Govt gets direct subsidy transfer report

Nilekani task force details infotech revamp of public distribution system, with full e-links for all ration shops.

A blueprint for reform of the public distribution system (PDS) was given to the government on Wednesday by the Nandan Nilekani task force on a better way to distribute essential subsidies.

It has suggested a two-phase strategy on applying information technology to do this, on enabling direct targeting of the poor for subsidies, beside checking pilferage. The first phase of revamp will deal with supply chain improvement and the second will focus on direct transfer of subsidy, said Nilekani, chairman of the Unique Identification Authority of India, after giving his report to Finance Minister Pranab Mukherjee.

The government has in principle accepted the report of the Task Force, said Nilekani. Adding: “It will now take appropriate action.”

The finance minister asked the ministries of consumer affairs and food and public distribution to examine the report for implementation in a time-bound manner and, if required, seek the guidance of the empowered group of ministers for unresolved issues. The panel was set up in February as the task force on direct transfer of subsidies on kerosene, LPG and fertiliser. Later, its mandate was expanded to include reforms in the PDS itself and on direct transfer of the food subsidy. It has recommended a dedicated institutional mechanism to implement end-to-end computerisation of the PDS across the country, said Nilekani.

It has suggested creation of a National Information Utility on the Public Distribution System Network by April 2012 and initiation of pilot projects by December 2012.

There are about 462,000 ration shops which distribute commodities wheat, rice, sugar and kerosene worth a little over Rs 30,000 crore every year to 180 million families. “The Task Force believes that a strong, robust IT infrastructure backbone is critical for reforming the functioning of the PDS,” the report said.

It says true PDS beneficiaries suffer due to “wholesale problems such as large-scale pilferage and diversion...duplicates and ghost beneficiaries, wrongful exclusion and inclusion.” Nilekani said: “The large focus of the report is to make system more efficient (and) to make sure people have choice.”

The report said Aadhaar, the new biometric-linked identity numbers for all citizens, can help simplify some of the flaws in PDS, but it cannot address all the diversion and pilferage. Pilferage may still occur through coercion and denial of service, but these could be addressed by providing choice for receiving food and kerosene, from multiple outlets.

The panel talks about the software that will make it possible for state governments to offer choice to beneficiaries in receiving their entitlements in kind or cash.

The task force report comes at a time when Congress party president Sonia Gandhi is believed to have put her foot down on any proposal to distribute cash in lieu of grains as and when the Food Security Bill comes into operation.

A food ministry official also said, “In principle, there will no cash distribution through the food Bill. It can happen only under special circumstances, which is a legal requirement to fulfill.”

The recommendations are expected to reduce the subsidy burden of the government through better targeting of these outlays. The food subsidy constitutes around 40 per cent of major ones given by the government. It was Rs 60,599 crore in 2010-11, against Rs 58,442 crore during 2009-10, and is projected to come down a bit to Rs 60,572 crore in 2011-12.