Kerala was the only state in India with near-universal coverage of the PDS. According to studies, in 1991, around 95% of all households were covered by the system and possessed a ration card. The benefits of the system were equitably spread across income groups in both rural and urban areas.
The quantity and quality of items of supplied through the 14, 000 fair prices hops (FPS) or ration shops, as known in Kerala, had a significant impact on rural consumption and nutritional requirement. Significantly, the poor used the PDS more than the rich. A survey found about 85% of consumers met all or part of their rice requirements from fair price shops.
Moving to the Targeted Public Distribution System (TPDS) from 1997 had a major impact on the state and the system as it lost large share of the central allocation of cereals and other items with a sizable chunk of its card holding families classified as above-poverty-line (APL).
The guaranteed and subsidized allocation of grain for below-poverty-line (BPL) households under the TPDS accounts for only 10 per cent of the previous PDS supply. According to Government figures, Keralas total food grain requirement in 1997 was 48 lakh tonne a year and internal production accounted for only 10 lakh tonne. Twenty-four lakh tonne used to be provided under the PDS, the rest of the requirement being met from the open market. With APL card holders having to pay higher prices ration shops have lost their advantage in relation to private stores. Most of them have shifted to private shops, general secretary of the All Kerala Ration Dealers Association (AKDA) Sebastian Choondal told FE.
With a smaller number of ration cards to serve, and upper bounds on margins that can be charged to BPL consumers, the net profits of FPS owners are lower under the TPDS than before. As compared to a monthly sale of 7,500 kg or rice and 2,000 kg of wheat in early 2000, fair price shops are now selling 1,400 kg of rice and 200 kg of wheat a month. Since sales from fair price shops have declined, many are estimated to be making losses, he added.