India’s Targeted Public Distribution System (TPDS) is the largest food security distribution network in the world. The National Food Security Act (NFSA) 2013, aims to cover 75% of the rural and 50% of the urban population through this network. The network also provides employment for 478,000 Fair Price Shop (FPS) owners, their employees, and hired labour, who work across the supply chain in corporations and godowns. In order to curb diversions, FPS automation was proposed. In this Note, we specifically talk about the revised commissions proposed by the Cabinet Committee on Economic Affairs (CCEA) of Rs.70 (US$1) per quintal of ration and an additional Rs.17 (US$0.25) per quintal for FPS owners making sales through Point of Sale (POS) devices are not proving enough for FPS onwers. With these levels of commissions, many FPS owners are likely to close their shops. In the end we recommend developing an economic model to optimise the business case for FPS owners.
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