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Resource centre on India's rural distress
 
 

Not smart enough? by Swati Narayan

Smart card technology can be used to streamline India's unwieldy PDS. But it is yet to prove itself under real world challenges.

Smart cards have become the latest buzzword to remedy India's public distribution system (PDS) — one of the largest food grain delivery networks in the world with more than 500,000 ‘ration' shops.

Electronic voting machines have streamlined Indian elections. Credit cards, which can be swiped for payment at any urban store, have transformed banking. Similarly, can the much talked about plastic smart cards reform the corrupt PDS? The PMO's Rangarajan panel has pinned all its hopes on it. But are they silver bullets?

Let's take a step back for just a moment.

What are these plastic smart cards? They have an embedded chip that can store and update varied types of information and are increasingly being used as train tickets, driver's license, health insurance and library cards.

For the PDS, smart cards can store food grain eligibility and, if required, fingerprint details of each household member. Compatible machines placed in ration shops then ‘read' this information and print a receipt for each transaction.

Some states have implemented pilot tests of these cards and my travels in the past three months reveal some of their ground realities.

Pocket-sized pilots

The Agriculture Minister in October 2010 had gone on record to proclaim, “ the smart card pilot has been successfully tested in Haryana and is ready to be rolled out nationwide.”

But, the most surprising revelation on the ground is the miniscule size of these Haryana pilots. Of the four districts selected, two had yet to start in the last quarter of 2010. Across Panchkula city, only three ration shops have been included. In each shop, only 10-35 smart cards have been issued. In neighbouring Chandigarh, too, the pilots are similarly pocket-sized.

Teething troubles abound. The reader machines use a clearly outmoded software technology, which takes 5-7 minutes to process a single transaction. The batteries in most shops have collapsed, and the machines only work when there is electricity.

In all fairness, adaptation to new technology is always a slow process. The currently fumbling, nascent Haryana pilot will officially take another two years to be competed. Till then isn't it entirely premature to pass a verdict?

Untested

The act of blindly issuing smart cards is also utterly meaningless, unless each transaction has a domino effect on the entire PDS supply chain — end-to-end. But these pilots have failed to explore three crucial aspects.

First, movement of grain across the supply-chain. Andhra's experiments with the superior technology of ‘contactless' smartcards, which transmit data via radio frequency identification waves, is the most promising. They can also potentially track identity tags embedded in every bag of food grain purchased from farmers. But, 3-5 years need to be invested to rollout an integrated pilot across the gigantic network of PDS warehouses even in a single district. This has yet to start.

Second, portability of entitlements. Inter-state migrants, in particular, would greatly benefit if they could use smart cards to purchase food grains from any shop. So far, however, none of these smart card pilots provide portability even between neighbouring shops, let alone across states.

Third, ability to embed the ration subsidy. Smart cards can potentially be used as electronic wallets by loading their chips with the ration subsidy. This could be a potential game-changer. But none of the pilots has tested its implications. How will the funds be uploaded regularly? How will they be automatically indexed to India's high food price inflation, now hovering above 15 per cent? Can Kenya's SMS-based mobile-money transfer system, M-PESA, which is a current rage in international policy circles, provide an alternative?

Since all these crucial features remain untested, it begs the question — as a technology, do smart cards have the potential to streamline the PDS? The short answer — Yes, definitely. Has this been proved? No, not yet.

Smart cards offer a technology of the future. But till they are fully tested, with an eye to real world challenges, can we please suspend judgment on the inherent ‘smartness' of these cards?

Keeping it simple

It is no secret that India's Public Distribution System (PDS) is plagued with leakages.

At the last mile of the world's largest network of food delivery of 500,000 fair price `ration' shops, an estimated 10-30 per cent of the food grains are pilfered through fake cards.

But the proposed Food Security Bill offers a window of opportunity for change. The National Advisory Council (NAC) has recommended that three-quarters of India's population should be entitled to PDS food grains. It would then make immense logical sense to invest in an exhaustive one-time exercise to ensure the uniqueness of each ration card issued.

Andhra Pradesh, which already has near-universal PDS coverage for 80 per cent of its population, is moving precisely in this direction. The civil supplies department is the lead registrar for Aadhaar's unique identification exercise (UID) and enrolment forms are being distributed at ration shops. This, in turn, proves to be a cost effective method for the department to clean up its centralised databases with each family member's biometric and iris information. Based on these unique numbers, the state government has begun to issue ration `smart' cards.

But, once these unique cards are distributed, is it then essential to again authenticate fingerprints on a biometric sensor at every purchase at ration shops? No, it is especially unnecessary in rural areas where the NAC proposes that 90 percent of the population be made eligible for rations. Besides, biometric authentication of each transaction is largely impractical and cumbersome.

For one, the conditions within ration shops are far from ideal. A pilot across 20 ration shops in Tamil Nadu, for example, revealed that due to high levels of dust, the fingerprint sensors have frequent breakdowns and identification errors. Now, the state government has decided to entirely abandon the use of biometrics in favour of simpler handheld billing devices used by bus conductors to print tamper-proof tickets. Two, regular maintenance remains a challenge. Credit card swipe machines often have service agreements which ensure that a technician checks it at least once a month. This is even more essential for the sensitive biometric sensors with high volume of monthly transactions of 500-1,000 cards in an average ration shop.

But, it is hard to imagine this level of maintenance across rural India.

Lastly, it will unduly inconvenience poor people. For example, in Orissa's remote tribal areas where ration shops are often as far as 16 km away from villages, each month 5-6 able bodied men usually journey in a cavalcade of bicycles to collect food grains for the entire hamlet, including the elderly. The writing is on the wall. Biometrics can be useful to create a unique identification for each eligible household. But their unnecessary overuse for authentication at every purchase at ration shops will only distance poor people even more from their rightful entitlements.