A Fair Price Shop is a store that has been licensed by an order issued under section 3 of the Essential Items Act, 1955 to offer necessary commodities to ration cardholders under the Targeted Public Distribution System.
The phrase is defined in Section 2(4) of the National Food Security Act of 2013.
Each state government is responsible for institutionalizing licensing arrangements for fair price shops in accordance with the relevant provisions of the Public Distribution System (Control) Order, 2001, made under the Essential Commodities Act, 1955, as amended from time to time, in order to ensure the Targeted Public Distribution System operates efficiently.
Under the Targeted Public Distribution System, the State Government is responsible for the following:
Accept delivery of foodgrains at the stipulated prices from the Central Government's approved depots in the State;
organize intra-State allocations for the purpose of delivering the assigned foodgrains to each fair price store's doorway via their licensed agencies; and
Ensure that foodgrains are delivered or supplied to entitled individuals at the indicated pricing.
Each local government, or any other authority or body authorized by the State Government, may conduct or cause to be conducted periodic social audits of the operation of fair price shops, the Targeted Public Distribution System, and other welfare programs, and may publicize its findings and take appropriate action in accordance with the State Government's instructions.
Preference is given in the licensing of fair pricing shops to public organizations or entities such as panchayats, self-help groups, cooperative societies, and so on, as well as to women or their collectives.
The State Government may establish a margin for the owner of a fair pricing business, which may be increased on a regular basis to ensure the fair pricing shop's long-term profitability. To bolster the fair pricing shop's profitability, state governments may authorize the sale of items other than food grains distributed through the Targeted Public Distribution System.