To facilitate the UPA government in implementing the proposed Food Security Act guaranteeing foodgrain to poor at subsidized rates the Comptroller and Auditor General (CAG) has begun an elaborate exercise to audit the Public Distribution System (PDS) across the country and suggest ways to revamp and make it scam-proof.

After its experience in several flagship schemes where large sums of money remained unspent, expenditure was shown on non-existent works and names of beneficiaries were concocted, the UPA government wants an effective distribution system before the Food Security Act is in place.

The ambitious act promises foodgrains to the poor at Rs 3 a kg. The government's urgency to revamp PDS comes from the fact that despite having addressed supply-side issues, the Manmohan Singh-led government has failed to arrest rising food inflation that touched an all-time high of 20% in December.

A senior official said CAG was likely to discuss the matter with all accountants general who are assembling in the capital for a four-day conference starting on April 5.

The agenda of the conference has been laid down as transforming audit into an effective tool for good governance.

The audit of PDS will include verification of the list of beneficiaries, amount of foodgrain lifted from Food Corporation of India and how much went to the beneficiaries.

The pathetic state of the food distribution system was highlighted in a recent study conducted by CAG. Carried out in the northeastern states, which are largely dependent on Centre's supply of foodgrains, the survey revealed that at least 40% of eligible beneficiaries were not even issued ration cards and were kept out of the distribution system.

Among those included as PDS beneficiaries, the survey found that 99% did not receive regular supply of foodgrains and more than 43% said local PDS officials sold them foodgrains at rates much higher than the set prices.

In Manipur, a state where majority of the population is rice-eating, the survey found that beneficiaries reported that rice was supplied to them once in 10 months on an average during 2002-2005, hinting at largescale diversion of foodgrains.