISFM) for implementation of the project in Haryana through Food Corporation of India. The Project is being implemented through NIC by Government of India and FCI. The project covering the FCI owned depots and frequently hired depots of the

CWC and SWCs to get the complete picture of the stocks in the Central Pool, the data pertaining to the stocks held by the State agencies on behalf of the FCI and the stocks in the decentralized procurement States. ii. FCFS had signed the MOU with GM, FCI, Haryana Region on 22.5.2006 for proper implementation of the project. State Government has identified 172 depots for implementation of the project out of which Food Department has identified 57 locations. FCI has provided the computer hardware and training to 232 employees of identified locations in the State from IISFM Project Funds. FCI has also customized the IISFM Application software as per requirement of all the procurement agencies on instructions to all the agencies and DFSC have been issued vide which they were requested to start the data feeding work in the said software up to district wise immediately. It was however, observed that the agencies other than FCI were not implementing this programme and have not even started feeding the data. iii. It is stated that in Haryana about 53 lakh people will be issued the smart card. Central Government have recently constituted a Unique Identification Authority of India (UIDAI). The mandate of UIDAI is to issue unique ID number to every resident of the country. It is stated that if PDS authorities, in their domain make ration cards on the basis of UID number of the ration card holders and their family members as mandatory, they can clear up their data base of bogus ration cards. UIDAI would re commend that all State Governments should start working and actively participate with the UIDAI so as to clean up their data bases and improve their delivery system. In answer to a question that about 1.5. crores bogus ration card holders were milking the PDS and could UID help such situations, Mr. Nandan Nilekani, Chairman, UIDAI, replied UID by itself will not solve the issue. The application of UID in a given context

will solve it. If a state decides to have UID in all its ration cards, then somebody who has a ration card with the UID cannot come again on another ration card with another UID. So UID will ensure there are no duplicates. We are providing a capability to agencies to re-engineer their public service deliveries but the decision to re-engineer has to be theirs.

CHAPTER 8
ENFORCEMENT, VIGILANCE AND COMPLAINT MECHANISM

8.1

Detailed instructions have been issued by the State Government vide letter dated 21.09.2005 with regard to enforcement, vigilance and complaints mechanism of PDS in the State. However, the Committee found that the enforcement, vigilance and complaint mechanism of in State is non-existant. The Vigilance Committees were only issuing monthly Utilization Certificates and that too without actually verifying distribution.

8.2

There is no separate unit in the police for enforcement of the provisions of the Essential Commodities Act, 1955. Some cases are detected by department in routine or in special drives. The following table shows the number of cases registered and the action taken during the last 4 years 2006-07 2007-08 54 36 628 2094 2008-09 39 19 288 1654 2009-10 (Upto 6/09) 4 1 68 260 2,05,250

No. of cases registered under E.C.Act Persons arrested No. of licencees cancelled No. of depot holders whose security forfeited Amount of security forfeited 8.3

25 13 405 1999

12,56,800 14,41,600 10,57,950

The Committee observed that there is no system of monitoring and vigilance of the PDS in the State, even the rules laid down in this regard are not being implemented and followed. This is particularly so with regard to inspections to be conducted by various officials at different stages and also with regard to the functioning of the Vigilance and Monitoring Committees.

8.4

The State has set up Vigilance Committees only at the FPS level. The functions of these Committees are specified in the Letter No. F: G -12005/17350, dated 21.09.2005 and also in the Haryana Public Distribution System (Licensing and Control) Order, 2009. However, the Vigilance Committees are only issuing Utilization Certificates to the FPS to enable them to get the allocation for the next month. It was found that the certificates are signed by the members of the committees without verifying the records of the FPS in routine.

8.5

The State should set up Vigilance Committees at State and District levels also to keep an eye on the Public Distribution System. The State level Vigilance Committee should be headed by the Commissioner Food and Supply and the District Level vigilance committee should be headed by the Deputy Commissioner. Date, Place and time for the meeting of the Committees should be fixed in advance. For example the State Level Vigilance Committee should meet once in two months on the first Monday of January, March, May and so on, at the office of the Commissioner Food and supply at 11.00 AM. The District Level vigilance Committee can meet at the office of the Deputy Commissioner on the first Wednesday at 11.00 AM.

8.6

Inspections by FCI Officials The Government of India issued instructions to FCI vide letter dated 24 th October 2007 with regard to putting in place a system of regular inspection of FCI and State Government/Authorized wholesale godowns. In pursuance to that FCI issued directions to all Regional General Managers vide Letter dated 31st October 2007 to inspect State Government /Authorized wholesale godowns and to submit detailed report

to the Headquarter and to State Government. Committee was informed that no such inspection has been conducted by the FCI officials in State. 8.7 Legal Metrology Department

8.7.1 Legal Metrology Department of the State is responsible for certifying the weights and scales of all establishments. This includes the entities involved in the PDS. 8.7.2 The FPS dealers are required to take annual certification from the Weights and Measures Department after getting their weighing machine checked. 8.7.3 The FPSs are supposed to take their weighing instruments including the weights and the scales to the office of the Legal Metrology Department which stamps the instruments and gives receipt of the amount paid by the dealer as certification fee. 8.7.4 However there is no coordination between the Legal Metrology Department and the PDS enforcement agencies. The Metrology department does not conduct regular or random inspections of the FPSs, to ensure that the weights and scales used therein are correctly aligned. Since there are no inspections, the question of initiating action against errant establishments also does not arise. Thus the role of the Legal Metrology department is limited to giving annual certification. 8.8 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.

8.9

There should be a complaint mechanism and the State should set up a 24 hours toll free helpline where a beneficiary can lodge his complaint. The toll free number should be printed or stamped on the Ration Card. There should be a system of the follow up of the complaint. A post of Ombudsman/Regulator should be set up as suggested by this Committee in its Delhi Report. The Ombudsman/Regulator should look into the complaints received through the helpline and take appropriate action against the defaulting licencees and the officials concerned.

8.10 A Public hearing for PDS on the lines of the Bijlee Lok Adalat must be convened at a designated place, time and day every 2 to 3 months where general public can seek to resolve outstanding issues pertaining to the PDS. These may include those relating to their category / entitlements, non-issuance of the cards, bifurcation of cards, wrong inclusion of APL, complaints regarding under-weighment etc. PDS Lok Adalat so constituted should be presided over by District Judge or a Judicial Officer nominated by him not less than the rank of Additional Judge and should include the Collector of the District and the District Supply Officer. A system of accountability must be put in place to ensure the implementation of decisions taken during these hearings. 8.11 Malpractices in the PDS continue because of lack of effective enforcement system. The Honble Supreme Court has issued the following directions to facilitate the supply of food grains1. a. b. licencees, who Do not keep their shops open throughout the month during the stipulated time. fail to provide grain to BPL families strictly at BPL rates and no higher

c. d. e.

to keep the cards of BPL house holds 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, 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.

8.12

It is therefore necessary that the special squads are set up by the State consisting of persons draw 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 is of the opinion 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. 8.13 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 DISTRIBUTION OF WHEAT FLOUR/ATTA TO PDS BENEFICIARIES

9.1 Government of India announced Targeted Public Distribution System in May, 1997. The TPDS was implemented in the State in the month of May, 1997. Under this scheme 10kg. wheat per family per month was distributed as per policy of the Govt. of India. Wheat was distributed from May, 1997 to June, 1998. 9.2 The Committee was informed that in the meeting of District Food and Supplies Controllers held on 16.06.1998, it was decided that whole meal atta may be distributed amongst the ration card holders instead 9.3 of wheat.

Due to the complaints of whole meal atta in January, 2002 it was decided that whole meal atta and wheat in grain form may be distributed as per the choice of consumers.

9.4

A letter dated 27.06.2003 was received from the Govt. of India in which it was intimated that there are too much complaints about the quality of the atta. Govt. of India intimated that when there is no provision to distribute atta under TPDS why the State Govt. is distributing atta instead of wheat in grain form. The matter was discussed and it was decided to continue with the present policy of need based supply of atta or wheat which ever is required by the consumers.

9.5

It was informed to the Committee that in the meeting held on 28.03.2005 under the Chairmanship of the then Deputy Chief Minister Haryana it was decided that suggestions may be called from the District Officers in regard to distribution of whole meal atta/ wheat. As per the suggestions of the District Officers of the Department it was decided on 31.03.2005 that only wheat be distributed in grain form under TPDS instead of atta. From 01.04.2005 wheat is being distributed under TPDS in grain form.

9.6

The Committee was informed that State Government had started distribution of atta instead of wheat in certain areas and that Scheme was subsequently withdrawn. The Committee could not find any substantial reasons first for supply of atta and then subsequently the withdrawal of scheme

9.7

During Public Hearings people supported supply of atta instead of wheat in the urban areas. This did not find favour with the FPS owners objection to the supply of atta was basically due to less shelf life. The atta is presently supplied basically in the State of Gujrat , Rajasthan and Union Territory of Chandigarh.

9.8

The Government of India decided vide letter dated 17.01.2008 to adopt a policy of encouraging distribution of wheat flour to ration card holders of AAY, BPL and APL categories under the TPDS. The State Governments should take up distribution of wheat flour through the network of fair price shops to AAY, BPL and APL categories of card holders under the TPDS, subject to the following terms and conditions:(a) Distribution of wheat products other than wheat flour such as suji, maida, rawa etc. will not be permissible from the allocations of wheat made by the Deptt. of Food and Public Distribution, Govt. of India under the TPDS. (b) The wheat flour to be distributed to ration card holders shall conform to all quality standards/ specifications of whole wheat atta prescribed under the Prevention of Food Adulteration Rules, 1955. The State/UT Governments shall put in place adequate safeguards to ensure that the quality of wheat flour issued to card holders is as per the standards/specifications prescribed under PFA Rules, 1955. (c) From commencement of this policy and thereafter in the beginning of every financial year, State/UT Govts. should assess the requirement of wheat flour in their State/UT based on options, if any, to be exercised by the ration card holders under the TPDS. However, this requirement of wheat and wheat flour would be limited to the monthly allocation of wheat to the concerned State/UT under the TPDS.

(d)

The State/ UT Governments should distribute wheat flour in quantities equal to about half of the monthly allocations of wheat to ration card holders under the TPDS from March, 2008 onwards. This should be done particularly in those areas where evaluation studies have shown high levels of diversion/leakages of foodgrains under the TPDS and where it would be more convenient for the ration card holder families to get delivery of the wheat flour.

(e) (f)

The wheat flour should be properly packaged in suitable quantities. The ratio of whole wheat flour to whole wheat should be fixed by the State/ UT Govts. appropriately in such a way as maximum quantity of wheat flour is obtained from the whole wheat to be issued to flour mills for this purpose.

(g)

Expenses on milling/ grinding of whole wheat, packaging and transportation of whole wheat to mills and of wheat flour from the mills to distribution centres, etc. should be borne by the State/UT Govts. or they should be adjusted suitably in the quantity/ issue price of wheat flour in such a manner as no additional burden in passed over to the targeted AAY, BPL and APL ration card holder families.

(h)

The State/ UT Govts. should ensure that no unreasonable monetary advantage is allowed to flour mills in the process.

(i)

For distribution of wheat flour instead of whole wheat to eligible ration card holders under the TPDS, it will not be necessary for

State/UT Govts. to obtain specific permission or prior concurrence of the Govt. of India for this purpose. However, the quantum of wheat flour distributed under the TPDS will be reported every month to GOI. (j) The quantity of unlifted wheat flour/ atta from fair price shops, if any, during a month may not be disposed of in the open market but carried forward to the next month for distribution subject to it retaining the required quality and the wheat allocation to RFMs/Chakki mills for conversion into wheat flour for the next month will be proportionately reduced by the State/UT Govt. authorities. (k) The State/UT Governments or their Agencies will not make any profit in implementation of the scheme. (l) The distribution of wheat flour / atta through PDS outlets will be made as per provisions of the PDS (Control) Order, 2001 and any violation of the Order will result in imposition of penalties under the EC Act, 1955. (m) Based on assessment of the State/ UT Governments, distribution of fortified wheat flour may also be taken up in selected areas or for selected categories of ration card holders or for all categories of the ration card holders, for improving nutritional standard of the families covered.

(n)

Distribution of wheat flour to the targeted families under the TPDS as per the terms and conditions specified above shall be sole responsibility of the concerned State/UT Governments. The State/ UT Governments shall ensure proper implementation and regular monitoring of the scheme. It shall be ensured that there is no diversion of TPDS wheat flour to the open market.

9.9

Since shelf life of wheat flour (Atta) is only 45 days it has to be ensured that the product is distributed and consumed within the stipulated period of shelf life so as to avoid product deterioration. The Committee would suggest the following steps:1. There should be a dedicated flour mill for grinding PDS wheat. In case that is not immediately possible, it should be ensured that the day on which the PDS wheat is ground no other wheat will be ground in that flour mill. 2. Quality of the flour manufactured has to be strictly monitored. Grinding should be perfect and flour should be of fine consistency; 3. There should be strict vigilance to ensure that no other wheat is mixed up with PDS wheat; 4. Grinding of PDS wheat should be in a flour mill where there is no human intervention except at the time of pouring the wheat grain in the machine and at the time of sealing the atta in right quantity in the bags as it comes out. The process may include fortification of wheat with proper folic acid, iron and other nutrients.

5.

There should be strict adherence to the time schedule to ensure that the atta is consumed within the prescribed period and its quality is maintained. It is necessary that t he atta reaches the FPS within 5 days of its grinding. A period of 30 days must be given to the beneficiary for consumption of atta from the date he lifts the atta from the FPS as he is given ration for one month. Thus, atta must be distributed by the FPS to all the beneficiaries within 15 days of grinding. In case, some bags are left undelivered in the FPS after 30 days of grinding, steps should be to remove the undelivered bags from the FPS.

6.

The date of grinding of the wheat and the date on the HDPE bag should be same and the bags should also contain all other relevant particulars like the expiry date, batch no., name of the mill, etc.

7.

The provisions of Prevention of Food Adulteration Act and Packaging and Measurement Act should be strictly observed. It is must be understood that any adulterator can cause great harm to the health of the public and the responsibility in the case will have to be fixed.

CHAPTER 10

RECOMMENDATIONS The Committee visited the State Headquarters in Chandigarh and also some Districts Ambala, Kurukshetra, Rohtak, Faridabad, Mewat, Palwal, Bhiwani and Hissar. During the visit the Committee discussed various issues concerning PDS with the State Government officials, District officials, consumers, Fair Price Shop dealers, NGOs, SHGs, and other stake holders to find out the problems in the State. The details about the visit have been discussed in different chapters. Following are some of the suggestions / recommendations for improvement of PDS in the State:1. There was a general complaint in all the public meetings, that the Committee held, and also while the Committee visited the villages to meet the consumers that the BPL survey had not been conducted properly. Many deserving families had been left out from the BPL list and many well to do families had obtained BPL or even AAY cards. It was alleged that the survey teams did not visit the consumers instead they met the Sarpanch and made the BPL lists under political influence. The Committee feels that though some of these complaints may be motivated, it is necessary for the State Government to have a periodical checking of ration cards and this should be continuous process as provided in Para 2 of the Annex to The Public Distribution System (Control) Order, 2001. 2. The Committee came across many cases of exclusion / inclusion errors. To deal with the situation fresh survey for identification of BPL families may be undertaken. Central Government also accepts for re-identification of BPL families is needed. that fresh survey The Committee feels that

the identification of BPL families is very important aspect to address the

food security issue as during the visit of the Committee in many States, it was generally seen that the deserving people are not having the ration cards rather those who are well to do and prosperous are included in the BPL category. To make the system of Public Distribution purposeful, it is utmost necessary that the survey should be conducted by an independent agency which can work without any political interference and the survey is conducted without any favour or fear. The Committee feels that the Registrar General of India may be involved for this purpose since they have the necessary experience in such work and also be perceived as a neutral agency. 3. Under the existing system food grain should reach the Fair Price Shops by 10th of the month. Some times the delivery is delayed even till the 15 th. The State Government should ensure that the PDS food grain reaches the Fair Price Shops before the 1st of every month so that distribution can start at the beginning of the month and continue throughout the month. The Fair Price Shops should remain open on all working days during the specified hours. The consumer should be allowed to draw ration in installments. 4. The ration card has become a valuable document. It serves as an identity card. It is required for availing benefits under various other schemes of the government. This is in gross violation of the provisions of the Public Distribution System (Control) Order, 2001 issued by the Central Government. Ration card should be de-linked from all other schemes and steps should be taken to ensure that it is not used as an identity card. The Committee also further suggests that in place of ration card a food entitlement card may be issued which can be used only for food supply

under Public Distribution System. SCHEME. 5.

The Committee also feels that it is

appropriate if the name of TPDS is changed to FOOD FOR POOR

Electronic weighing systems should be installed at the godowns of all the agencies storing PDS grain. Delivery should be made to the representative of CONFED after 100% weighment.

6.

Joint sampling of grain is not taking place at all. The Committee found that none of the FPSs, visited by it had valid samples. Thus, there is no check on the quality of grain which is sold at the FPSs. Joint sampling of food grain should be done at the time of lifting from the godowns of the agencies and samples should be displayed at the Fair Price Shops.

7.

In order to ensure proper quality and quantity food grain can be packed in smaller packing of appropriate sizes in non pilferable, tamper proof bags like HDPE bags.

8.

It is no secret that an FPS dealer can not honestly earn enough to sustain himself and his family. To avoid running into losses he indulges in black marketing. Study of the Committee shows that merely increasing the commission will not result in making the FPS a profitable or viable proposition. The Committee is of the view that the concept of stand alone FPS should be changed. It should be in the condition of FPS licence that he runs a kirana/ grocery shop. He should be permitted to sell all items except PDS rice and wheat. This way the FPS owner can earn profit and the shop will remain open through out the month. Moreover attached number of cards means a set number of customers in any case and it will

not be necessary to put any condition in the licence to keep the shop open during particular hours or to observe a particular day as a holiday. Programme Evaluation Organisation under Planning Commission in its evaluation Report on TPDS defined Viability of FPS to mean an annual return of 12% or more on the working capital.3 However, the commission rate of the FPS dealer is very low and any increase in the commission means extra burden either on the beneficiary or on the Government. Therefore, the FPS dealership should be given to the kirana shop owner to make the shop financially viable. The Committee also feels that the income equivalent to 12% annual return on the investment as observed by the Planning Commission in not enough to servive or make the FPS viable. For example, the investment needed by an FPS dealer with 750 cards (200 BPL + AAY and 550 APL) is only about Rs. 80,000/- . The annual return at 12% on this amount comes to only Rs. 9,600/- i.e. Rs. 8,00/- per month. 9. In the clause (4) of Haryana Public Distribution System (Licensing and Control) Order, 2009 family has been defined as including all those persons whose names have been entered in the ration card of a fair price shop owner or who are dependent upon him. This definition of the Family leads to corruption as it enables an influential family to have several FPS licences. The Government should consider redefining the Family to include son/daughter/brother/sister/ daughter in law/ wife/widow of a brother etc to remove the anomaly.

PEO, Performance Evaluation of Targeted Public Distribution System-2005, (at pg vi and 50).

10.

It is a well documented fact that the FPS owner is in business for the purpose of diversion or for political influence or other influence that he can wield by being an FPS retailer. There is massive corruption woven around it where the participants are the shop keeper, officials of the Department / Corporation, transporters and last but not the least the politicians. The Committee is of the view that the reservation for various categories provided in the Haryana Public Distribution (Licensing and Control) Order, 2009 appears rather unnecessary. FPS licences should be allotted to persons of the locality who are already running kirana/ grocery shop or have the capability to do so.

11.

There is no separate system of implementation of enforcement and vigilance in the PDS as currently there is no separate cell for the purposes of monitoring PDS. It is recommended that a separate division of enforcement and vigilance of PDS be started in the State in order to deal with the specific problems of PDS.

12.

The State should set up Vigilance Committees at the State and District levels also to keep an eye on the Public Distribution System. Date, Place and time for the meeting of the committees should be fixed in advance. Vigilance Committees at various levels be strengthened by including the NGOs, Self Help Group, Consumer Organisations and the educated youth in the Vigilance Committee at various levels. The meetings of the Vigilance Committees must be convened regularly. The Secretary of the Department of Food & Supply should be responsible for convening the meeting at the State level. Similarly Deputy Commissioner should ensure that the meetings of the Vigilance Committee at District level are held at regular intervals, at the Fair Price level the responsibility can be given for

convening the meetings regularly to Municipal Councilors of the area for Urban Areas and Block Development Officer for the FPSs in Rural Areas. 13. The Village/ FPS level committee should also meet regularly every month. Minutes of the meetings of the vigilance committees should be recorded. Follow up action should be verified in the next meeting. 14. There is no effective and systematic complaint redressal mechanism for the common people. In the absence of a customized complaint redressal system, most of the grievances of the common persons go unheard and unattended, encouraging the corrupt practices by the dealers and the officials. It is recommended that an effective complaint redressal system for PDS related grievances be initiated wherein the beneficiaries may register and also follow up their complaints. Till such time a formal complaint mechanism is established, it is recommended that the concerned officials be given strict instructions with regard to responding to and acting upon the complaints received from the beneficiaries. 15. There should be a complaint mechanism and the State should set up a 24 hours toll free helpline where a beneficiary can lodge his complaint. The toll free number should be printed or stamped on the Ration Card. There should be a system of the follow up of the complaint. A post of Ombudsman/Regulator should be set up as suggested by this Committee in its Delhi Report. The Ombudsman/Regulator should look into the complaints received through the helpline and take appropriate action against the defaulting licences and the officials concerned.

16.

The Legal Metrology Department does not play an active role in the monitoring and enforcement of the PDS. Thus it is recommended the Legal Metrology Department works in coordination with the PDS administration. The officials of the Legal Metrology department should also be made accountable for any act of omission or commission in fulfilling their duties.

17.

The rate, at which action is taken against the errant FPS dealers and errant officials, is abysmally low. Thus there is no effective deterrent to stop malpractice in PDS. It is necessary that there should be special squads for enforcement of PDS. The squads should be responsible conducting raids, surprise checks, conducting prosecutions, recommending Departmental action against the officials and taking action against the defaulting officer under the Essential Commodities Act 1955, Prevention of Corruption Act, 1988 and Indian Penal Code. PDS operation should be based on the principle of zero tolerance. Any infraction of the Rules and Regulations or Instructions should invite strict action not only against the FPS owner but also the concerned officials.

18.

The Committee feels that awareness is very important for proper functioning of PDS. To create awareness among the people it must be ensured by the District administration that a press release is issued at the beginning of the month indicating the quantity issued to be FPSs, entitlement of various categories of the beneficiaries, rates of the commodities to be charged by the FPS dealer and, so that people can know their rights and entitlements.

19.

To further enlighten the peoples of their rights and entitlements, pamphlets, posters must be published and widely circulated. details on their scrolls to create awareness among the people. Local TV channels may also be requested to show all these above mentioned

20.

A Public hearing for PDS on the lines of the Lok Adalat ( Bijlee/ telephone/ water) must be convened at a designated place, time and day every 2/3 months where general public can seek to resolve outstanding issues pertaining to the PDS. These may include those relating to their category / entitlements, non-issuance of the cards, bifurcation of cards, wrong inclusion of APL, complaints regarding under-weighment etc. PDS Lok Adalat so constituted should be presided over by District Judge or a Judicial Officer nominated by him not less than the rank of Additional Judge and should include the Collector of the District and the District Supply Officer. A system of accountability must be put in place to ensure the implementation of decisions taken during these hearings.

21.

The Committee has given a comprehensive report on computerization and recommends that the same be acted upon. In the report the Committee has suggested the whole process of computerization of the Public Distribution System which includes using electronic weighing systems and integrating the same with automated allocation and delivery systems.

22.

Distribution of essential commodities under the PDS control order as per ration card be rationalized. Though it is general understood that each family as per ration card be issued 35 kgs of foodgrain per month. It is also generally understood that a family consists of five members. The

Committee has come across certain cases where family consist of more than five members, in such situation the Unit system be introduced. 23. Though the Committee is not required to go into distribution of kerosene oil but in various public meetings the corruption in distribution of kerosene oil has come into notice. There is a general complaint regarding the less allocation of kerosene oil to APL families which are not using LPG. It was informed that APL families are given three litre kerosene oil per month while the allocation to BPL and AAY families is 9 litre per month. It was observed by the Committee that in Haryana generally kerosene oil is not used for cooking purpose in rural areas. Rather people use the kerosene oil for lighting purposes as there is no 24 hour electricity supply is available. In urban areas also generally people cook on LPG and kerosene oil is used for lighting purposes. extent for cooking purposes. However, poor people and migrant labour etc. who lives in the outskirts of the city use kerosene oil to some Most of the kerosene oil allocated to the FPSs is diverted in the black market. One of the reason for this black marketing is non-availability of open sale kerosene oil in the market. Government should take steps to allow the open sale of kerosene oil at reasonable price, so that those who are in need of kerosene oil can get the same in the open market and need not to encourage diversion / black marketing. Separate licences for open market sale can be issued by the oil companies once a policy decision is taken by the Government of India. 24. The Committee feels that there should be some provision of food security for the migrant labour who come in search of job or work from their native places temporarily. They could be registered as temporary

residents and provision should be made for providing PDS food grains etc. to them also. 25. The Committee during the visit to the State came across many cases of damaged foodgrain supplied to the consumers under PDS. It was informed by the District Officials that generally the quality is proper however at some places the grain is damaged because of the nonavailability of storage space with the procurement agencies in Haryana. They have to store the foodgrains sometimes in the open. Therefore, due to the non-availability of proper storage space, not only the grain which is supplied in PDS is of proper quality but also the foodgrain is damaged. The Committee feels that State Government must take immediate steps for creating storage space so that the foodgrains is not damaged and the proper quality is available to the consumer though PDS. 26. The Committee in its report on Delhi and other States has recommended abolition of APL category. The Committee found that in Haryana no wheat is distributed to the APL card holders. 27. The Committee is of the view that to began with atta instead of wheat be distributed to BPL families in urban areas. The distribution of atta also checks diversion of PDS food grain into black market, however, certain checks are required considering the self life of atta is 32-45 days. Committee suggests following measures regarding Atta Distribution: a) There should be a dedicated flour mill for grinding PDS wheat. In case that is not immediately possible, it should be ensured that the day on which the PDS wheat is ground no other wheat will be ground in that flour mill. the State of

Quality of the flour manufactured has to be strictly monitored. Grinding should be perfect and flour should be of fine consistency; b) c) There should be strict vigilance to ensure that no other wheat is mixed up with PDS wheat; Grinding of PDS wheat should be in a flour mill where there is no human intervention except at the time of pouring the wheat grain in the machine and at the time of sealing the atta in right quantity in the bags as it comes out. The process may include fortification of wheat with proper folic acid, iron and other nutrients. d) There should be strict adherence to the time schedule to ensure that the atta is consumed within the prescribed period and its quality is maintained. It is necessary that t he atta reaches the FPS within 5 days of its grinding. A period of 30 days must be given to the beneficiary for consumption of atta from the date he lifts the atta from the FPS as he is given ration for one month. Thus, atta must be distributed by the FPS to all the beneficiaries within 15 days of grinding. In case, some bags are left undelivered in the FPS after 30 days of grinding, steps should be to remove the undelivered bags from the FPS. e) The date of grinding of the wheat and the date on the HDPE bag should be same and the bags should also contain all other relevant particulars like the expiry date, batch no., name of the mill, etc. f) The provisions of Prevention of Food Adulteration Act and Packaging and Measurement Act should be strictly observed. It is must be understood that any adulterator can cause great harm to the health of the public and the responsibility in the case will have to be fixed.

APPENDIX
Issues raised during Public Hearing Central Vigilance Committee visited the following districts of Haryana Ambala, Kurukshetra, Rohtak, Faridabad, Mewat, Palwal, Bhiwani and Hissar.During the visit meetings. the Committee discussed various issues with the the formal as well as informal different stake holders regarding PDS in

The Meetings were attended by FPS dealers, Consumers/card

holders, NGOs, SHGs, Consumer Organisations, Media persons and Women Organisations. The following are some of the issues raised by different stake holders in these formal / informal public Meetings Short weighment by FPS dealers. Shops are not opened everyday. Timings of shops be fixed and followed scrupulously. Viability of FPS is not there. Commission of FPS needs to be increased or fixed honorarium / salary be allowed to FPS dealers. APL category with gas users may also be allowed kerosene. Rickshaw pullers and other daily wage earners be allowed ration cards. Allocation of ration be made unit-wise rather than ration card-wise. There is complaint of bad quality of food items. BPL survey be made again to remove exclusion / inclusion errors. Food articles be packed in small HDPE bags. Atta be supplied in convenient packing instead of wheat. Kerosene oil be restricted to 5 litre instead of 9 litre. Vigilance mechanism is weak which needs to be strengthened. Social workers be included in the vigilance committee. Display board should be clear and legible.

Toll free number should be available at District HQs for complaints, suggestion etc. No response of officials in case of complaints Less weighment by FPS dealers. Overcharging by FPS dealers Items in PDS should be increased such as edible oil, pulses, salt, cloth. Entitlement of these commodities for various categories be increased. Transparency and honesty need to be brought out in allotment of FPSs. WSHGs be pr eferred in allotment of shops. Vigilance mechanism needs to be strengthened. Ration depots are not opened through out the month. Depot holders be given the dealership of cooking gas also. LPG users may also be allowed some quantity of kerosene oil. Ration is not supplied every month rather once in three month. Fake entries are made in the ration cards by the FPS dealers. Sugar supply is not regular. Super Bazars may be opened in Mewat area. Quality of grain is not proper. Depot holder keeps the ration card with him or her. Atleast minimum wages be given to FPS dealers. Rice should also be provided in PDS. The survey made in 2007 for identification of BPL families be implemented immediately. Really needy / deserving people are not categorized in BPL and AAY categories.

Wide publicity be given about the entitlements / rates etc. Social audit may be adopted in PDS. Enforcement mechanism is week. Migrant labour be covered in PDS. Ration be allowed in installments. Gas cylinders should be supplied through FPSs. Senior officers of the department are involved in the diversion. Stringent laws should be there to deal with those found indulged in diversion and in violation of EC Act and Control orders. Fast track courts be established to deal with the cases of diversions of PDS items and violation of the Act. Provision of summary trial and punishment of the guilty in the shortest possible time be made by amending the laws.