The year’s Union Budget has estimated the oil subsidy bill at Rs 43,500 crore, that for running the Public Distribution System (PDS) at Rs 75,000 crore and the fertiliser subsidy bill at Rs 61,000 crore. The government is now banking on the Unique Identification Number (UID)-based subsidy disbursal mechanism for better targeting and savings. Sumit Bose, the Union government’s secretary (expenditure), who is coordinating the effort from the government side for implementing UID pilot projects in 50 districts as proposed in the Budget, outlines the progress in this regard in an interview with Santosh Tiwari. Edited excerpts:
What is the progress on the pilot projects?
These are 50 districts where we would take up reforms based on UID. We have taken this up with the chief secretaries of the states concerned. The idea is to give freedom to the states to select the schemes they’d like to be covered, to ailing the interests of the Centre and states. For instance, food; many states are coughing up subsidies over and above what the Centre is providing, and it is in their interest to get it covered under the scheme.
It also creates a sense of empowerment among the beneficiaries. We have seen this happening in Ranga Reddy district of Andhra. Madhya Pradesh has been doing PDS reform based on coupons but now they are about to launch a UID-based system. UID has great power to ensure duplicates are weeded out and based on what we have seen in Hoshangabad district of MP and Ranga Reddy, there is huge potential for savings – 15 per cent one-time and even on a recurring basis.
How is it happening at the ground level?
What happens otherwise is all these Fair Price Shops (FPS) tend to show a zero balance at the end of the month. When they are linked to UID, at the end of each day, even if they are not online, all the sales-related data are transmitted to the headquarters. So, their stocks are monitored and at the end of the month, they are not able to show a zero stock balance. There is another 10 per cent recurring saving, so this has a great potential. These are early days though, as I am talking on the basis of a few pilots.
How have you selected the 50 districts?
On the basis of penetration, and 20 of these are districts where Aadhaar coverage is already 80-85 per cent or more. In others, it will obviously pick up now. The system can also be used in other areas of government spending, such as distribution of scholarships and social security pension. The Maharashtra government, for example, has grant-in-aid schools; they did a little campaign earlier this year without a UID base and found substantially high duplicate enrolments, because of which their payouts were rising. They have mandated that from the next financial year, the state will give grant-in-aid only if all children have a UID number and they expect Rs 2,000 crore of savings on that account. Based on what Maharashtra has done, we are looking at applications under the Sarva Shiksha Abhiyan, under the Right to Education, so that the possibility of duplication could be weeded out.
What is the time frame for implementation of the 50 pilot projects?
This has to be done in close cooperation with states. It is all in the districts, so we are pushing it through the committee with representatives from the ministries concerned and the states. I expect it would be rolled out in these 50 districts by the end of the year.
The calendar year?
Yes. It’s not that every programme would roll out in every district. That’s not the idea, either. We are trying to see which is the most important programme and for us. For the central government, for example, the PDS is one, and then on kerosene. In Alwar, beneficiaries have had cash transferred into their account and then kerosene moves to the FPS at the market rate, without any subsidy. The beneficiary has to come and purchase the kerosene at the market rate, without the subsidy; they have got the cash in advance. We’re going to roll this out as a pilot in Hyderabad, too. It’s very encouraging. In Alwar, the savings are immense.
Any projections on savings?
For FPS, I’d earlier mentioned 15 per cent in one go and 10 per cent recurring. For other areas, savings would be different. For pensions, education, it is going to be different and hard to estimate but Maharashtra, for example, has estimated Rs 2,000 crore (savings) in education. The flavour from each district has to be different but the movement is clear. It’s also towards better service delivery, not just a question of savings. You are going to the shop and getting your due; you are not told there is no stock.
Subsidy reduction is the main purpose, though, isn’t it?
Better delivery is equally important. Certainly, rationalisation of subsidy is important but in all these cases, you are ensuring better delivery. Take kerosene; it hardly reaches the actual beneficiary, with so much scope for diversion, the way it moves at the subsidised rate and the difference with the market rate. When it moves at the market rate, the chance for diversion isn’t there. The beneficiary goes and pays cash, and gets it. It’s equally important for better, targeted delivery and all this will cut the subsidy. These 50 pilot projects are crucial because once you roll out in these, extending to 100 and then 200 districts would be much easier.