The government is hurrying the implementation of cash transfer in the Public Distribution System (PDS) without putting in place the national information utility announced in the Budget this year.
The Budget for 2012-13 had announced the creation of the national information utility for computerisation of PDS and operationalising it by December 2012.
The proposal apparently has been put on the back burner as the mid-year review presented in Parliament last week said, “Necessary steps for setting up of National Information Utility i.e. PDS Network (PDSN) for computerisation of PDS will be taken by the Department of Food and Public Distribution in due course”.
The idea for the creation of a national information utility had been first mooted by the task force on the IT strategy for PDS and implementable solution for the direct transfer of subsidy for food and kerosene in its report in October 2011.
The task force was headed by Nandan Nilekani of the Unique Identification Authority of India (UIDAI).
The task force in its report had stressed that given the complexity, scale, and mission-critical nature of PDS operations, a dedicated professional institution was necessary to design and operate the solution centrally.
The task force recommended the setting up of PDSN, which would operate as a technology back-office and central system for the concerned ministries in the central and state governments.
It would provide support in IT-intensive areas such as development, operation and maintenance of technology, supply chain management, transparency portal, and electronic payments.
It would also provide integration with the IT systems of other key stakeholders and other e-governance systems as they are designed over time, the task force said in its report.
“In order to achieve these outcomes, PDSN should be staffed professionally. It will promise minimum service levels to the states through service level agreements, and lower costs by offering a common customisable platform. The development of a common software solution will also ensure that best practices and successes observed in any one state can be rapidly deployed in all other states,” the panel had envisaged.
The draft plan prepared by the food ministry for direct transfer of food subsidy in six union territories from April 1 onwards, however, does not make a mention of the PDS network.
According to the proposal, foodgrains would be lifted by the union territories at an appropriate cost (which would be determined by the central government and would be closer to the market rate of grains).
This would then be distributed to the rationshop owners who after adding their commission would sell it to the final beneficiaries at the “appropriate cost” plus all incidentals.
The central government would transfer the difference between the appropriate cost fixed by it and the current rate at which wheat and rice are sold through the ration shops directly into the bank account of beneficiaries.
Rough estimates show that considering the current minimum support price of wheat and rice and their sale price in ration shops, if the government fixes a “appropriation cost” close to the prevailing market rate then every Below Poverty Line (BPL) family of five members should get Rs 550-650 a month as direct subsidy for either wheat or rice.
The plan does not mention whether the nascent PDSN network would be used for transferring this cash to beneficiaries. It, however, says that the Union Territories would ensure that a bank account is opened for every beneficiary, which would be mapped in the database with the ration card number.
According to the plan, as and when “Aadhaar” strengthens this cash transfer system, it will be suitably integrated with the platform. According to the road map prepared by the department of food and public distribution, the ration card database of the targeted public distribution beneficiaries in the six identified Union Territories would be digitised and cleaned by December 31, 2012 after which a Cabinet note would be sent for approval of the new scheme. The bank account would be seeded with the ration card database by February 15.
The food ministry has not been very enthusiastic with the PDSN network. Instead, it had earlier framed detailed guidelines for computerisation that is based on a platform developed by the National Informatics Centre called the PDS Common Services Platform.
On the ground, computerisation has so far progressed in some states to varying degree with each state using its own software and systems.