Recent developments in PDS

Aadhar and functionality of PDS

• Aadhaar as an identifier:
  • People belonging to marginalized sections of the society often do not have a valid proof of identity. As a result, they miss out on availing social benefits provided by the government. Aadhaar has been successful in solving this problem.
  • One of the quintessential properties of Aadhaar is its uniqueness. It is an identification that a person can carry for a life time and potentially use with any service provider thus, fundamentally becoming a pro-poor identification infrastructure.
• It provides a single view of beneficiary data and information, aiding in streamlining policy decisions for the state
• Social benefits delivery services:
  • Enables State Governments to directly transfer benefits to beneficiary accounts under various schemes.
• Beneficiary Identification:
  • Helps in sanitizing the State’s/Department’s databases and uniquely identifying beneficiaries by removing ghost/duplicate identities
• Demographic and development planning:
  • Enables valuable anonymized demographic data to help development planning at State, District and local government levels.
• Preventing leakages:
  • Welfare programs, where beneficiaries need to be confirmed before service delivery, also stand to benefit from UIDAI’s verification service.
  • Examples of such usages include subsidized food and kerosene delivery to Public Distribution System (PDS) beneficiaries.
  • This usage would ensure that services are delivered to the right beneficiaries only.

Challenges

However, the use of Aadhaar-based biometric authentication (ABBA) in the public distribution system has its own share of challenges:

• ABBA requires not only Aadhaar seeding, but also successful fingerprint authentication at the ration shop every month. That, in turn, requires a functional Point of Sale (PoS) machine, adequate connectivity, and reasonably smooth fingers. Despite some alleged safeguards, the system is far from perfect
• Evidence from Jharkhand suggests that ABBA is of little use in reducing PDS corruption.
• Neither seeding nor the ABBA can stop quantity fraud.
• If PDS dealers give people less than their due, biometric authentication does not help.
• Cases of deaths due to hunger as people could not collect rations because of a biometric mismatch at the PDS shop.
• Disenfranchisement of the elderly and the disabled, as ABBA requires beneficiaries to visit the PDS outlet personally for fingerprint authentication.
• Seeding issues:
  • When benefits are paid through Aadhaar-enabled means such as the Aadhaar Payments Bridge System (APBS), the first step is to seed the list of beneficiaries with the corresponding Aadhaar numbers. Seeding is a tedious operation and it has to be done each time a new scheme is inducted. Those who have failed to comply are simply removed from the lists
  • Seeding often creates inconsistencies between ration-cards database and the Aadhaar database.
  • Many poor people do not know the rules of Aadhaar seeding and biometric authentication.
• Inclusion errors increase the financial burden of the state, exclusion errors can often leave poor families vulnerable to hunger.
• Deprivation of poor:
  • Poor people often find themselves deprived of their rights in the process. For instance linking one’s pension or ration card or bank account with Aadhaar is a tedious process as data-entry errors are common.
  • And even without such errors, Aadhaar linking often fails because a person’s demographic details in the Aadhaar database do not match the corresponding details in her job card or ration card.
  • The government failed to address these issues as job cards, ration cards and pensions have been mass-cancelled in many states

Way forward

• Inconsistencies need to be resolved for successful Aadhaar seeding.
• It is essential to deal with issues of duplication, use less disruptive methods than Aadhaar such as food coupons, smart cards, and last-mile tracking
• Using other technology to curb corruption like computerisation, SMS alerts, online availability of official records, toll-free help lines and so on.
• It is imperative that the Union Government enact a privacy legislation that clearly defines the rights of citizens consistent with the promise of the Constitution.
• The government should factor in privacy risks and include procedures and systems to protect citizen information in any system of data collection. It should create institutional mechanism such as Privacy Commissioner to prevent unauthorised disclosure of or access to such data.
• Our national cyber cell should be made well capable of dealing with any cyber attack in shortest time.

The scheme which will allow portability of food security benefits. This means poor migrant workers will be able to buy subsidized rice and wheat from any ration shop in the country. Recently the Supreme Court (SC), asked the Union government to examine the feasibility of implementing the “one nation one ration card” (ONORC) scheme during the national lockdown. Consequently, Finance Minister announced the national rollout of a ‘One Nation, One Ration Card’ system in all states and Union Territories by March 2021. As of now, about 20 states have come on board to implement the inter-state ration card portability.

Highlights of the scheme

• The poor migrant workers will be able to buy subsidised rice and wheat from any ration shop in the country but for that their ration cards must be linked to Aadhaar.
• Migrants would only be eligible for the subsidies supported by the Centre, which include rice sold at Rs. 3/kg and wheat at Rs. 2/kg, it would not include subsidies given by their respective state government in some other state.
• This scheme will ensure that no poor person is deprived of subsidised grains.
• The scheme can be implemented as already 77% of the ration shops across the country have PoS machines and more than 85% of people covered under the National Food Security Act (NFSA) have their cards linked to Aadhaar.
• For remaining beneficiaries, all the States have been given one more year to use point of sale (PoS) machines in the ration shops and implement the scheme.
• The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs, and enable that person to purchase the quantity of foodgrains to which she is entitled under the NFSA.
• The Annavitran portal enables a migrant worker or his family to avail the benefits of PDS outside their district but within their state.
• While a person can buy her share of foodgrains as per her entitlement under the NFSA, wherever she is based, the rest of her family members can purchase subsidised foodgrains from their ration dealer back home.

Significance of Scheme

• For migrant labourers:
  • India has had food security benefit schemes which have domicile based access.
  • 36 crore people or 37% of the population is that of migrant labourers. The scheme is therefore important for anyone who is going to move from one place to the other.
  • It happens that when one moves from one place to the other (for e.g. a government employee being transferred from one place to another), it takes about two to three months to get a ration card at that next place and then further more time to start getting commodities against the same.
  • After the implementation of the scheme, it would be ensured that a migrant is able to access the benefits which are due to him in any part of the country.
  • This would be ensured on the basis of Aadhaar authentication and a validated data.
• For Women:
  • ONORC will be particularly beneficial for women and other disadvantaged groups, given how social identity (caste, class and gender) and other contextual factors (including power relations) provide a strong backdrop in accessing PDS.
• Provides Choice:
  • ONORC will give the beneficiaries the opportunity to opt for the dealer of their choice. If any dealer misbehaves or misallocates, the beneficiary can switch to another FPS shop instantly.
  • ONORC lets the beneficiaries choose the PDS shop that best delivers on the attributes.
• Curbing corruption:
  • In ONORC Scheme, the fundamental prerequisite is de-duplication so that it is ensured that the same person does not figure as a beneficiary in two different locations of the country.
  • With the help of the scheme, the government would be able to rightly target the beneficiaries to provide them with the foodgrains under the PDS. The scheme is linked with Aadhaar and biometrics, this removes most possibilities of corruption.
  • The government is creating a central data repository to get all the details of ration card which are being maintained by states so that the repository acts as a clearing house or a server to do the cross checking on the basis of Aadhaar authentication.
  • This ensures that there is no corruption or duplication of the benefits that are being passed on to the beneficiaries. The government will ensure all these things with the help of technology.

Challenges

• Since the scheme is based on technology, the government may face some technical challenges during the implementation of the scheme.
• The scheme will increase the woes of the common man and, the middlemen and corrupt PDS shop owners will exploit them.
• Tamil Nadu has opposed the proposal of the Centre, saying it would result in undesirable consequences and is against federalism.
• Within some states issue of intra state portability.
• Different states have different rates and these mismatching rates will be a big challenge.
• Few regional parties have expressed apprehensions on bearing the cost of additional ration cards. This is a matter which is to be settled between the states and the Government of India.
• One of the apprehensions mentioned by few states is the cost of additional food grain to be supplied to the migrant workers.
• However, the whole system is based on the entitlements mandated under the NFSA and this prevents the charges of additional cost. Beneficiaries will continue to pay the same issue prices that are fixed under the NFSA.
• The quality of services is markedly inferior for the subaltern groups with latent methods of discrimination such as lack of information, mixing of inferior grains, longer waiting time and, at times, even verbal abuse.

Way Forward

• The current migrant crisis should be seen as an opportunity to develop a national migration policy addressing the challenges faced by migrant workers’ productivity, living conditions and social security.
• While this must be done, the government must also fast-track the ONORC scheme because India’s present rights-based regime is based on the assumption that people are sedentary.
• The food security scheme under the NFSA costs more than Rs 1 lakh crore per year. It is very expensive but is highly needed. There is a need to ensure that subsidized food grains ultimately go to the person or the family that is entitled to.
• The ONORC should also include access to health and other things.
• At the principal level, within the government, there is broad consensus on having a unified kind of service delivery system based on technology and identity.
• A unified service platform combining all the citizen centric services on the basis of few parameters of identity and other indicators of technology, is the need of the hour.
• ONORC combined with a rating system based on the experiences akin to the Uber/Ola system, the government can improve PDS by closer monitoring and control. Those PDS dealers who perform better could be rewarded.

While ONORC has the potential to improve outcomes particularly for the subaltern groups, like any delivery mechanism, the entire value chain of making the system work needs to be closely monitored and backed by infrastructure. The availability of point of sale (PoS) systems at PDS shops, and its functioning needs to be ensured to check compromises in the entitlements. Even after the coronavirus pandemic is over, this will be useful. Migration is bound to restart because of unemployment. When migrant workers again start boarding trains and buses for the destination cities, they must have their PDS cards that are valid across India with them.

The Economic Survey, rightly flagged the issue of a growing food subsidy bill, which, in the words of the government, “is becoming unmanageably large”. The reason is not far to seek. Food subsidy, coupled with the drawl of food grains by States from the central pool under various schemes, has been on a perpetual growth trajectory.

During 2016-17 to 2019-20, the subsidy amount, clubbed with loans taken by the Food Corporation of India (FCI) under the National Small Savings Fund (NSSF) towards food subsidy, was in the range of Rs.1.65-lakh crore to Rs.2.2-lakh crore. In future, the annual subsidy bill of the Centre is expected to be about ₹2.5-lakh crore. Even the Economic Survey 2020-21 has made important recommendations to improve the Public Distribution System.

Implementation

• Food Security of beneficiaries is ensured by distributing food grains at subsidized prices through the Targeted Public Distribution System (TPDS).  It protects them from price volatility due to inflation.
• Over the years, while the spending on food subsidy has increased, the ratio of people below the poverty line has decreased.
• The Ministry of Consumer Affairs, Food, and Public Distribution is the nodal ministry for the implementation of food subsidy. This Ministry has 2 Departments which are given below
  • Department of Food and Public Distribution
  • Department of Consumer Affairs
• 98% of this Ministry’s budget is allocated to the Department of Food and Public Distribution.

 Challenges to Food Security in India

• Beneficiaries have complained of receiving poor quality food grains.
• Farmers receive Minimum Support Price (MSP)from the Government for crops such as wheat, paddy, and sugarcane.
• The MSP is higher than the market price. There is very minimum procurement of other crops by the Government at MSP.
• Due to this factor farmers do not have the incentive to produce other crops such as pulses. This puts immense pressure on the water table as the above crops are highly water-intensive.
• Due to the possibility of increasing nutritional imbalance in food grains, the Government must expand subsidies and include other protein-rich food items.
• Under the National Food Security Act, the identification of beneficiaries is to be completed by State Governments.
• As per the findings of the Comptroller and Auditor General in 2016, a massive 49 % of the beneficiaries were yet to be identified by the State Governments.
• The available storage capacityin states was inadequate for the allocated quantity of food grains as per the report of the Comptroller and Auditor General (CAG).

Quantity of Food grains: High drawal rate by the states

• During the three years, the quantity of food grains drawn by States (annually) hovered around 60 million tonnes to 66 million tonnes. Compared to the allocation, the rate of drawal was 91% to 95%.
• As the National Food Security Act (NFSA), which came into force in July 2013, enhanced entitlements (covering two-thirdsof the country’s population), this naturally pushed up the States’ drawal.
• Based on an improved version of the targeted Public Distribution System (PDS), the law requires the authorities to provide to each beneficiary 5 kg of rice or wheat per month.
• For this financial year (2020-21) which is an extraordinary year on account of the COVID-19 pandemic,the revised estimate of the subsidy has been put at about ₹4.23-lakh crore, excluding the extra budgetary resource allocation of ₹84,636 crore.
• Till December 2020, the Centre set apart 94.35 million tonnes to the States under different schemes including the NFSA and additional allocation, meant for distribution among the poor free of cost.
• Importantly, the government has decided to abandon the practice of extra budgetary resource allocation and include in the food subsidy amount itself, arrears in loans outstanding of the FCI drawn through the NSSF.

Problem of Allocating funds: Increase in the Food Subsidy Bill:

• The food subsidy bill has increased from 1.2 lakh crores in 2014-15 to 3.8 lakh crores in 2020-21.
• In order to pay the food subsidy bill, the Government has been borrowing from National Small savings Fund (NSSF) through the issuance of special G-Secs.
• However, this practice of borrowing from NSSF has been discontinued from this year as announced in the Union Budget 2021-22.
• Food subsidy comprises of:
  • Subsidy provided to FCI for procurement and distribution of wheat and rice under NFSA and other welfare schemes and for maintaining the strategic reserve of food grains and
  • Subsidy provided to States for undertaking decentralized procurement. The Food subsidy bill is calculated as the difference between Economic cost of Food grains and Central Issue price (CIP).

Way Forward: Recast the food subsidy system is the need of the hour:

• In this context, it is time the Centre had a relook at the overall food subsidy system including the pricing mechanism.
• It should revisit NFSA norms and coverage. An official committee in January 2015 called for decreasing the quantum of coverage under the law, from the present 67% to around 40%.
• For all ration cardholders drawing food grains, a “give-up” option, as done in the case of cooking gas cylinders, can be made available.
• Even though States have been allowed to frame criteria for the identification of PHH cardholders, the Centre can nudge them into pruning the number of such beneficiaries.
• As for the prices, the existing arrangement of flat rates should be replaced with a slab system.
• Barring the needy, other beneficiaries can be made to pay a little more for a higher quantum of food grains.
• The rates at which these beneficiaries have to be charged can be arrived at by the Centre and the States through consultations.
• These measures, if properly implemented, can have a salutary effect on retail prices in the open market.

There are no two opinions about reforms implemented in the PDS through various steps, including end-to-end computerisation of operations, digitisation of data of ration cardholders, seeding of Aadhaar, and automation of fair price shops. Yet, diversion of food grains and other chronic problems do exist. It is nobody’s case that the PDS should be dismantled or in-kind provision of food subsidy be discontinued.

After all, the Centre itself did not see any great virtue in the Direct Benefit Transfer (DBT) mode at the time of giving additional food grains free of cost to the States during April-November last year. A revamped, need-based PDS is required not just for cutting down the subsidy bill but also for reducing the scope for leakages. Political will should not be found wanting.

Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) is a scheme as part of Aatmanirbhar Bharat to supply free food grains to migrants and poor. In a major relief to the poor amid the devastating COVID-19 pandemic, Prime Minister Narendra Modi announced on Monday that the government has extended the scheme to distribute wheat and rice free of cost to around 80 crore people till November 2021. Earlier in April 2021, the Centre had announced distribution of free food grains for the months of May and June under the Pradhan Mantri Garib Kalyan Anna Yojana to help people during the second wave of the pandemic.

Features

• Considered as world’s largest food security scheme, the Pradhan Mantri Garib Kalyan Anna Yojana aims at ensuring sufficient food for the poor and needy during the coronavirus crisis.
• It was announced as part of the first relief package during the COVID-19 pandemic.
• Part of the scheme, the food needs to be provided to all the beneficiaries under public distribution system (TPDS) for Antyodaya Anna Yojana (AAY) and priority household (PHH) ration cardholders.
• As per updates, the eligible beneficiaries will receive 5kg of foodgrains and 1 kg Gram per month.