The promulgation of the National Food Security Ordinance (NFSO) on July 5 has set off an epic debate in the media. Over the last fortnight, much has been said about the Ordinance by commentators representing a broad spectrum of opinions and ideologies. Depending on whom you choose to believe, the NFSO: is a game-changer for Indias battle against hunger and malnutrition; is a step in the right direction but does not do enough for disadvantaged sections of society; does too much by covering too many people; is too expensive in the face of our burgeoning budget deficit; is inflationary and distortionary; is a slight to due Parliamentary process; is a politically motivated masterstroke with an eye on the upcoming elections; and finally is doomed to be a failure as it depends on the porous and creaky Targeted Public Distribution System (TPDS) as a delivery mechanism.
While there may be an element of truth in some of these assertions, none of them completely encapsulates the situation we are currently faced with. In our great Indian tradition, this debate could carry on forever with perfectly rational people continuing to disagree on the elements of each argument. However, it is important to recognise that barring something pretty drastic the Ordinance will, in all likelihood, be passed by Parliament and become an Act in the coming monsoon session. In light of this near inevitability, the key question should, therefore, be about how the Act can best be implemented to ensure that its intended benefits are realised in the most efficient and cost-effective manner.
In order to achieve the ambitious objectives of the Act, the government will need to get two things right: (1) system/process design to deliver this service and (2) implementation of this design. Let us begin by talking about the three main system/process design requirements that must be fulfilled for the Act to achieve its objectives.
First, in order to provide 67% of the countrys population with the promised quantity of subsidised foodgrains on a monthly basis, the government will need to create a robust process and specific guidelines for the identification of priority families. State governments have been entrusted with this responsibility. It will be absolutely essential to ensure that the issues that currently plague the TPDSnamely exclusion errors (eligible families deprived from getting benefits), inclusion errors (ineligible families getting benefits), bogus/ghost beneficiaries (fake names in beneficiary lists) and shadow ownership of ration cards (valid cards not in the hands of their rightful beneficiaries)are not allowed to continue. Reliable, updated lists of all family members with sufficient information to establish their eligibility for benefits will be required to replace current ration card lists, many of which are based on data from the early to mid-1990s. The ongoing SECC (socio-economic and caste census) which is based on 2011 census data could potentially serve this purpose although the acceptability of its ranking of households on the basis of specific characteristics and its applicability to the identification of priority households will need to be determined. A supplementary mechanism to identify and eliminate duplicates and bogus/ghost cards will also be required. The uniqueness of the biometric-based Aadhaar provides the dual benefit of de-duplication and ghost card identification (as fake names will find it difficult to get an Aadhaar number) as well as that of enabling ration cards to be distributed to only their rightful owners (thereby reducing the chances of shadow ownership from the very outset).
Second, since the entitlements under the Act are dependent on the number of members in each family, a responsive system for updating family member details (due to birth, death, marriage, divorce etc) and resulting changes in foodgrain entitlements will be required. This is currently lacking in the TPDS in the majority of states. The use of CSCs (and potentially licensed cyber cafes in areas in which CSCs are currently not present) for easy updating of ration cards is a potential option. A real-time online system that contains the most up-to-date details of family members will allow for these changes to be translated into updated foodgrain entitlements. While there is clearly an incentive for registering changes in the family structure that increase the number of members in the household, mechanisms to remove family members in case of death, divorce etc will need to be devised. In short, a more dynamic and flexible avatar of the current TPDS will be required for the proper implementation of the provisions of the National Food Security Act (NFSA).
Finally, a mechanism to eliminate the potential for the falsification of foodgrain issuance records at the fair price shop (FPS) is required to prevent large-scale diversion of foodgrains from the TPDS. The vast majority of FPS still maintain sales records on paper registers in which beneficiaries sign or put their thumb impressions as an acknowledgement of the fact that they have received their foodgrain entitlements. This system is opaque, difficult to monitor/audit and provides ample opportunity for records to be falsified at the FPS to mask pilferage of foodgrains throughout the supply chain. There is, therefore, a genuine fear that, without a change in this system of issuance at the FPS, a significant portion of the additional foodgrain that will be pumped into the TPDS under the NFSA may be diverted away from the intended beneficiaries and into the open market.
A system based on real-time authentication of the beneficiarys identity at the FPS would significantly reduce the FPS dealers ability to unilaterally declare issuance of foodgrains and thereby curtail pilferage and diversion of unclaimed foodgrains. The Aadhaar-based system authentication system for the TPDS in East Godavari district of Andhra Pradesh has shown significant promise in this regard. A number of smart card and coupon-based systems have also been tried but the scalability, robustness and overall cost of Aadhaar-based systems makes them the most attractive option. The process of FPS automation must be speeded up considerably in order to create tangible impact. Even today, the sum total of all FPS in which some form of automation has been carried out is less than 1% of the 5 lakh FPS in the country.
An automated authentication and transaction monitoring mechanism at the FPS would allow the government to track utilisation of benefits at the level of each beneficiary. This is essential not only to establish that each beneficiary is being provided the right to food (if this information were ever required in a court of law) but would also significantly increase the level of transparency in the system. Access to this information would streamline the operations of the grievance redressal processes laid out in the Act by making them more data-driven and fact-based and, therefore, more likely to be of genuine benefit to the aggrieved beneficiary.
All the ideas mentioned above have been implemented in one form or another in TPDS pilot projects across the country. The need of the hour is to combine established best practices from a series of small, disparate pilots to form a comprehensive end-to-end solution and to implement this at scale.
Coming to the subject of implementation, it is important to recognise that the end result of even the best conceptualised scheme is only as good as the manner in which it is implemented. As we have seen time and again, the implementation of large complex programmes is tricky business. Let us look at some of the prevailing conditions that the implementers of the NFSA will have to contend with. The unprecedented magnitude of this scheme alonethe Act will provide nearly 815 million people with a legally enforceable right to foodwill make implementation a formidable task. Given the scale of the task at hand, the proposed implementation schedule, if not managed properly, could raise a number of significant issues that might compromise the eventual effectiveness of the overall effort.
The Act stipulates that states must implement its provisions within 6 months, i.e. by the end of 2013. Governments with an eye on impending state and general elections are going to be under pressure to show even quicker results that can be showcased to the electorate. The recent slew of announcements by states like Delhi, Haryana and Karnataka promising implementation of the Act starting August 20, 2013, are likely to be followed by others in the near future. However, the proper implementation of the systems and processes required to improve the functioning of the TPDS, in order to achieve the intended objectives of the NFSA, should not be compromised in the hurry to issue ration cards and to start the flow of foodgrains. The TPDS process most vulnerable to this issue is that of beneficiary identification. This is a complicated process and sufficient time and resources in addition to clear guidelines and exception management processes will be required to ensure that the beneficiary listthe foundation of the entire systemis not compromised in an effort to quickly issue ration cards. Any errors introduced into the beneficiary list at this moment will be very difficult to remove once cards are issued to beneficiaries and proper care must be taken to ensure that this does not happen. It would also be nave to assume that all the other required improvements to the TPDS can be implemented in the next 6 months. The diversity of the TPDS situation across states means that the design and implementation plan for any solution would need to be customised to the state context. The long lead times associated with administrative approvals, procurement of hardware and services, and the relatively slow progress of change management efforts within government means that a longer time horizon, significant patience and determination will be required to deliver the full benefits of the NFSA.
To conclude, the government will need to ensure that 3 critical requirements are met for the successful implementation of the NFSA. First, the Centre and state governments will have to work together to clearly articulate a comprehensive set of processes and systems with a long-term, end-to-end systemic viewpoint. They will need to take into account interdependencies between processes, eschew short-term measures that may have adverse longer-term consequences and align the incentives for all key stakeholders. Second, states will need to issue a highly detailed set of directives to the district and block level authorities responsible for on the ground implementation. These directives must provide a pragmatic set of procedures, target timelines and milestones. Constant monitoring and evaluation of process and outcomes will be required to ensure that the provisions of the envisaged system are not diluted during implementation. Finally, government will need to invest sufficient resources and build or source adequate organisational capacity at the Centre and at state level to successfully execute this mammoth endeavour within a reasonable time and cost. A bill seeking to transform the lives of our poor has to also transform its delivery system to deliver!
Arindam Bhattacharya is managing director, Seema Bansal is principal and Ashish Jhina is project leader, the Boston Consulting Group, India