Cleaning up the back-end of the subsidized public distribution system (PDS) has helped weed out over 6 million bogus ration cards, plugging leaks to the tune ofRs.4,200 crore in two years, the food ministry said on Monday.
In its bid to better target subsidies and ensure leakage-free distribution of foodgrains, the government used direct benefit transfer (DBT) and automated ration shops, a statement issued by the ministry said.
DBT allows the transfer of subsidies to bank accounts of beneficiaries, who then buy food from the open market. Automation ensures foodgrains are distributed via ration shops through point-of-sale (PoS) devices that authenticate beneficiaries and record the quantity of subsidized grains given to a family.
While DBT is presently used in only the Union territories of Chandigarh and Puducherry, PoS devices are used in 59,500 ration shops. The target is to scale this up to 150,000 shops by March 2016 and 542,000 by March 2017, the ministry said.
States are using central assistance to install PoS devices in ration shops that are linked to the Aadhaar unique identification numbers of beneficiaries.
The linking of Aadhaar numbers with ration cards has gone up from 8% to 39% between April and December, the food ministry said.
As a result of these efforts, 6.14 million bogus or duplicate ration cards have been cancelled in the past two years, stopping the diversion and misuse of PDS foodgrains amounting to about Rs.4,200 crore.
Plugging leaks in PDS through digitization comes on top of the DBT scheme for subsidized domestic gas.
Under DBT for LPG, or the Pahal Scheme, 147.4 million beneficiaries have received Rs.29,826 crore in their bank accounts since the scheme was relaunched in November 2014. The government expects to save Rs.15,000 crore in LPG subsidy every year that would have been lost to leakages.
To successfully implement the National Food Security Act (NFSA), the central government has focused on end-to-end computerization, which will bring transparency and check leakages and diversion of foodgrain, the food ministry said in its statement.
So far, the beneficiary database has been digitized in 33 states and Union territories, while 17 states and Union territories are being allocated foodgrains online. In nine states and Union territories, the entire supply chain has been computerized.
The food law was enacted by Parliament in 2013 and entitles beneficiary households to draw 5kg of foodgrains per person per month at a subsidized price of Rs.2-3 per kg. The scheme is expected to cost the government Rs.1.2 trillion in 2015-16.
While 11 states and Union territories are yet to implement the law, 25 have done so. States that are yet to roll out the law include Uttar Pradesh, Gujarat, Tamil Nadu and Kerala.
Presently, around 530 million people have been brought under the law.
A committee on restructuring the Food Corporation of India suggested in its report submitted in January that the government begin direct cash transfers of food subsidy because the existing delivery mechanisms lead to a leakage of as much as 47%. It estimated that cash transfers alone could save the exchequer Rs.30,000 crore every year.