Portability in the Public Distribution System

The public distribution system in India is a major instrument for achieving the goal of “Zero Hunger.” Despite the vast amounts of resources spent, the PDS suffers from several inefficiencies largely attributable to the monopoly of agents involved in the last-mile delivery of grains. To address this issue, several state governments in India have started implementing a novel intervention called portability. This intervention offers beneficiaries the choice of when and where they can avail of their food entitlements while the government controls what and how much. We use detailed and large-scale programme data from Andhra Pradesh to analyse the uptake of portability among the beneficiaries and identify its underlying drivers.

This research was supported by a grant from Omidyar Network to the Digital Identity Research Initiative at the Indian School of Business. The authors are grateful for their support and would like to thank Ashwini Chhatre at the Indian School of Business for providing valuable feedback. They are also grateful to Nivedita Mantha at the Indian School of Business for her support with data collection and cleaning.

In India, the public distribution system (PDS) is a major policy instrument for achieving the Sustainable Development Goal of “Zero Hunger.” Despite substantial budgetary allocations (typically about 1% of the national gross domestic product), the PDS is consistently reported to be plagued by the leakage of grains to open markets, poor quality of grains, and apathetic customer service (Drèze and Khera 2015; Khera 2011). A key structural determinant of these problems is the presence of monopolistic agents who are responsible for the last-mile delivery of foodgrains. These agents lack strong incentives to improve efficiency and customer service but have strong incentives to divert subsidised grains to open markets (Banerjee et al 2017; Pingali et al 2017; World Bank 2003).

To address this issue, several state governments in India have implemented a novel intervention that leverages the ongoing digitisation of India’s PDS. Under this intervention, termed portability, beneficiaries can use their biometric identities (fingerprints or iris scans) to digitally authenticate themselves and collect their foodgrain entitlements from any licensed shop within their state. This is in stark contrast to the traditional mode of operations, wherein beneficiaries could collect their entitlements only from a single, pre-assigned shop (hereafter “home shop”).¹ Thus, portability is designed to be a technology-driven solution to provide choice to beneficiaries, thereby decreasing the monopolistic power wielded by the shop dealers.