Govt Bets ₹25,530 Crore on AI to Fix India’s Broken Ration System

For decades, India’s Public Distribution System (PDS) has been one of the world’s largest food security networks, serving more than 80 crore beneficiaries under the National Food Security Act. Yet, despite multiple rounds of reforms, the system continues to grapple with challenges ranging from beneficiary identification errors and supply-chain leakages to delayed grievance redressal and inefficient food grain distribution.

A 2005 Planning Commission study highlighted chronic issues such as irregular supply, poor-quality food grains, and corruption at fair price shops. More recently, NITI Aayog’s evaluations have pointed to persistent governance gaps, recommending stronger local monitoring, real-time tracking systems, and improved transparency mechanisms.

Now, the Union Cabinet is placing a bet on AI to tackle many of these longstanding issues.

The Cabinet has approved the continuation and integration of existing PDS modernisation schemes into the new AI-powered SARTHAK-PDS programme (Scheme for Assistance in Ration Transport and Handling-Income with Automation in PDS), allocating ₹25,530 crore through March 2031. The initiative aims to transform the food distribution network using AI, machine learning, natural language processing, and blockchain technologies.

The government expects the programme to modernise beneficiary management, improve logistics, reduce leakages, and strengthen citizen engagement across the entire food subsidy ecosystem.

What are the Core Initiatives?

At the core of the initiative are three AI-driven platforms designed to modernise different aspects of the PDS.

NIRMAL will serve as a real-time beneficiary registry, integrating data from multiple government schemes and ministries to improve beneficiary identification and reduce duplication.

ASHA, a multilingual AI-powered grievance redressal system, will be capable of handling up to three lakh citizen interactions daily through calls, WhatsApp, Interactive Voice Response System, and chatbots.

Meanwhile, SAKSHAM will focus on AI-enabled supply-chain management through vehicle tracking, QR-code tracing of food grain bags, demand forecasting, and route optimisation.

The government estimates that AI-led logistics optimisation could reduce transportation distances by 15-50%, generate annual savings of approximately ₹280 crore, and lower carbon emissions by nearly 35%.

However, experts caution that technology alone cannot solve structural challenges.

Talking to AIM, Vinay Nair, Founder and CEO of Khetibuddy, believes AI has the potential to fundamentally reshape how the PDS operates. “AI has the potential to transform India’s PDS from a system that manages scarcity to one that anticipates need. Today, the system struggles with three fundamental problems: it doesn’t always know who the real beneficiaries are, it can’t accurately predict what they’ll need, and it loses significant value between procurement and delivery.”

According to him, AI can address these gaps through smarter authentication systems, demand forecasting models, and improved supply-chain visibility.

At the same time, he warns that the quality of outcomes will depend heavily on the quality of underlying data.

What Does the System Lack?

“The honest truth is that AI is only as good as the data it learns from, and PDS data has historically been fragmented, inconsistent, and politically sensitive. The opportunity is real, but so is the risk of deploying half-baked solutions at scale. India needs AI integration that is transparent, auditable, and built ground-up with beneficiary trust at the centre—not technology retrofitted onto a broken process,” Nair states.

“AI brings three things to PDS that the system has always lacked—precision, speed, and accountability,” Nair says. “Precision in knowing exactly who the beneficiaries are and what they need. Speed in flagging anomalies, supply gaps, and delivery failures in real time rather than after the fact. And accountability through audit trails that are transparent and tamper-resistant.”

Yet, the shift towards AI-driven governance also raises important questions around data privacy and citizen rights.

The increasing integration of Aadhaar-linked databases, beneficiary records, and cross-ministry datasets means vast amounts of personal information will be processed by AI systems. While digital reforms such as AePDS have improved transparency, implementation challenges remain, particularly in rural regions where internet connectivity and digital literacy continue to be uneven.

Nair believes the government must establish stronger safeguards before scaling such systems nationwide.

“Data is the new land. And just like land, if you don’t define ownership clearly, the powerful will take it.”

Data Security Concerns

He argues that governments must clearly define data ownership through legislation, ensure meaningful transparency and consent mechanisms, and invest in sovereign data infrastructure to avoid excessive dependence on commercial platforms.

“Citizens and farmers must own their data by default. Not the platform. Not the cloud provider. The individual.”

Technology providers involved in large-scale public-sector modernisation efforts also see significant potential in the SARTHAK-PDS programme.

Ritwik Batabyal, CTO and Innovation Officer at Mastek, tells AIM that the initiative could strengthen food security delivery by making the system more efficient, transparent, and responsive.

“The SARTHAK-PDS scheme is expected to significantly strengthen the PDS by making it more efficient, transparent, and beneficiary-centric.”

Batabyal says that AI-powered monitoring can help identify duplicate or fraudulent records, while advanced demand forecasting and logistics optimisation can improve grain movement and storage.

“AI-driven grievance redressal mechanisms will enable faster detection and resolution of beneficiary concerns, improving service quality and accountability. Real-time data analytics and dashboards will provide policymakers with better visibility into system performance, allowing quicker decision-making and targeted interventions.”

He adds that the cumulative impact could be substantial.

“Overall, the scheme will enhance operational efficiency, reduce losses, improve beneficiary satisfaction, and strengthen food security delivery across the country.”

The SARTHAK-PDS programme represents the latest chapter in India’s broader digital governance journey. Earlier reforms introduced Aadhaar-linked ration cards, ePoS machines, online allocation systems, and applications such as Mera Ration. The SMART PDS initiative, launched in 2023, further digitised supply-chain operations.

What makes SARTHAK-PDS different is its ambition to move beyond digitisation toward predictive governance—using AI not just to record transactions but to anticipate demand, identify anomalies, and optimise delivery decisions in real time.

Whether the initiative succeeds, however, will depend on far more than algorithms. Data quality, governance frameworks, privacy safeguards, and institutional accountability will ultimately determine whether AI can solve the structural challenges that have persisted in India’s food distribution network for decades.

For now, the government is placing one of the world’s largest food security systems at the center of its AI-powered governance experiment.