The Public Distribution System is the government's arrangement for supplying essential commodities such as rice, wheat and sugar to people at subsidised prices. The Food Corporation of India procures and stores the grain, and state governments distribute it to ration-card holders.

The final link of this chain is the network of ration shops, officially called Fair Price Shops, spread across villages, towns and cities. Ration-card holders buy their quota of foodgrains from these shops at prices fixed by the government, including the free grain given under the National Food Security Act scheme.

Open markets sell grain at market prices and are outside the subsidised system. Farmer cooperatives help farmers in credit and marketing but are not the outlets of the system. Warehouses only store procured grain before it is moved to the shops; consumers do not receive grain from them.

Fair Price Shops option is correct.