KOCHI: ARD-1, the first fair price shop (FPS) in Changanassery taluk, shut down on March 31, 2023, marking the end of an era. Established when rationing began in Kerala, this FPS in Kurishumoodu was operated by Joseph Kunju’s family for decades. Kunju’s children urged him to close the shop to curb losses.
Now dependent on them for livelihood, Kunju reflects, “Leaving my lifelong career was painful, but dwindling returns and rising operational costs made running the shop unsustainable.”
Kunju’s story echoes the plight of FPS dealers statewide, highlighting the challenges facing this once-essential institution. This isn’t an isolated case. Many FPSs, or ration shops as they are known commonly, once vital in feeding thousands, now struggle to sustain themselves.
Government commissions fail to cover expenses and delayed payments add to the woes, according to the Kerala State Retail Ration Dealers’ Association, the umbrella organisation of FPS dealers. High wages and rent are dealing a heavy blow, says association president G Krishnaprasad. This sentiment is echoed by many dealers struggling to make ends meet. Unless the commission paid to dealers is significantly increased, many FPS owners may be forced to shut down their shops, he adds.
The association estimates that more than 150 shops have downed shutters in the recent past.
N Shijeer, the organising secretary of the association, told TNIE that the current commission structure for FPS was formulated in 2018, when electronic point of sale (E-PoS) machines were introduced, and has remained unchanged since.“The existing structure ensures a monthly commission of Rs 18,000 for selling 45 quintals of foodgrain,” Shijeer explains. “This comprises Rs 8,500 in government support and Rs 220 per quintal.”
Despite repeated requests, the commission structure has not been revised in the last six years, he says. For shops selling above 45 quintals, the additional income works out to Rs 180 per quintal.
While there are some shops in Wayanad and Malappuram, which have more than 2,000 rations cards, a majority of the FPSs in the state have 200 to 300 cards on average.
Shijeer points out that the payments are often delayed for months, putting the dealers under severe stress.
Food and Civil Supplies Minister G R Anil acknowledges that there are payment delays and issues affecting dealers. He avers the government is working to address these problems. To improve the financial viability of FPS owners, the government is upgrading FPS into K-stores, which will provide better returns, he says. “According to a study conducted by the department, around 2,000 FPSs face difficulties due to income crises, but some shops with over 2,500 cards earn more than Rs 1 lakh in commission. The government recognises Kerala’s high standard of living and aspirations, but notes that increasing commission payments for FPS owners is constrained by the fact that the public distribution system (PDS) is a service,” Anil says.
To enhance earnings for FPS dealers, the government plans to introduce additional services, such as retailing bottled drinking water, which can generate good commissions, the minister points out.
“A further expansion of services under FPS aims to ensure that dealers receive decent returns,” he adds.
Policy experts point out that before moving to a targeted PDS system in 1997, Kerala was recognised for having the best PDS in the nation, catering to almost all of its citizens and making a significant impact on nutrition.
A drastic reduction of the above poverty line (APL) subsidy led to these households leaving the PDS, shrinking the customer base of ration shops and leading many of them to closure. Computerisation of the system also dealt a blow to the FPS operators as it reduced the scope for the diversion of grains into the black market.
Four types of ration cards are issued in the state – Antyodaya Anna Yojana (yellow), Priority Household (pink), Non-Priority Subsidy (blue) and Non-Priority Non-Subsidy (white) cards. There are 93,94,853 valid ration cards in the state, as on October 31, 2023.
A study by the civil supplies department in 2019 says that 10,615 shops earn a commission of less than Rs 30,000 per month, with 3,196 earning less than Rs 20,000, and 63 earning less than Rs 10,000 per month. Only 737 FPSs get a commission above Rs 40,000 per month.
The study, which had the civil supplies director as the chair and included ration dealers, recommends a combination of increasing commission, base payment and incentivising transactions to make the FPS viable.
Ration card holders (as of March, 2023)
Antyodaya Anna Yojana
(AAY) - Yellow: 5,85,906
Priority Household
(PHH) - Pink: 35,54,182
Non-Priority Subsidy
(NPS) - Blue: 22,99,897
Non-Priority Non-Subsidy
(NPNS) - White: 29,26,693
Non-Priority Institution:
(NPI): 28,175
Number of Fair Price Shops:
14,157 (as of October 2023)
Total foodgrain distributed in the state in 2022-23: 13,96,185 tonnes
Public Distribution System at a glance
No of districts: 14
No of taluks: 81
No of interim godowns: 223
No of authorised ration dealers: 14,002
(Source: Economic Review 2023)