This paper explores the role of the Public Distribution System (PDS) on consumption and household savings, across different sections of population, in rural and urban Tamil Nadu. Using NSSO data for the year 2011-12 as well as data from a primary study conducted in 2015, the paper demonstrates a significant, positive contribution of PDS to cereal/calorie consumption and savings across all sections of the population in Tamil Nadu. In this, the importance of PDS is found to be much higher among the poorer sections of the population compared to the rest in both rural and urban areas of Tamil Nadu. The findings are important in the current context where direct food transfer programmes, such as the PDS, are seen to be less effective compared to cash transfers.