Every year, India’s poor are cheated of 53.3 per cent of the wheat and 39 per cent of the rice meant for them. With the exception of 11 states and Union Territories, large-scale diversion of PDS food grains takes place everywhere in India. In three years, 2004-05,2005-06 and 2006-07, wheat and rice worth Rs 31,000 crore had been diverted from the PDS, thanks to the widespread corruption and inefficiency in the system. The North-East (NE) states fared the worth in term of the extent of leakage. For example, in six of the eight NE states, but no corrective are taken to fix the problem. Good governance is the only answer to the problem. namely, Sikkim, Meghalaya, Manipur, Mizoram, Nagaland and Assam,100 per cent of the PDS wheat was diverted. If the political and policing problems in the NE states could be blamed for such large scale leakages, other states have no alibi. In terms of the extent of loss to the exchequer, Uttar Pradesh fared the worst, followed by West Bengal, Madhya Pradesh, Assam, Rajasthan and Maharashtra. Such large-scale leakages in the PDS have been known for decades now