The countrys supreme auditor has decided to carry out an audit of the public distribution system (PDS) to check for leakages that prevent essential commodities from reaching the actual beneficiaries.

The Comptroller and Auditor General (CAG) of India is concerned by the large-scale leakages and inefficient delivery mechanism that mar the current delivery system and to some extent has also been stoking food price inflation.

In a number of state audits, we have found that often the foodgrain is dispatched from the warehouse but does not reach the shop and is simply diverted. So we decided to conduct a country-wide audit of PDS, an official in the CAGs office said.

The decision comes at a time when the government is planning to enact a national food security law that aims at providing 25kgs of rice or wheat at a subsidised rate of Rs 3 to all families below the poverty line.

The CAG is framing guidelines and parameters for the exercise, which is likely to be initiated during the year, the official said.

As part of the audit, CAG officials will also speak to the targetted beneficiaries and understand the shortcomings of the system.

Another objective of the audit is to ensure that the huge funds provided as food subsidy are utilised properly. For 2010-11, the government has pegged the food subsidy bill at Rs 55,578 crore. In 2009-10, it was kept at Rs 52,490 crore.

The CAG recently also decided to audit the fertiliser subsidy because of the huge outlays made to the sector.

PDS, which provides essential commodities like grain and kerosene at subsidised rates to below and above poverty line families, is under the jurisdiction of the ministries of consumer affairs and food. With food price inflation touching a 10-year high of 20% in December last year, the role and effectiveness of PDS as a delivery mechanism has once again come under question.

Prime Minister Manmohan Singh in fact recently also set up a committee of central ministers and chief ministers to overhaul the PDS and check price rise.