Today's Editorial

04 June 2017

Good start on reforming targeted PDS



Source: By Bibek Debroy: The Financial Express



There is a tendency to be sceptical about everything governments do. Hence, even when something deserves to be applauded, it is discounted and not disseminated. I will focus on National Food Security Act (NFSA), 2013, and subsequent reforms in targeted public distribution system (TPDS). Everything stated in this column is public domain information from the website of department of food and public distribution. More specifically, there is NIC’s PDS portal (Anna Vitaran Portal). There is no need to revisit NFSA provisions. That’s a separate debate, let’s take NFSA as a given. Broadly, with 2011-12 NSS (National Sample Survey) data, two-thirds of population (75% rural, 50% urban) is entitled to subsidised food-grain through AAY (Antodaya Anna Yojana) and PHH (priority households) schemes. (There are other provisions on ICDS, MDMS and maternity benefits.)


Though NFSA came into force on July 5, 2013, because states needed to evolve criteria and identify beneficiaries, adoption by states was staggered, with Nagaland, Kerala and Tamil Nadu the last to join, in 2016. All states/Union Territories (UTs) are now part of NFSA. Let me quote Section 12 of NFSA to highlight TPDS reforms I have in mind.


“(1) The Central and State Governments shall endeavor to progressively undertake necessary reforms in the Targeted Public Distribution System in consonance with the role envisaged for them in this Act. (2) The reforms shall, inter alia, include— (a) doorstep delivery of food-grains to the Targeted Public Distribution System outlets; (b) application of information and communication technology tools including end-to-end computerization in order to ensure transparent recording of transactions at all levels, and to prevent diversion; (c) leveraging “Aadhaar” for unique identification, with biometric information of entitled beneficiaries for proper targeting of benefits under this Act; (d) full transparency of records; (e) preference to public institutions or public bodies such as Panchayats, self-help groups, co-operatives, in licensing of fair price shops and management of fair price shops by women or their collectives; (f) diversification of commodities distributed under the Public Distribution System over a period of time; (g) support to local public distribution models and grains banks; (h) introducing schemes, such as, cash transfer, food coupons, or other schemes, to the targeted beneficiaries in order to ensure their foodgrain entitlements specified in Chapter II, in such area and manner as may be prescribed by the Central Government.”


For subsidised grain, there are 186.6 million ration cards, 23 million AAY and 163.5 million PHH. If these are digitised and seeded with Aadhaar numbers, duplication is reduced and ghost ration cards eliminated. All 36 states and UTs (Union Territories) have now digitised ration cards. (Since some ration card holders are not entitled to AAY or PHH, total number of ration cards is 232 million.) For some states, there are live links/reports on digitisation. As of March 31, 2017, 77.04% of ration cards (178.2 million) have been seeded with Aadhaar numbers.


Between 2013 and 2016, 23.3 million bogus ration cards were identified and removed. Once records and databases have been fixed, one moves to on-line allocation of food-grains, down to the FPS (fair price shop) level. Thirty states/UTs have done this and some have live links/reports on online allocation. Since Chandigarh and Puducherry (and partly, Dadra and Nagar Haveli, in urban areas) have opted for direct benefit transfers (DBTs), with equivalent cash transfer into seeded bank accounts, on-line allocation is irrelevant for these UTs—233,520 households are now covered by such cash transfers, the bulk in Puducherry. The “equivalence” is worked out by multiplying MSP by a factor of 1.25 and subtracting CIP (central issue price).


The next step is automation of supply-chain management (delivery orders, release orders, truck challans, gate passes, receipts and issuance of food-grains, monitoring of stock positions, payments and SMS alerts, when opted for).Twenty states/UTs have done this and some have live links/reports. All have transparency portals and toll-free helplines. Except for Arunachal and J&K, all have online grievance registration facilities. The last step in this end-to-end computerisation of TPDS is the most difficult and this is automation of fair price shops, through handheld devices or computers. Let’s just call it EPoS (electronic point of sale) devices.


One shouldn’t be too sceptical. This has already started to happen in 22 states/UTs. These 22 have 526,000 FPSs and 186,726 of these already have such EPoS devices. When the EPoS device is owned by the FPS dealer, there is a provision for purchase and operation cost to be included in dealer margins. Several states/UTs have live reports on FPS automation. As I mentioned earlier, figures on the PDS portal are a revelation. I am not suggesting everything is perfect. For instance, portability and migrant populations still remain an issue. Since 1991, every once in a while, people have spoken about reforming TPDS.

Nothing significant happened. Compared to that, what’s occurred since 2013 is remarkable. Visit the portal and see for yourself. I clicked on Rajasthan and details on category and number of each type of ration card were available for each of 33 districts. Pick a district and click on urban. It will take you to Nagar Palika, then ward, then name of FPS shop and finally to details of household’s ration card (names, ages, address and photograph of head of household). If you click on rural, the same destination, via block, panchayat and village. All public domain information, I did click on Delhi too, but that site was perpetually down.

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