Archive · 8 Jan 2026
India's PDS faces inefficiencies, cash transfers proposed
India gives free rice and wheat to over 800 million people through the Public Distribution System (PDS).
This costs the government a lot of money, around ₹2.05 lakh crore every year.
The problem is that a lot of this food gets lost or stolen before it reaches the people who need it.
It also costs a lot to transport and store the food.
Some experts think it would be better to give the money directly to the people instead of giving them food.
This way, people can buy better food and the government can save money.
They suggest starting this slowly, letting people choose between food and cash, and making sure the money is enough to buy food even if prices go up.
This could help make the system more efficient and give people more power to choose what they eat.
India's PDS provides free rice and wheat to over 800 million people, costing ₹2.05 lakh crore annually.
About 20 million tonnes of subsidized grain are diverted or lost each year, costing ₹69,108 crore.
Transportation, storage, and handling of food grains add to the high logistics and subsidy burden.
Experts propose replacing physical grain distribution with direct cash transfers to reduce inefficiencies and empower beneficiaries.
A phased, opt-in approach is suggested, allowing beneficiaries to choose between grain and cash for 12–18 months.
- Who
- Indian government and beneficiaries of the Public Distribution System (PDS)
- What
- Proposal to replace physical grain distribution with direct cash transfers to reduce inefficiencies and leakages
- When
- Current system in place since 2013, proposal for future reform
- Where
- India, specifically targeting rural and urban PDS beneficiaries
- Why
- To reduce fiscal burden, prevent wastage, and empower beneficiaries with choice and financial inclusion
- Annual Food Subsidy Bill
- ₹2.05 lakh crore (FY2024–25)
- Economic Cost per kg
- ₹39.75 (rice), ₹27.74 (wheat)
- Annual Grain Distribution
- 36–38 million tonnes (rice), 18–20 million tonnes (wheat)
- Grain Diversion/Loss
- 20 million tonnes annually
- Cost of Diversion/Loss
- ₹69,108 crore annually
- Open Storage Grain
- 30 million tonnes
- Spoiled Grain in Storage
- 1.8 million tonnes
- PDS Beneficiaries
- 75% of rural India, 50% of urban India