(1)  The State Government shall, within the number of persons determined under section 9 for the rural and urban areas, identify—

   (a)  the households to be covered under the Antyodaya Anna Yojana to the extent specified under sub-section (1) of section 3, in accordance with the guidelines applicable to the said scheme;

   (b)  the remaining households as priority households to be covered under the Targeted Public Distribution System, in accordance with such guidelines as the State Government may specify:

   Provided that the State Government may, as soon as possible, but within such period not exceeding three hundred and sixty-five days, after the commencement of the Act, identify the eligible households in accordance with the guidelines framed under this sub-section:

   Provided further that the State Government shall continue to receive the allocation of foodgrains from the Central Government under the existing Targeted Public Distribution System, till the identification of such households is complete.

   (2)  The State Government shall update the list of eligible households, within the number of persons determined under section 9 for the rural and urban areas, in accordance with the guidelines framed under sub-section (1).