Govt targets food, kerosene DBT by April 2016

Enthused by the success of direct benefit transfer (DBT) for LPG, the Narendra Modi government has set an ambitious target to roll out DBT for disbursing food and kerosene subsidies across the country latest by April 1, 2016, officials said.

Unlike in the case of LPG, where the subsidy amount is deposited to beneficiary accounts almost simultaneously with the sale of the fuel to household consumers, the DBT schemes for food and kerosene, the sources said, would have both cash and non-cash options.

Especially in the case of rural areas, the sources added, subsidised rationing of food and kerosene would be better targeted with biometric authentication of beneficiaries.

However, the target, according to analysts, looks challenging as most states are yet to start the authentication of beneficiaries by seeding their bank accounts and Aadhaar numbers.

Officials said the Centre may have to get tough with states on the implementation of DBT, which is crucial for ushering in expenditure reforms to improve the government finances. The Expenditure Management Commission, in its interim report in January 2015, recommended that DBT be implemented in all government welfare schemes to ensure only the deserving get the benefits and leakages are plugged. Major subsidies — food, fertiliser and fuel — which were 2.3% of GDP in FY14, were brought down to 2.0% in FY15 and are estimated to be 1.6% in FY16, thanks to the decontrol of diesel and petrol, benign crude oil prices and a DBT-LPG scheme.

The Centre has made it clear that states won’t be able to get any need-based extra allocation of food under the Targeted Public Distribution System (TPDS) if digitisation of beneficiaries list and end-to-end computerisation of PDS is not complete by September 30. If the digitisation and seeding of Aadhaar is not complete by December 31, they will only get PDS rations proportionate to digitisation.

After the fiats, most of the states have completed digitisation of beneficiaries list, but are yet to complete digitisation of online allocation and supply chain systems for subsidised food. The Centre is now pushing states to start de-duplication of beneficiaries by seeding Aadhaar and bank accounts to meet the DBT roll-out target, which officials admit is ambitious.

According to an estimate, a family could get R500-700 per month, depending on its size, if it opts for cash as an alternative to subsidised foodgrains and kerosene. After the failure of the initial pilot in Puducherry in July, the Centre is going to roll out the pilot for DBT-cash for food and kerosene in Puducherry, Chandigarh, Daman & Diu, and Dadra & Nagar Haveli in September. “Based on this experience, states will decide on their option,” a senior government official said.