From ration to nutrition: Re-orienting fair price shops for nutrition security

Chaman Prakash, a Fair Price Shop (FPS) dealer in the Pratap Vihar Block of Ghaziabad, Uttar Pradesh, has been distributing food grains for the past 11 years. As the only FPS dealer in the area, he serves over 1,500 households. His reputation as a trusted figure in the community became especially vital during the disruptions caused by the COVID-19 pandemic, when beneficiaries relied heavily on their Public Distribution System (PDS) entitlements. Prakash is among 5.3 lakh dealers nationwide who act as last-mile food grain delivery agents, ensuring food security for more than 80 crore individuals through the PDS.

These FPSs are licensed and managed by state governments and receive compensation through dealer margins based on per-quintal transactions at their shops.However, food grain distribution through FPSs is concentrated over a 7-10 day period each month. For the rest of the month, these shops remain underutilized, providing no additional income opportunities for the dealers. Such sub-optimal utilisation of physical and human resources in the FPSs threatens the economic viability and sustainability of this essential last-mile delivery network.

Over the past decade, the Department of Food and Public Distribution (DFPD) has implemented various initiatives to modernize FPSs. Electronic Point of Sale (e-PoS) devices have been installed in all FPSs, and nearly 100% of transactions are now biometrically authenticated through Aadhaar. The process of linking the e-PoS devices with electronic weigh scales so as to ensure correct weighment of the foodgrains has also been initiated and due for completion by end of 2024. States have been encouraged to develop Model FPSs under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)with amenities for beneficiaries such as waiting areas, seating arrangements, and drinking water.

State Governments are also empowered to provide extra services at the FPS such as Common Service Centre (CSC) services and Business Correspondent (BC) services to create additional income streams for FPS dealers. In January 2024, the DFPD launched a pilot program to onboard FPSs onto the Open Network for Digital Commerce (ONDC), an initiative aimed at expanding the customer base of FPSs and enhancing their viability. However, the economic sustainability of FPSs continues to remain an area of concern for dealers and government alike.

Another pressing challenge has been the nutrition security of beneficiaries. Currently, DFPD only provides energy-rich cereals (rice and wheat) through the PDS, while a significant portion of the population continues to face nutritional deficiencies. Data from the National Family Health Survey (NFHS-5) reveals high anaemia rates: 67.1% in children aged 6 to 59 months, 57% in women aged 15 to 49 years, and 25% in men aged 15 to 49 years. Additionally, issues of stunting, wasting, and underweight persist among children under five years. Therefore, a dual approach is essential: enhancing income opportunities for FPS dealers while simultaneously improving the nutritional outcomes of the population through dietary diversification.

In order to overcome these two challenges, the DFPD has launched a pilot program to transform FPSs into ‘Jan Poshan Kendras’ (JPKs) in 60 FPSs—15 each in Ghaziabad, Jaipur, Ahmedabad, and Hyderabad.These kendras will,  inter alia, offer a diverse range of nutrient-dense commodities, such as millets, pulses, edible oils, and soybeans, at competitive prices compared to the open market. The JPKs aim to provide additional revenue streams and better margins for dealers while addressing nutritional gaps among beneficiaries and the local population.

The transformation of FPSs into JPKs is built on four key pillars: i) training and capacity building for FPS dealers, ii) access to working capital for FPS dealers through invoice financing, iii) market linkages via B2B aggregators, and iv) promotion of nutritional literacy.

To enhance the capacity of FPS dealers, the DFPD has signed a Memorandum of Understanding (MoU) with the National Institute for Entrepreneurship and Small Business Development (NIESBUD) which operates under the Ministry of Skill Development. This partnership aims to provide skill development programs focused on financial literacy, digital literacy, nutritional literacy, and business management. Training sessions for the FPS dealers participating in the pilot program were held in two batches during May and June 2024.

Additionally, the DFPD has executed another MoU with the Small Industries Development Bank of India (SIDBI) to create ‘FPS-Sahay,’ a mobile application that allows FPS dealers to finance invoices for purchasing non-PDS commodities. Major B2B aggregators have been invited to join this platform to help establish supply chain linkages for FPS dealers. Furthermore, FPS dealers are being oriented to serve as ‘Poshan Mitras,’ offering basic guidance to beneficiaries on the benefits of consuming nutrient-dense foods and creating balanced meals. Through these four pillars, DFPD is laying the groundwork for a sustainable model that benefits both the dealers and the communities they serve.

With this initiative, Chaman Prakash's professional life is poised for transformation, enabling him to diversify his offerings, increase his income, and play a pivotal role in improving the nutritional health of the community. This development will not only enhance his livelihood but also strengthen the essential role of FPSs in promoting food and nutrition security across India.

(Article by Secretary, Department of Food and Public Distribution, Government of India, Shri Sanjeev Chopra)