The government on Thursday said it plans to make Aadhaar card essential, although not mandatory, for subsidised foodgrain under the National Food Security Act and asked states to link them with ration cards at the earliest.
The Centre also said that states have promised to install digital payment system at ration shops by June.
Under the food law, over 80 crore people get 5 kg wheat or rice per person per month at Rs 2-3 per kg costing exchequer Rs 1.4 lakh crore annually.
In order to promote digital transactions and less cash economy post demonetisation, Food and Consumer Affairs Minister Ram Vilas Paswan today held a national conference of state food ministers and secretaries on 'PDS Reforms and Cashless/Less-Cash Environment'.
"At present, nearly 29,000 fair price shops have the cashless facility out of 5.27 lakh ration shops. We are happy to share that many states will have 100 per cent cashless system in rations shops by March," Paswan told reporters here.
Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Tamil Nadu, Delhi and Maharashtra are the states that have committed to adopt digital payment system in their ration shops by March, he said.
"Most of the states will have digital payment system by June," he said, adding that Bihar and Uttarakhand have promised to install cashless system by July while Andaman & Nicobar and J&K by end of this year.
Even West Bengal, which has been critical of the demonetisation move, has agreed to go cashless by June.
Paswan said the beneficiaries would continue to have the option of payment through cash.
The minister said that end-to-end computerisation of the PDS system and cashless transaction at ration shops would help check corruption and promote transparency in Public Distribution System.
With some states raising the issue of banking transaction cost for electronic payments, Paswan said he would hold discussion with the Finance Minister on waiver of such costs, which at present are free till March.
Food Secretary Preeti Sudan said the government is moving towards making Aadhaar "essential" but not "mandatory" and added that a notification in this regard would be issued.
Stating that there is a fine line between essential and mandatory, she said: "let me work with the nuances".
However, she asserted that beneficiaries would never be denied their entitlement under the food law.
So far, 72 per cent of ration cards have been seeded with Aadhaar Cards. There are 23 crore ration cards, of which about 16.62 crore have been seeded.
Sudan said 'Aadhaar enabled Payment System (AePS)' is the preferred mode for the implementation for digital PDS transactions as it involves no additional transaction charges and is aligned with the objectives of Plan Scheme on 'End to End Computerization of TPDS Operations'.
Asked about the difficulties mentioned by the States in adopting cashless payment system, she said: "Some of the states have talked about issues related to Aadhaar authentication, connectivity problem, upcoming elections etc".
On achievements made so far in PDS reform and end-to-end computerisation, Paswan said the digitisation of ration cards/ beneficiaries data has been completed in all 36 states and UTs. Digitised details of 23 crore ration Cards are available on transparency portals of all States/UTs.
About Aadhaar seeding of ration cards, he said 16.62 crore cards (72.32 per cent) have been linked to enable better targeting of food subsidies.
The online allocation of foodgrains has started in 29 states/UTs, while the automation of supply-chain has been completed in 20 States/UTs, and is in full-swing in remaining States/UTs. More than 1.78 lakh Fair Price Shops (FPS) has been automated.
"We did not put any pressure on the States about the timeline for implementing the digital payment system. We will agains review the progress after March," Paswan said.
Addressing the conference, Minister of State for Food CR Chaudhary asked the States to install digital payment system by March in urban centres and district headquarters.
UIDAI CEO AB Pandey said informed that as of now 110.68 crore Aadhaar Cards have been issued and 20 crore people are left to be enrolled.
Pitching for requirement of Aadhaar in the PDS, he said the States are in a "unique position for authentication (of real beneficiaries) and ccarying forward the digital transactions" taking help of Aadhaar cards.
Pandey said the infrastructure is being scaled up for 40 crore authentication per day from the present capacity of 10 crore per day.
Stating that 38.6 crore Aadhaar numbers have been linked with bank accounts, he said this would be enable us to succeed in the Aadhaar linked payment system.