India Specific Retail Models

In a country dominated by local and traditional stores, business models specific to the Indian context are bound to emerge. In this article, we study some of the models that have emerged which are peculiar to the Indian landscape.

The Public distribution system:

The Public Distribution system (PDS) in India is more than half a century old as rationing was first introduced in 1939 in Bombay, by the British Government as a measure to ensure equitable distribution of food grains to the urban consumers in the face to rising prices. Thus, rationing in times of crisis like famines was the historical precursor to the national policy of stabilization and management of food grains. Among the numbers of Price Control Conferences held during 1940-42 the sixth, held in September 1942 laid down the basic principles of a Public Distribution system for India.

The Food Department set up in December 1942 formulated an All India Basic Plan that dealt with issues such as procurement contracts for purchasing agents, public distribution, inspection and storage. The basic objective of the then emerging policy was stabilization of food prices .With inflation spiraling and the food situation deteriorating persistently in many parts of the country, the Food Grains Policy Committee (1943) recommended he introduction of rationing in urban centers with a population of more than 100,000 .The consequent food distribution was exclusively focused on the urban centers.

The Green Revolution a food self sufficiency brought about a new dimension in food grains management. The focus was on fair procurement price for farmers to insulate them from market anomalies buffer stocking and control of market prices and public distribution of essential commodities. The Food Corporation of India was established in 1965, to function storage movement, transport, distribution and sale of food grains and other food unit stuff.

In 1984, the Government of India created the Ministry of Food and Civil Supplies with two departments namely the Department of Food and the Department of civil Supplies the latter being in charge of PDS.

The PDS, as it is understood today, is a means for the distribution of essential commodities to a large number of people, through a network of Fair Price Shops (FPS’s) on a recurring basis. The commodities are as follows:

1) Wheat
2) Rice
3) Sugar
4) Kerosene

PDS evolved as a major instrument of the government’s economic policy, for ensuring availability of food grains to the public at affordable prices as well as for enhancing the food security for the poor. It is an important constituent of the strategy for poverty eradication and is intended to serve as a safety net for the poor, whose number is more than 330 million and who are nutritionally at risk. PDS, with a network of about 4.78 lakh fair Price Shops (FPS’s) is perhaps the largest distribution network of its type in the world. The Public Distribution system (PDS) is a crucial part of life in many parts of India. PDS is operated under the joint responsibility of the central and state governments. The central government has the responsibility for procurement, storage, transportation and bulk allocation of food grains etc. The responsibility for distributing the same to the consumers, through the network of Fair Price Shops (FPS’s) rests with the state governments. The operational responsibilities, including allocation within the state, identification of families below the poverty line, issue of ration cards, supervision and monitoring off the functioning of FPS’s rests with the state governments.

The major states have built up three tier / four tier administrative set-ups for managing the PDS – the state department at the apex level, the District Collector and District Supply Officer and his staff at the district level and the Tehsildar / Taluka Supply Officer and Food inspectors at the tehsil /block level. Smaller states (for example, the selected North Eastern states) have built up official administrative systems of PDS only up to the district level.

The actual lifting of food grains from the FCI godowns is done by the designated wholesale dealers of good grains who operate at the district or sub-district level, upon receipt of the allotment of grains from the district level. The food grains lifted by them are transported to their other godowns at the sub-district level (stage I transport) and from there to the designated retail points (Stage II transport) The nature of operation of wholesale dealers and the mode of transport vary cross states.

The viability of the fair Price Shops (FPS’s) and of retailers in the PDS net work, is one of the important pre-conditions for achieving the objectives of the targeted PDS. The financial viability of the retail dealers (FPS’s) is intertwined with the viability of the higher level dealers of PDS items i.e. the wholesale dealers state level corporations (if involved) and the FCI: nonetheless the present study confines itself to an exhaustive examination of the financial viability of the FPS’s but only for sparing comments on the viability of wholesale dealers.