ISSN 2330-717X

IT Solutions Can Transform India’s Poor PDS Delivery Mechanism – Analysis

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By R. Swaminathan

In the mid-1970s and a large part of the 1980s, a pitched intellectual and academic battle raged between legendary political scientist C P Bhambri and iconic sociologist Rajni Kothari on the structure, composition and character of the Indian State. A parallel and interesting skirmish erupted between the two giants when Kothari said that poverty is relative. Bhambri was of the strong view that poverty is absolute and one needs to have a holistic and universal definition of what constitutes poverty. Both stuck to their guns and it led to one of the most creative periods in the academic history of social sciences in India. Kothari, who was the founder of the Centre for the Study of Developing Societies (CSDS), brought his institution international recognition, while Bhambri took the Centre for Political Studies (CPS) in the Jawaharlal Nehru University to newer heights. The contours of that debate has influenced and informed poverty estimation measures, policy interventions and prescriptions, especially on providing subsidised food to disempowered sections of Indians. They still do.

India
India

Poverty in India is multidimensional and there are no easy ways to define it. It’s precisely this difficulty in evolving a comprehensive and uniform understanding of what constitutes poverty that has led to different estimations of the number of poor people and contradictory theories of why they are poor. On one hand the Tendulkar Committee report, which the Planning Commission keeps as its foundation for policy prescriptions to combat poverty, states that 37 percent of Indians are poor. On the other the Arjun Sengupta report straightaway doubles that figure by stating that 77 percent of Indians live on less than Rs20 a day. Similarly, the Multi-dimensional Poverty Index (MPI), which measures the degree of poverty against several dimensions of health, education and living standards, evolved by the Oxford Poverty and Human Development Initiative and the United Nations Development Programme (UNDP), found that over 53 percent of Indians, or close to 650 million, were poor with 340 million of them, over 28 percent, living in severe poverty. But the National Council of Applied Economic Research (NCAER), which also uses a multidimensional estimation model, found that only 200 million Indians, just above 15 percent of the total population, could be ’defined’ as absolutely poor, earning less than Rs45,000 in a year.

Poverty appears to be relative since its contours have failed to accommodate itself within the confines of an absolutist definition. Poverty estimations are critical because a large part of India, by default, has to depend on the institutions of State to keep their body and soul intact. The reasons for this food insecurity range from lack of social safety net, declining rate of return in agriculture to severe under-employment in the rural areas. These definitions of poverty, all of them relative, have been the bedrock of the policy of targeted subsidisation. The most concrete manifestation of this approach has been the Public Distribution System (PDS), which is supposed to provide a food safety net to the most deprived and disempowered section of Indians. The underlying philosophy of amelioration has its chinks, but is fundamentally sound. Two problems arise when the targeting is synchronised with estimations of poverty that use different, and sometimes contradictory, parameters for setting a threshold limit, popularly referred to as Below Poverty Line. First, there is no reliable way of identifying BPL households. This leads to massive exclusion errors. Second, targeting per se, especially with regard to food, not only accentuates and amplifies existing social divisions, but creates new ones.

The popular perception of PDS is one of inefficiency and massive leakages. To a certain extent it is true, but to see it as the complete picture is inaccurate. In recent years, there has been a silent revival of PDS in many states. The main reason for the upsurge has been increase in the market prices of PDS commodities – mainly rice and wheat – which has given people a much larger stake in the system. Between 2004-05 and 2009-10, household purchases of wheat and rice from the PDS increased by 50 per cent in quantity terms. The proportion of households purchasing at least some rice or wheat from the PDS increased from 27 per cent in 2004-05 to 45 per cent in 2009-10. This substantial increase in uptake of PDS commodities has revived the PDS system in several states.

Tamil Nadu has always been a pioneer in tweaking and experimenting with the PDS. The state has initiated a fundamental transformation of the philosophy of targeting that has traditionally informed PDS interventions. It has actually let go it. The state has given each household, irrespective of their poverty status, 20 kilogrammes of rice every month. It’s the first state in India to implement a universal PDS. Other states that are adopting this approach and creating a near-universal PDS are Andhra Pradesh, Chhattisgarh, Himachal Pradesh, Kerala, Orissa and Rajasthan. This approach has helped avoid exclusion errors and at the same time create an internal pressure on the system to reduce leakages and increase the efficiency of distribution. It’s here that the Central and state governments are looking toward Information Technology to plug the loopholes and create a more inclusive PDS. Solutions range from smart cards, radio frequency identification devices on trucks, GPS systems to bulk SMS alerts on the food stocks in your neighbourhood PDS shop, social audits through mobile phones and digital ration cards.

For instance, a pilot project in Chandigarh to streamline PDS shops, which was implemented across 1000 families last year, issued smart cards containing a 64kb microchip that stored fingerprints, photograph, and personal details of the cardholder and at least two other family members. Bachan Singh of Chandigarh’s food and supplies department, which is administering the scheme, told Governance Now: “Forty percent of foodgrains and other commodities supplied to the PDS shops, which used to be written off earlier as damaged or spoilt in transit, was accounted for and distributed through the use of smart cards.” It’s just an indication of the quantum of corruption that could be reduced nation-wide through the use of Information Technology and smart cards. Other states have also recognised the transformative potential of smart cards. Delhi government’s Samajik Suvidha Sangam (Mission Convergence) aims to streamline the delivery of basic services in the National Capital Region (NCR) by bringing together all citizen services into a single window through a biometric smart card. Similarly, smart cards are being used to deliver health insurance benefits to BPL families under the Rashtriya Swasthiya Bima Yojana (RSBY). Under the scheme, all beneficiaries are issued biometric smart cards that contain the fingerprints and photographs of family members. Over seven million such cards are active and operational under the RSBY.

It’s in this context that the UID programme, which has been working at an integrated country-wide solution of identity and micro-payments using smart cards and mobile phones, becomes critical. UID has ensured that the technological backbone to reduce corruption in disbursement of funds and to ensure that money reaches the poorest of the poor is available. It also means that the same technological backbone can be scaled up and implemented across a variety of government services from issuance of passports, identification of the correct set of beneficiaries for the PDS to the entire backward and forward integration of the PDS network with FCI godowns, cold storage chains to agricultural procurement.

For the first time in India’s history, a common technological platform is available to provide governance services to all Indians through one single smart card. More than any other service, information technology solutions, especially smart cards, have the real potential to transform the delivery mechanism of PDS. Such a transformation will ensure that the dream of an inclusive universal food security net for all Indians actually becomes a reality.

(R. Swaminathan is a Visiting Fellow at Observer Research Foundation. He is also a National Internet Exchange of India (NIXI) Fellow)

Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

One thought on “IT Solutions Can Transform India’s Poor PDS Delivery Mechanism – Analysis

  • Avatar
    October 6, 2012 at 7:28 am
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    Smart cards will require Smart Card readers, which in turn will need Electricity and Internet connectivity to run. Neither internet or electricity is available in the villages…… so what good will the Chip based smart card do?

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