From the horse's mouth - food security measures for the poor.

"The study finds that about 58 per cent of the subsidized food grains issued from the Central Pool do not reach the BPL families because of identification errors, non-transparent operation and unethical practices in the implementation of TPDS. The cost of handling of food grains by public agencies is also very high. According to the
study, for one rupee worth of income transfer to the poor, the Gol spends Rs.3.65, indicating that one rupee of budgetary consumer subsidy is worth only 27 paise to the poor. The results obtained deserve careful consideration. The study has also suggested some measures for improvement, which would help in finding better ways of ensuring food security for the poor." - Performance Evaluation of Targeted Public Distribution System (TPDS), Planning Commission, Government of India.

The system surely needs improvement or an alternative.