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PDS goes smart in Haryana by Navneet Sharma


The 1,600 families in Haryana’s Panchkula district which line up at fair price shops for foodgrains and kerosene can do away with their prized ration cards, pieces of paper that entitle the poor to subsidized food and fuel.

Beginning Tuesday, while they still have to queue up, these families will receive their rations after a biometric identification using smart cards.

That’s a small beginning for an ambitious Rs138 crore Centrally funded project aimed at checking leakages, curbing corruption and ensuring need-based allocations in the public distribution system (PDS), India’s oldest and largest social security scheme, on which the government will spend Rs55,578 crore over 2010-11.

Consumer affairs, food and public distribution minister Sharad Pawar launched the smart card project—the first of its kind for PDS in any state—through a video conference at the national conclave of food secretaries of all states in New Delhi on Tuesday.

The government hopes to replicate the Panchkula pilot across the country, which struggles with a corrupt system where less than half the subsidized food meant for the poor actually reaches them.

For now, Haryana authorities hope to cover the entire state by end-2011.

Then Union finance minister P. Chidambaram had described Haryana as a “willing partner” when he announced the project in his budget for 2008-09. The state has 5.4 million ration card holders, including around 1.2 million of the poorest families under the Antyodaya Anna Yojana (AAY), receiving their rations through some 9,600 fair price shops.

The cycle of corruption

Like in most states, leakage and diversion of foodgrains and kerosene from the PDS is high in Haryana too. New Delhi-based think tank National Council of Applied Economic Research (NCAER) found in a study it did four years ago that about “40.6% of PDS kerosene is being diverted” and finding its way into the black market “or purchased by households without a card.”

Around 4.2 million families in Haryanawhichhold ration cards and are above the poverty line, are entitled to 3 litres of kerosene every month if they do not have a connection for a cooking gas cylinder. But there’s no system to ascertain whether they have gas connections or not and a sizeable portion of the kerosene oil entitlement is diverted.

After two panels—headed by C. Rangarajan in 2006 and by B.K. Chaturvedi committee in 2008—recommended that subsidized kerosene be supplied only to poor families, the state government in September 2008 decided to stop supplying to non-poor families even if they did not have cooking gas connections. The decision was rolled back within days on “humanitarian grounds”. Kerosene leakage is even higher in Punjab, Delhi, Bihar, Chhattisgarh and Uttarakhand.

Similarly, there is a huge diversion of wheat, rice and sugar from the PDS due to misuse and duplication of ration cards. According to some estimates, around 30% of the foodgrains and other commodities allocated for poor families do not reach them.

“In states like Haryana, which have surplus wheat and rice and where the poor get their share in crop from the landowners in lieu of working in the fields, the ration card holders deposit their cards with fair price shop owners and take cash or other items of daily use in place of their monthly entitlements,” a food and supplies department official said, requesting anonymity. “A number of ration shop owners also run grocery stores. And this makes diversion easier.”

State authorities are confident the biometrics-based smart cards will help check such malpractices and weed out fake and duplicate ration cards.

Roll-out plan

“We are in the process of engaging a system integrator from (the) private sector for setting up and maintaining infrastructure, issuing smart cards, running a call centre and carrying out back-end operations. Bids have been received and the company will (be) decided within the next few days,” said Navraj Sandhu, financial commissioner and principal secretary, food and supply.

She said Ambala City, Gharaunda, Sonepat and Sirsa blocks would be taken up in the first phase of implementation, which is to be completed by October. “Test run results in Panchkula have been satisfactory. There may be a few technological glitches initially, but we hope to learn from them and improve the system,” she said.

The National Informatics Centre has developed the software and tested it to some extent in Panchkula. Fingerprints of each member (above the age of 12 years) of beneficiary families would be stored in the smart card along with details of their monthly entitlement.

At fair price shops, a smart transaction terminal (STT) will be used to match the fingerprint records on the smart card with that of the consumer’s and authenticate the transaction.

All district offices and Food Corporation of India centres will be given STTs to make allocations and to keep records of all transactions. At a later stage, transporters will be given similar smart cards for delivering foodgrain and kerosene oil.

Linking Aadhaar

After Chhattisgarh, where ration card data has been computerized to ensure proper distribution and to check leakages, the Panchkula pilot is the first such experiment ahead of a nationwide PDS reform that Nandan Nilekani, head of the Unique Identification Authority of India, is pursuing.

A.K. Gaur, deputy director in-charge of the Smart Card Project, said the smart cards would be compliant with the unique ID (UID) project called Aadhaar.

“A decision has been taken in principle that fingerprints and iris scans of families holding ration cards will be taken for UID by the system integrator of our project while making smart cards. The bids were invited with and without iris scan costs,” he said.