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Food assistance in India

Overview

India’s Public Distribution System (PDS) is the largest food subsidy programme in the world, benefitting over 800 million people. PDS is overseen by the Central Government’s Department of Food and Public Distribution (DFPD) and implemented by State Governments. Through a decentralised procurement system, states procure grains at Minimum Support Prices (MSP), distribute them through fair price shops, and are reimbursed by the central government.

Given its scale, the Public Distribution System (PDS) has faced significant inefficiencies in food disbursal and reimbursement. Traditionally, it has been characterised by manual and fragmented processes between the central and state governments. These in turn created delays in claim validation, limited visibility for stakeholders, and inconsistencies in cost calculations and reimbursements. As a result, some states could take years to settle their annual accounts.

Food assistance

Our reforms to the subsidy claim and settlement process for India’s food subsidy program, PDS, led to:

100%

Digital submission of cost sheets and claims

67%

Reduction in the turnaround time for issuing cost sheets and subsidy releases

Solution

To address these challenges, MSC supported the DFPD in reforming the subsidy claims and settlement process by developing a standardised operating procedure (SOP) and the SCAN 2.0 digital platform.

The SOP was developed in consultation with DFPD and state governments to establish clear rules, workflows, and timelines for the subsidy lifecycle. SCAN 2.0 is an integrated digital solution, aligned with the SOP, that streamlines fund transfers, document validation, and financial reconciliation through pre-set rules and validations. The platform also records and makes visible transactions across stakeholders, thereby increasing oversight. Altogether, these reforms have transitioned PDS from a discretionary, paper-based system to a rule-based, transparent, and digital framework for intergovernmental transfers.