Delivering ration: When Aadhar-based system doesn’t work and cash transfers is not an option

Citing glitches in the authentication system being used in Rajasthan and Jharkhand, experts urge Bihar to improve delivery through other means.


While the Union government is pushing to make the use of Aadhaar, a biometrics-based digital identity number, mandatory in the public distribution system, academics and social activists have written to Bihar Chief Minister Nitish Kumar, asking him to not switch to the fingerprint-based authentication system for the distribution of ration, and to instead focus on improvements in delivery through other measures.

In the letter, development economists Jean Drèze and Reetika Khera, and social activists Kamayani Swami and Ashish Ranjan of Jan Jagran Shakti Sangathan, an organisation that works with rural workers in Aaria, Bihar, pointed out that the experience of fingerprint authentication of welfare scheme beneficiaries in other states such as Rajasthan and Jharkhand was “very negative” and resulted in “depriving large numbers of people of their entitlements” when the technology did not work reliably in rural areas, and due to data entry errors, causing immense hardship to beneficiaries.

Drèze had earlier analysed Jharkhand government data to show that after the biometrics-based authentication was made compulsory in ration shops in Ranchi district, ration card holders received only 49%, or less than half their entitlements, in July and August.

“Imposing a technology that does not work on people who depend on it for their survival is a grave injustice,” the letter noted.

The authors of the letter added that Bihar had recorded “rapid improvements” in the ration system through other means till 2014, with the estimated grain leakage falling from 90.9% to 24.4% between 2004-’05 and 2011-’12. A 2016 survey by Dreze-Khera had found irregularities in delivery creeping in again in Bihar and Jharkhand. Bihar would do well to continue its own reform measures such as information boards in ration shops, ensuring timely delivery, and fixing schedules for grain distribution, they said.

Cash or Aadhaar-authentication

Under the National Food Security Act, beneficiaries are entitled to 5 kg subsidised grains per person per month. In May last year, the ministry of consumer affairs, food and public distribution wrote to all state governments and Union territories to opt for either cash transfers in place of food, or to adopt fingerprint-based authentication of beneficiaries by installing point-of-sale machines at ration shops across their states.

West Bengal Chief Minister Mamata Banerjee has opposed Aadhaar being made compulsory in social schemes while several people still do not possess Aadhaar numbers. Bihar is among the states with lowest levels of Aadhaar enrolment and linking of ration cards with Aadhaar, theFinancial Express reported earlier this month.
In their letter this week, the academics and activists criticised the Union government’s imposition on the states.

Said Kamayani Swami, an activist with Jan Jagran Shakti Sangathan in Araria, Bihar: “The experience in Rajasthan and Ranchi in Jharkhand shows that Aadhaar technology is not bringing down corruption as the dealer is still allowed to do a manual override when fingerprints don’t work or if there are data entry errors or are doing quantity fraud, but the switch is causing hardship and exclusion for beneficiaries, reducing their access.”

Excerpts from the letter:

Respected Chief Minister,

We are writing to share our apprehensions about the imposition of PoS machines in the Public Distribution System (PDS), and also about replacing food with cash.

As you know, we have been watching the PDS in Bihar with keen interest. We were impressed with the rapid improvements that took place until 2014, but disappointed to find no evidence of further progress in our most recent survey in June 2016.

Meanwhile, we hear that the central government is putting pressure on state governments to explore two alternatives to the Public Distribution System: switch to cash, or deploy Aadhaar-enabled machines at ration shops. In response to this pressure, several state governments have started using Point of Sale machines.

The experience of these states (especially Rajasthan and Jharkhand) with PoS machines is very negative. On the one hand, Point of Sale machines fail to address the main source of corruption, which is quantity fraud (dealers give people less than their full entitlements) rather than identity fraud. On the other hand, because the Point of Sale system is so unreliable (it requires several fragile technologies to work together, in addition to correct seeding of Aadhaar numbers etc.), it ends up depriving large numbers of people of their entitlements.

In Ranchi District (the pilot district in Jharkhand), Public Distribution System cardholders have been getting less than half of their entitlements since the Point of Sale system was made compulsory. Imposing a technology that does not work on people who depend on it for their survival is a grave injustice.

The states that decided to try Point of Sale machines did so because they understand that the other option given to them by the centre, i.e., to switch to cash transfers is neither practical nor advisable.

Among other issues, the banking system in Bihar is simply not ready to handle mass cash transfers. As with NREGA wages and social security pensions, the payments are likely to be very irregular and chaotic, depriving people of the little security they have from the Public Distribution System and causing much discontent.

Instead of switching to other systems that are almost bound to fail, we feel that the Bihar government should persevere with well-tested Public Distribution System reforms – timely door-step delivery of grain, putting ration lists and other Public Distribution System data online, ensuring a fixed schedule for delivery of grain, etc.

Some of these reforms have already been initiated in Bihar, with significant results, but others are yet to be implemented (in our experience, for instance, very few ration shops in Bihar have an information board). Further, much more needs to be done to make Public Distribution System dealers accountable, if not replace remove them altogether as has been done with much success in Chhattisgarh and Odisha.

The Bihar government could also consider using non-biometric Point of Sale machines that record transactions in offline mode, for weekly uploading on the Public Distribution System portal. This would ensure reliable recording of last-mile transactions without the fatal dependence on multiple fragile technologies inherent in the Point of Sale system.

Prakash Kumar, the deputy secretary food and civil supplies, in the Bihar government, said that the state government had launched two pilot projects, one to experiment with cash transfers in Kasba block in Purnea district, and a second on fingerprint-authentication using Aadhaar in Nalanda district.