Details
India’s Public Distribution System (PDS), the largest state-run food delivery programme in the world, is more than just a welfare scheme distributing subsidized grain to the poor. It is a mechanism through which the market for cereals is regulated, prices are stabilized, and farmers are supported — all while enhancing household food security for the general population. Although often seen only as a food distribution programme targeting the poor, the PDS is closely linked with the government’s procurement and buffer stock policies, which together regulate food grain supply, stabilize prices, and maintain food reserves to manage supply shocks.
Dipa Sinha is a development economist and a prominent voice in India’s Right to Food Campaign. Her work focuses on food security, nutrition, and public health.
The strength of the PDS was illustrated during the COVID-19 pandemic. As the Indian economy came to a halt during repeated lockdowns and daily wageworkers lost incomes overnight, the PDS stepped in to prevent widespread hunger. As part of its wider pandemic relief measures, the government used the PDS to distribute free food grains to about 800 million people who were already registered beneficiaries of the programme, with a number of surveys showing that the majority of eligible households received grain under the system. With food consumption otherwise vulnerable to shocks, the government’s ability to double food grain allocation was made possible by its existing procurement and stock-holding system.
But the story of the PDS is not a tale of social protection alone. In India, where more than 40 percent of average household expenditure is on food, food prices and affordability play a crucial role in determining standards of living, real incomes, and basic well-being. At the same time, nearly 45 percent of the country’s workforce continues to be concentrated in agriculture. That said, most farmers are smallholders, with little bargaining power in markets and high exposure to risk. The dual challenge, then, is how to support producers while protecting consumers. The PDS, in conjunction with the system of public procurement, is the system through which India tries to achieve food security for consumers and remunerative prices for producers.
From Public Procurement to Public Distribution
The institutional foundations of India’s food system were laid in the 1960s in response to food crises that required imports under agreements with the United States. As part of the Green Revolution measures undertaken to achieve self-sufficiency, the government set up the Food Corporation of India (FCI) in 1965. Its mandate was threefold: procure grains at a pre-announced Minimum Support Price (MSP) to ensure fair returns to farmers, maintain buffer stocks to protect against shocks, and distribute food grains to those who needed it most through the PDS.
MSPs are determined by the Commission for Agricultural Costs and Prices (CACP), also established in the 1960s, which uses cost-based formulas, supply-demand estimates, and inter-crop parity norms. While MSPs are set for 23 crops, in practice effective procurement — where the government actually buys from farmers — is mostly restricted to rice and wheat. As of 2019–2020, about 30 percent of India’s wheat production and 40 percent of rice production were procured through the public system. This represents over 60 million tonnes of grain annually, which is stored in FCI warehouses and distributed through nearly 500,000 Fair Price Shops across the country.
The COVID-19 pandemic highlighted the effectiveness of India’s system.
Beyond the grains required for distribution through the PDS and other welfare schemes such as school meals, buffer stocks are maintained to manage market fluctuations and respond to disaster situations. The Open Market Sale Scheme (OMSS) allows the government to release grains into the market when prices rise sharply, or to build reserves when prices fall below MSP levels. In February 2023, for instance, the government announced the release of 3 million tonnes of wheat under the OMSS to cool rising retail prices, which had risen due to global disruptions following the Ukraine war. It was reported that this release resulted in the wholesale prices dropping by over 10 percent in major markets.
Public procurement and distribution thus form two arms of a single apparatus that simultaneously supports farmer incomes and stabilizes consumer prices. India’s experience can serve as an example for developing countries, countering the narrative that food markets must be left entirely to private actors who allegedly ensure maximum efficiency.
Lessons from the Pandemic
The COVID-19 pandemic highlighted the effectiveness of India’s system. When lockdowns were imposed in March 2020, both food supply chains and household incomes were severely disrupted. The government, however, was able to scale up its PDS deliveries rapidly. The National Food Security Act (NFSA) passed in 2013 converted the PDS benefits into a legal entitlement, making 75 percent of the rural population and 50 percent of the urban population eligible to receive subsidized food grains (rice, wheat or millets) of five kilogrammes per person per month. As a result, about 67 percent of India’s population was effectively covered under the PDS. Under the Pradhan Mantri Garib Kalyan Anna Yojana (Prime Minister’s Food Security Scheme for the Poor, or PMGKAY), an additional five kilogrammes of grains per person per month were provided free of cost to all 800 million NFSA beneficiaries.
This emergency doubling of grain distribution would have been impossible without large existing stockpiles. As of July 2021, India held almost 90 million tonnes of rice and wheat in its central pool — more than double the buffer norm of 41 million tonnes. It is these surpluses, built over two decades of consistent procurement, that enabled the government to mount such an extensive food relief effort without resorting to market purchases or foreign aid.
Moreover, the PDS has increasingly moved toward greater inclusion. Before the NFSA, ration cards were issued based on Below Poverty Line (BPL) identification, which was often unreliable. With the legal guarantee of coverage under the NFSA, and uniform entitlements for priority households, the PDS has been restructured to cover a much broader base. This also helped build community ownership and reduced leakages. While leakages continue to be a problem, recent data from the Household Consumption Expenditure Survey (HCES) as well as multiple field surveys show a significant decline in corruption and diversion in PDS delivery over the last decade.
Beyond Rice and Wheat
While India’s procurement system is robust in cereals, especially rice and wheat, its reach is far more limited when it comes to other essential food items — most notably pulses and oilseeds. This narrow focus has long-term implications for nutrition, trade dependency, and price volatility. Pulses are the main source of protein for millions of Indian households, particularly for the poor who cannot afford animal-based proteins. Oilseeds, on the other hand, are critical both for domestic consumption and the food industry.
Despite this, India remains import-dependent in both categories. As of 2024, India imports about 60 percent of its edible oil and around 10 percent of domestically consumed pulses. This makes domestic prices extremely sensitive to international market movements, also because India is the world’s largest consumer and importer of pulses.
As the global food system becomes increasingly concentrated in the hands of multinational agribusinesses, India’s model offers a crucial alternative.
For example, during the first half of 2022, sunflower oil prices soared by more than 10 percent following the Russian invasion of Ukraine. India, being the largest importer of sunflower oil from Ukraine, experienced a sharp increase in retail oil prices, hitting low-income households the hardest.
The government has occasionally intervened to stabilize these markets. A notable example was the 2015–16 pulses crisis, when prices of pigeon peas crossed 200 rupees (a little over 2 euro) per kilogram following poor monsoons and supply bottlenecks. In response, the government expanded procurement operations and imported pulses to cool domestic prices. It also began to distribute pulses through the PDS in select states. As a result of these measures and improved weather, pulse production jumped from around 17 million tonnes in 2015–16 to about 23 million tonnes in 2016–17.
Despite this success, procurement of pulses remains inconsistent and under-institutionalized. In 2022, the Cabinet Committee on Economic Affairs raised the procurement ceiling for pulses such as pigeon pea, urad beans, and red lentils from 25 to 40 percent of marketable surplus under the Price Support Scheme. This move was designed to give states more leeway in building local reserves and reduce exposure to international price shocks. However, implementation remains uneven across states, and institutional capacities to handle these procurements are limited compared to the infrastructure in place for cereals.
Similar gaps persist in oilseeds procurement. Groundnut, soybean, and mustard, all eligible under MSP, are barely procured outside a few states. In fact, even the production and yield of oilseeds in India is low. Without assured procurement and distribution linkages, farmers would be hesitant to shift from cereals to more sustainable or high-value crops. The absence of procurement also means no buffer stock is available for price stabilization, leaving both farmers and consumers exposed to volatility.
Regional Disparities
Another major structural flaw in the system is its regional imbalance. Punjab and Haryana, two North Indian states, accounted for over 70 percent of total wheat procurement. This regional imbalance is both an outcome of the Green Revolution as well as later developments, which led to strong state infrastructure and assured procurement by central agencies in these regions. In the last two decades, states such as Chhattisgarh, Madhya Pradesh, and Odisha have also increased procurement. These states implemented decentralized procurement systems wherein the state agencies procured directly from farmers and used the grain within the state for PDS and nutrition programmes.
On the other hand, eastern states like Bihar, Jharkhand, West Bengal, and Assam — regions with large agrarian populations and high poverty rates — have low levels of procurement and weak PDS performance. In many such states, market arrivals of food grains are not even recorded properly, and the absence of state-level procurement agencies discourages participation by small and marginal farmers. As a result, these regions often see distress sales and lack access to subsidized grains during periods of inflation.
Unity among Global South nations is urgently needed to shift the global narrative around food security from a market-led model to one anchored in public provisioning.
There is a call for decentralized procurement systems and procurement of diverse food crops (beyond rice and wheat) across the country. The benefits of decentralized procurement are several. First, it reduces transport and storage costs by allowing localized distribution. Secondly, it builds administrative capacity in lagging regions. Thirdly, and most importantly, it gives farmers outside Punjab and Haryana a stake in the system and a reason to diversify into other crops, especially when climate stress and groundwater depletion make monocropping unsustainable.
Buffer Stock Management and the Role of OMSS
Buffer stock policy in India is based on the principle of maintaining sufficient reserves to cover PDS obligations, market stabilization operations, and emergency relief. These norms vary by month, taking into account the agricultural calendar and procurement cycles. However, in practice, buffer stocks have often been far in excess of norms, raising concerns about the cost of holding such large inventories.
As of July 2025, the central pool held over 70 million tonnes of food grains, while the buffer norm required only 41 million tonnes. Maintaining excess stocks involves significant costs including storage costs, wastage losses, and interest payments. Open Market Sales through OMSS is one way in which the government manages its stocks. While the OMSS has had varying success depending on the crop and timing, the various other cost-saving initiatives that are possible such as decentralized procurement, storage, and distribution must also be taken into account. A recent initiative of the government is to offload stocks for ethanol production, raising serious moral and ethical considerations over selling food grains to corporations at a low price for ethanol production while many in the country still go hungry.
In fact, there is a case to be made for strategic use of buffer stocks for non-PDS food programmes, midday meals in schools, take-home rations, and other nutrition schemes targeting children under six years. Adolescent girls and pregnant women can also benefit from additional food categories such as pulses and oils — if stocked and distributed effectively. This would reduce food grain surplus stocks while addressing India’s persistent undernutrition problem. The current food subsidy is less than 1 percent of the GDP, and has remained at this level for the last 15 years, except for during the pandemic years. Therefore, the concern around burgeoning costs must not be overstated.
The Global Context and Constraints
To sustain this procurement system, to expand it to other regions and crops within India, as well as for other developing countries to adopt similar systems, global trade rules will also have to change. Under current World Trade Organization (WTO) rules, public procurement at administered prices like MSP is classified as trade-distorting support. A peace clause currently shields India and a few other countries from penalties, but it is a temporary arrangement and not a guaranteed exemption.
At present, WTO rules cap farm subsidies at 10 percent of the value of production, calculated using 1986–1988 reference prices. This outdated benchmark does not reflect either current costs or inflation and has been widely criticized by developing countries. India has repeatedly called for a permanent solution on public stockholding for food security, arguing that such programmes should be exempt from subsidy caps when they serve domestic nutrition objectives.
Few developing countries have managed to build a food security system that reaches hundreds of millions, supports producers, and stabilizes markets.
While large-scale procurement and extensive distribution make India a target at global trade forums abandoning this system or reducing its scope would severely undermine both farmer viability and consumer protection, particularly during crises like pandemics or commodity price shocks. Unity among Global South nations is urgently needed to shift the global narrative around food security from a market-led model to one anchored in public provisioning. A push was made by the G33 group to establish a peace clause in the WTO norms on public stockholding, but more concerted and sustained efforts are required.
A Model with Global Relevance
India’s Public Distribution System and its associated procurement mechanisms are not flawless. They suffer from crop bias, regional imbalance, fiscal pressures, and digital exclusion. That said, few developing countries have managed to build a food security system that reaches hundreds of millions, supports producers, and stabilizes markets.
As the global food system becomes increasingly concentrated in the hands of multinational agribusinesses, India’s model offers a crucial alternative. For countries in Asia, Africa, and Latin America grappling with hunger, food inflation, and climate uncertainty, the lessons from India are both timely and urgent. At the same time, the Indian model itself needs to be decentralized and made more inclusive to ensure that smallholder farmers are benefited and nutrition security is achieved.
