India's One Nation-One Ration Card: Important but Delayed Reform
ONORC will leverage choice, competition & incentive to streamline the PDS using smart technology, proponents say.
The Supreme Court set the cat amongst the pigeons on 29 June, directing all States and Union Territories to implement the One Nation, One Ration Card (ONORC) system by 31 July 2021. In doing so, it also lit a fire under Luddites crying foul against deploying technology to serve the poor.
The intertwining of IT and the Public Distribution System (PDS) has been in the making, on the back-burner, since 2011, when a panel headed by then UIDAI chairperson Nandan Nilekani suggested a two-phased strategy to improve the PDS network. The first phase was to revamp the supply chain, while the second was to focus on the direct transfer of subsidies.
The task force pointed out that PDS beneficiaries suffer due to 'wholesale problems such as large scale pilferage and diversion….duplicates and ghost beneficiaries, wrongful exclusion and inclusion." It recommended creating a National Information Utility (NIU) or a Public Distribution System Network to provide a strong, robust IT infrastructure and backbone for reforming the PDS.
Delay in Fast-tracking Integrated Portal
A decade later, it has taken the scourge of COVID and the Supreme Court to put the government on the spot, to complete the task.
Strategically, the task force erred in recommending a Direct Benefit Transfer of subsidies in place of rations to a weak UPA government, which hastily swept the report under the carpet in the face of a hostile political economy. The Modi government picked up the threads of many Aadhaar-enabled reforms but lost time by not creating a savvy IT agency or NIU for PDS like the one for the Goods and Services Tax Network.
The inhouse agency NIC struggled to develop the twin portals: the Integrated Management of Public Distribution System (IM-PDS) to record interstate transactions, and Annavitran to record intra-state transactions.
The cutting edge streamlining of a manual system encompassing 5.46 lakh Fair Price Shops (FPS), 23.63 crore ration card holders, 81 crore individual beneficiaries in 28 states and 8 Union Territories was a challenge, given weak state capacity.
The sheer magnitude of digitalising beneficiary data, adopting a national numbering scheme and seeding the Aadhaar numbers of beneficiaries with their ration cards, called for a mission mode approach. Surprisingly, the quick-witted Modi government decided to fast track the pipeline initiative only in its second term in June 2019, after packaging it One Nation One Ration Card (ONORC).
"ONORC Could Have Saved Lives During COVID"
Proponents of the scheme believe had it been in place during the lockdown, migrant workers, daily wagers, urban poor, ragpickers, street children, domestic workers, and the needy would not have gone hungry. Instead of being tied to particular PDS outlets back in their villages, they would have been able to procure rations from any e-Point of Sale (PoS) enabled FPS in the place of their residence.
On the other hand, critics such as Jean Drèze and Reetika Khera highlight the limitations of technology to address perennial problems plaguing the PDS. Major pain points are the missing names of children, estimated at one per family given defined per capita entitlements. FPS dealers impose katauti, a practice of giving less than entitled grains.
Gullible and illiterate beneficiaries are swindled and overcharged by separating authentication and distribution outside the pale of an IT-enabled system. Poor connectivity, authentication failures, breakdown of PoS devices, mismatch between Aadhaar and ration card numbers, inadequate training of FPS dealers to use POS devices, and high transaction costs of online transactions are some of the reasons supporting their pain-without-gain argument.
"ONORC Can Mitigate Identity Fraud, Generate Competition"
Much favours the scheme.
Besides intelligent technology, ONORC leverages choice, competition and incentives to streamline the Public Distribution System. The use of Aadhaar to remove duplication from PDS databases overcomes the identity fraud problem. The unshackling from the clutches of a captive Fair Price Shop improves the bargaining power of the beneficiary and mitigates quantity fraud. It also generates competition amongst the FPSs and makes them customer-friendly.
A transparent, public-facing beneficiary database strengthens accountability to the detriment of eligibility fraud. Generating rich data that manual systems are incapable of generating support improvements as well as constructive criticism.
An innovative exception management system allows the elderly and manual labourers with poor biometrics, to authenticate using one-time passwords on mobile phones. Automated paper receipts record transactions and inform beneficiaries of their entitlements. Audible voice messages accompany every transaction for the benefit of the illiterate. The decoupling of family members allows multi-point access, rather than all members drawing rations from one place.
Early Signs Show Public Support
The central government has incentivised states with additional borrowing rights to implement the scheme.
Except for Assam, Chhattisgarh, Delhi and West Bengal that now risk the wrath of the Supreme Court, all states have implemented it. 4.74 lakh out of 5.46 lakh Fair price shops have installed e-PoS devices. Widespread adoption can be seen by 1.35 crore portability transactions every month, totalling an impressive 27.83 crore since its inception in August 2019.
Interestingly, 19.8 crore such transactions have been recorded during the COVID-19 period of April 2020 to May 2021. The number of intra and inter-district transactions is even more impressive, suggesting a thumbs-up from the beneficiaries.
Going back to the Nilekani task force, deep reform is in the making. The first phase, technology-enabled revamp of the PDS, lays the foundation for the second phase Direct Benefit Transfer programme to address what the Economic Survey 2021 calls the 'unmanageably large' food subsidy bill.
(The writer is a former Joint Secretary in the Ministry of Finance. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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