The Public Distribution System (PDS) accounts for about one-third of total subsidy expenditure of the Government of India and about three percent of the GNP. If managed efficiently, the PDS could be more effective in alleviating poverty and hunger. However, it did not receive as much attention of the researchers as was received by progrmmes on poverty alleviation which claim much less expenditure. In this paper, interface of the rural consumers with PDS channels is analysed. The extent of benefits derived by rural consumer under different typologies of PDS is examined. Evaluation of channels of PDS is done by using 'management by objectives' approach. It is found that strategy formulation in PDS is not worked out well and therefore, its cost of reaching the poor become very high. It is suggested that unless a targetting approach is adopted and strategy based on the needs of the target group is done, programme would remain very expensive. Alternatives of phasing out PDS and substituting it with food stamps and proper employment projects are suggested.