Union territories script success story of cash food subsidy

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Chandigarh | Published: October 18, 2015 12:27:44 AM

Beneficiaries in Chandigarh, an early mover in cash transfers, give a thumbs up to new scheme

(Left) Mamta Devi works as a domestic help at a house in Sector 33, Chandigarh. She received Rs 378 in her bank account under DBT PDS and (Right) Bimla Devi with husband Chandra Prakash and their daughter in front of their rented accommodation at Attawa village in Chandigarh. R473 have been transferred to Bimla Devi’s bank account towards DBT PDS.(Left) Mamta Devi works as a domestic help at a house in Sector 33, Chandigarh. She received Rs 378 in her bank account under DBT PDS and (Right) Bimla Devi with husband Chandra Prakash in front of their rented accommodation at Attawa village in Chandigarh. Rs 473 have been transferred to Bimla Devi’s bank account towards DBT PDS.

After the success of Direct Benefit Transfer for LPG or PAHAL scheme, which led to savings in excess of Rs 7,000 crore in FY15 via the elimination of about 3 crore fake subscribers, the government is now trying the efficacy of the Aadhaar-enabled cash transfer for food subsidy. And, the initial reports are encouraging.

Pioneering the DBT-food programme are the country’s union territories, given their relative smaller geographies, population and better administrative machinery. The Chandigarh food department, the early mover among these, last month transferred Rs 1.67 crore to the beneficiary households’ Aadhaar-seeded bank accounts under the National Food Security Act.

Sources in the UT administration said the implementation of Aadhaar-enabled DBT has led to removal of thousands of bogus entries from the city’s list of Public Distribution System (PDS) households, which are now pegged at some 56,000.

“We have stopped distributing food grains through PDS outlets since last month. Instead, the subsidy amounts are being transferred to the beneficiaries’ bank accounts,” Praveen Kumar, district food supplies officer in the department of food, Chandigarh administration, told FE. Earlier, the food department used to distribute 26,000 quintals of grains every month to poor families under NFSA, which guarantees 3 kg of wheat and 2 kg of rice per person at Rs 2 per kg and Rs 3 per kg, respectively. The economic costs of PDS rice and wheat are Rs 23.12 per kg and Rs 16.12 per kg, respectively, and this includes, apart from the procurement costs, the expenses on grain transportation, storage and distribution, besides PDS retailers’ margins.

Kumar said the 90-odd PDS outlets in the UT would close down during the next few weeks. He, however, refused to give a precise estimate of the savings in subsidies from the DBT rollout. Chandigarh being an urban centre, the share of bogus PDS subscribers could be relatively less than in rural areas, where the administration is weak and tends to be more amenable to corrupt practices, analysts said. Given the average number of persons in a household being around four, the number of DBT-food scheme beneficiaries in Chandigarh could turn out to be close to 2 lakh, a tiny fraction of the UT’s population. FE spoke to some people whose bank accounts have been credited with food subsidy amounts and they largely seemed to be happy with the new system. Bimla Devi, a housewife from Attawa village in the UT, said she just received an SMS saying that her bank account has been credited with R473 as food subsidy. Devi, whose family comprises her husband Chandra Prakash, who is a daily wage labourer, and three children, would henceforth receive such amounts during the first week of each month. “With money being transferred into my account every month, we will be able to buy grain of better quality from the market as per our needs, instead of PDS grain,” Devi told FE.

Mamta Devi, a mother of three children who works as a domestic help in Sector 33 of Chandigarh, received R378 in her bank account earlier this month. She likes this idea better, saying that availability of rice and wheat was often a problem with PDS shops.

Besides Chandigarh, the DBT food scheme is going to be implemented in Puducherry and Dadra and Nagar Haveli as well.

A high-level committee on restructuring of Food Corporation of India had earlier in the year recommended a gradual introduction of cash transfers in PDS, starting with large cities with over one million population, and then extending it to grain-surplus states and giving option to deficit states to opt for cash or physical grain distribution. The committee’s calculations revealed that through DBT, the government could save more than Rs 30,000 crore annually, and still give a better deal to consumers.

However, food minister Ram Vilas Paswan is on record saying “if we transfer cash, the beneficiary can buy grain from the open market. Then the procurement operation, storage facilities and the PDS system could over time become redundant. We need to think about this before implementing the (DBT food scheme) on a larger scale”.

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