In India, there are several levels of bureaucracy that are involved. The main layer is called the Public Distribution System (PDS), whereby people are issued ration cards and allowed to purchase a certain amount of food at subsidized prices, or in poor families, given it for free. There is a colossal amount of corruption and theft; people simply report grains as sold and sell it on the black market. Due to the immense number of small traders and grocers who take cash and sell stuff without receipts, there are no taxes paid on this, and so everyone involved makes a profit, except for those whom this is supposed to benefit. Also, the sole source of storage are government granaries & silos, where a lot of food has either been found to have rotted, or been stolen. While people on HN are busy reading all the time about various Indian inefficiencies, corruptions and crimes, let us not forget that India's history is a socialist one (and like all socialist economies, the inefficiencies are built into the system - look at Venezuela/Cuba/Argentina/Hungary etc. today), and it is only in the last 20 years that there has been some liberalization and the Indian entrepreneur's spirit has been allowed to flourish. As you can see from all these headlines, there is still a long way to go for free market reforms. There are several sectors like the agricultural sector, energy sector and construction sector, where reforms would help a lot.