Finance minister Pranab Mukherjee on Wednesday accepted the recommendations of a task force led by Nandan Nilekani suggesting wholesale reform of food and fuel subsidy for the poor, by migrating the delivery mechanism to an end-to-end technology platform. Once implemented, the poor can opt for cash subsidy, change ration shops at will and decide on the quantity of purchase while eliminating diversion of subsidised commodities.
The panel has suggested a two-phase IT road map which individual states can modify as per requirements. It will also facilitate the implementation of the proposed National Food Security Bill and save costs for the Centre, which expects to spend over R1.5 lakh crore this fiscal on subsidies.
The task force plan aims to create a National Information Utility or Public Distribution System Network (PDSN) by April 2012 and initiate pilot projects by December 2012.
The panel, including secretaries from all major departments, has recommended that oil marketing companies will supply kerosene to state governments at market price. The Centre will bear the subsidy on kerosene and transfer the difference between the market price and retail price to states. State governments will ensure that the subsidy goes directly to the beneficiaries. The report suggests these phases will be aligned with the phased approach recommended for PDSN. The task force on direct transfer of subsidies on kerosene, LPG and fertiliser was set up in February. ?The major focus is on making the system more efficient,? Nilekani said.
The first phase will focus on information visibility and transparency. As the ration card is the document of eligibility for the public distribution system, computerising its issuance and capturing details of the beneficiary and his/her family is essential. Aadhaar enrolment of PDS beneficiaries will happen simultaneously in the first phase. Enrolment in Aadhaar and linking it to the ration card will ensure de-duplication of the beneficiary database as well as address some of the exclusion and inclusion errors in the system.
In the second phase, a core subsidy management system (CSMS-PDS) will be implemented which will be leverage Aadhar.
The report recommends that states can adopt particular modules and solutions especially in regard to payments and fraud analytics from PDSN. The states can also customise parameters based on local needs such as eligibility, type and quantity of commodity, type of token like coupon, smart card, electronic or mobile phone and price of food and kerosene. Pilot projects will start after identifying the fair price shops and sensitising the states on the functioning of PDSN.
The report also proposes an electronic ration card registration process which will allow beneficiaries to get their cards without hassles. The PDS network will also work on entitlement portability, which empowers the beneficiaries as they can relocate or migrate, without worrying about losing their government benefits. In order to check leakages, it says that entitlement portability will bring competition among fair price shops, due to which shops that adulterate or discriminate among users will eventually see less competition.
The report proposes making PSDN financially self-reliant but the government will have a major say in its appointments. The report states: ?The task force believes that a strong, robust IT infrastructure backbone is critical for reforming the functioning of the PDS.?