One Nation One Ration Card-Digitalising PDS

One Nation One Ration Card (ONRC) is set to digitalise the Public Distribution System (PDS). Can it stem the systematic leakages and corruption?

Background

The Indian Public Distribution System (PDS) is one of the largest food security systems in vogue anywhere in the world.  Jointly run by the Central Government and the State government, PDS covers 75% of the rural population and 50% in urban areas.  The Food Corporation of India (FCI) carries out procurement, storage, transportation and bulk allocation of food grains to state governments who distribute it at a highly subsidised rate through an extensive network of Fair Price Shops (FPS).     

Originally started by the British in 1939 in Bombay on the onset of World War II, as a wartime food rationing measure, the programme was extended to other cities as the war got prolonged. Since then, it has evolved over the years.  In the 1960s FCI was set up to procure and store food grains to ensure uninterrupted supply to PDS, and by 1992, all households pan India were entitled to the PDS irrespective of their income.

The Targeted Public Distribution System (TPDS) was launched in 1997 to reduce the subsidy burden. TPDS divided the beneficiaries into two categories: households below the poverty line (BPL); and households above the poverty line (APL).  The Antyodaya Anna Yojana (AAY), launched in December 2000, further streamlined the PDS, targeting the ‘poorest of the poor’ (10 million poorest families BPL).  Now over 20 million families are being covered under the AAY.  In 2013, the National Food Security Act introduced the right to food thus giving legal sanctity to the scheme.  

PDS, in a new digital avatar, will be re-born in Jun 2020. It will have the One Nation One Ration Card (ONRC) based on biometric/ Aadhar authentication on ePoS devices and all transactions will be digitally tracked. 

Analysis

PDS is not unique to India; many other developing countries like Egypt and Iraq run similar programmes.  Even a developed nation like the US takes care of the food needs of its poor through food stamps, which entitle them to free food items.  

The PDS system was under increasing criticism as there are significant leakages and corruption involved.  There is also the issue of correct identification of beneficiaries with a large number of ineligible inclusions (about 25%) and about 61% error in the inclusion of bonafide categories.  Leakage of food grains, almost 36% as per the Planning Commission, into the commercial market is rampant during transportation and by the FPS owners. 

With the stark contrast between the rich and the poor in India only increasing, no well-meaning government can afford to allow this scheme to die away.  The numerous loopholes in the present system are being plugged by harnessing technology and through the structural changes, requiring infrastructural investment.  

Aadhar bio-metric verification well put an end to inclusion and exclusion errors. All FPS will be empowered to carry out Aadhar verification through e-PoS machines.  As of February 2019, 388,000 out of 533,000, or 72%, of FPS have an ePoS device each. 

The linkage of all ration cards with Aadhar card will enable portability. The migrant labour in India stands at 139 million (accounting for inter- and intra-state movement). This segment is deprived of access to subsidised ration as presently access to PDS is restricted to the designated ration shop.  With ONRC, the beneficiary will have all India portability.  

Another connected issue is the open-ended procurement of grains even when buffer stocks are brimming and suffering extensive rat and weather damage. The open markets, in turn, faced shortages and price escalation.  With digitisation and real-time availability of stock holding both at the state and FCI level, hopefully overstocking of buffer stock/ open-ended procurement can be reduced.

Counter View

PDS makes direct procurement from farmers with an assured minimum support price (MSP). Farmers are, therefore, tempted to produce specific coarse grains like wheat and rice.  Reliance on single crops year after year has adversely affected crop diversification and has led to groundwater depletion and nitrogen contamination due to high water demand and overuse of fertilisers.  

Due to the rising subsidy bill, the economic viability of such a large scheme is questioned.  Many economists have proposed that in-kind food distribution should be replaced with food coupons (like the US) or direct benefit transfer.

Assessment  

  • As per the UN, poverty rates in India have dropped during the last decade from 55% to 28%.  Since the BPL segment is still too large, PDS, which is a flagship social enterprise, should be nurtured to ensure the basic right to food, albeit with digital support to clamp down on its misuse.
  • Food distribution is a provincial subject and many Indian states differ in their eligibility policies.  The Central Government must streamline this to ensure that the subsidy is offered only to the needy.       
  • Technology has the requisite tools to enhance its effectiveness and plug leakages by making all enrolments biometric-based and using ePoS to digitally track all transactions. Audit of stocks will be easy now to catch crooked FPS owners who sell cheap grain in the open market at much higher profits or FCI contractors who offload grain consignments during transportation.
  • While the success of the direct transfer of subsidy (DBT) has been very successful in LPG distribution, the huge extent of PDS makes it difficult to implement at this juncture. Perhaps it could be considered once technology-based solutions using AI can make it entirely foolproof. In the interim, the processes need to be regularly audited not only by officials but also by public activists and NGOs.

 

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