Setting Public Distribution System Right

India has made a determined effort to fulfill its ideal of a welfare state, not only in principle but also through economic planning. The welfare budget allocation of about INR 2,270 billion ($36 billion), which is about 40 percent of the total budget outlay for the country for the year 2015-16, reflects this fact. However, the proportion of this amount that actually reaches the intended beneficiaries is a matter of speculation. After the success of direct benefit transfer (DBT) for the liquefied petroleum gas subsidy, the government is contemplating the introduction of DBT for the public distribution system (PDS), India's food security system, as well.

These notes specifically talk about what ails the PDS, the various alternative methods for distribution being piloted and necessary steps required to run a successful PDS scheme. Part II compares the three of the below alternative distribution models:

• Biometric authentication through point of sale (PoS) device.
• Food coupons.
• Direct benefit transfer.