Fair Price Shop (FPS)

A Fair Price Shop (FPS), commonly referred to as a ration shop, is an integral part of India’s Public Distribution System (PDS). These shops are responsible for distributing essential commodities such as rice, wheat, sugar, and kerosene at subsidised rates to the economically weaker sections of society. The primary objective of the FPS network is to ensure food security, price stability, and equitable access to basic necessities across both urban and rural regions.

Background and Evolution

The concept of fair price shops in India dates back to the period of the Second World War, when food scarcity and inflation prompted the government to regulate food distribution. The first formal structure of rationing was introduced in 1942 in Bombay (now Mumbai). After Independence in 1947, the government institutionalised the system to tackle food shortages and protect vulnerable populations from price volatility.
The Public Distribution System (PDS) evolved gradually over the decades. In the 1960s, it became a nationwide food security mechanism linked with the Green Revolution, which improved agricultural productivity. In 1997, the Targeted Public Distribution System (TPDS) was launched to focus subsidies on Below Poverty Line (BPL) and Antyodaya Anna Yojana (AAY) families. This shift marked a transition from universal to targeted rationing.
By the 21st century, technology-driven reforms and legislative backing, such as the National Food Security Act (NFSA) 2013, enhanced transparency and accountability in the functioning of FPS.

Objectives and Functions

Fair Price Shops operate under the dual supervision of the Central Government and State Governments, with distinct responsibilities:

• The Central Government, through the Food Corporation of India (FCI), procures, stores, and allocates foodgrains to states and union territories.
• The State Governments are responsible for identifying eligible households, issuing ration cards, and overseeing the functioning of FPS.

The main objectives of the FPS are:

• To provide essential commodities at subsidised prices to ensure food security.
• To stabilise market prices and prevent exploitation by private traders.
• To promote social justice by supporting vulnerable sections of society.
• To ensure equitable distribution of foodgrains across all regions.

Structure and Operation

Each Fair Price Shop is managed by a licensed dealer, cooperative society, or community-based organisation. Shops are typically located in accessible areas within villages, towns, and urban localities to serve the population efficiently.
The essential commodities distributed through FPS include:

• Cereals: Wheat and rice.
• Sugar: Distributed in limited quantities.
• Kerosene: Provided for household fuel needs (though its role has declined due to the Pradhan Mantri Ujjwala Yojana).

The distribution quota and entitlements depend on household classification under the NFSA 2013:

• Priority Households (PHH) receive 5 kilograms of foodgrains per person per month at subsidised rates.
• Antyodaya Anna Yojana (AAY) households, representing the poorest of the poor, receive 35 kilograms of foodgrains per family per month at highly subsidised rates.

FPS dealers maintain registers recording stock receipts, sales, and balance quantities. Monitoring and auditing are conducted by local authorities to prevent malpractice.

Technological Reforms

In recent years, digital initiatives have transformed the functioning of Fair Price Shops. Key reforms include:

• Computerisation and e-PoS machines: Electronic Point of Sale (e-PoS) devices linked to Aadhaar authentication ensure real-time verification of beneficiaries and prevent duplicate ration cards.
• Online transparency portals: Many states publish FPS-wise stock details, allocation data, and transaction records online.
• GPS tracking of foodgrain movement from warehouses to shops enhances supply chain monitoring.
• DBT (Direct Benefit Transfer) pilots in some regions replace physical grain distribution with cash transfers, enabling beneficiaries to purchase food from open markets.

These measures collectively aim to improve efficiency, reduce corruption, and ensure that subsidies reach genuine beneficiaries.

Challenges and Criticism

Despite its vast reach, the Fair Price Shop system faces persistent challenges:

• Leakages and Diversion: A significant portion of subsidised foodgrains is often diverted to the open market, leading to large-scale inefficiencies.
• Inaccurate Beneficiary Identification: Errors in poverty estimation and outdated ration card lists result in exclusion or inclusion errors.
• Poor Infrastructure: In remote rural areas, irregular supply, inadequate storage, and transport bottlenecks hinder operations.
• Low Dealer Incentives: Limited commissions and bureaucratic delays affect the motivation of FPS operators.
• Corruption and Irregularities: Malpractices such as under-weighing and non-issuance of receipts undermine public trust.

Several evaluation studies have highlighted that although the FPS network covers nearly 80 crore beneficiaries under NFSA, only a fraction of the allocated grains often reach the intended households due to systemic inefficiencies.

Reforms and Policy Measures

The government has initiated numerous reform measures to strengthen the FPS system and enhance its accountability:

• Digitisation of Ration Cards: Linking ration cards with Aadhaar has reduced duplication and enabled portability.
• One Nation, One Ration Card (ONORC): Launched in 2019, this scheme allows beneficiaries to access their entitlements from any FPS across the country, promoting migrant welfare.
• End-to-End Computerisation: Digitising procurement, storage, transportation, and distribution stages has increased transparency.
• Grievance Redressal Mechanisms: Toll-free helplines and online complaint portals have been introduced for citizen feedback.
• Community Monitoring: Involving panchayats and self-help groups in FPS oversight enhances local accountability.

Some states, such as Chhattisgarh, Tamil Nadu, and Kerala, have implemented model PDS systems with near-universal coverage, minimal leakages, and digitised supply chains, serving as benchmarks for other regions.

Socio-Economic Significance

The Fair Price Shop network remains the world’s largest distribution system, ensuring food and nutritional security for millions. It supports both rural and urban households, cushions the impact of food inflation, and contributes to national objectives such as poverty alleviation and inclusive growth.
Moreover, the FPS system has socio-economic spillovers:

• It creates employment for local distributors and transporters.
• It supports domestic agriculture by ensuring assured procurement from farmers.
• It stabilises market demand and prevents extreme price fluctuations during crises.

During emergencies such as the COVID-19 pandemic, FPS outlets played a crucial role in delivering free foodgrains under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), highlighting their strategic importance in welfare delivery.

Contemporary Developments and Future Outlook

In the contemporary context, the focus is on transforming Fair Price Shops into multi-service centres offering various government and financial services alongside food distribution. Some states are experimenting with FPS outlets doubling as Common Service Centres (CSCs), where citizens can access digital services, bill payments, and e-governance facilities.
Future policy directions emphasise:

• Enhancing transparency through blockchain-based tracking.
• Integrating nutrition objectives by expanding the food basket to include pulses, millets, and fortified foods.
• Encouraging private participation under strict regulation to improve efficiency.