The number of people covered under the National Food Security Act for free ration supplies may come down, leading to significant savings on the food subsidy bill.
To weed out ineligible beneficiaries, the government will soon complete e-KYCs of all 800 million people covered under NFSA through bio-metric and Aadhar authentication.
Food subsidy bill, solely attributable to the NFSA, is estimated to be Rs 2.05 lakh crore in the current fiscal year. Food and fertiliser subsidies together accounted for 97% of the explicit budget subsidies provided by the Union government in FY24.
Any savings to the exchequer on account of removing ineligible beneficiaries of food subsidy will depend on how the procurement, storage and distribution of food grains are managed, and economic costs are reined in.
Sources told FE that so far e-KYCs of 527 million or 65% of the people registered NFSA beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) have been completed.
The food ministry is aiming to complete the process of digital authentication of remaining people who get free grain soon and the purpose is to ensure that around 60-70 million tonne (MT) grain supplied under public distribution system annually reach the intended beneficiaries and reduce pilferage.
Some of the states where e-KYCs authentication is slow are Maharashtra (14%), Delhi (1%), Jharkhand (26%), Gujarat (46%) and Haryana (43%).
“The aim is to ensure that only those persons whose names are there in the ration cards get the free grain without any duplication,” an official said, adding that there are instances where beneficiaries are enrolled twice under different ration cards following migration, marriage and other causes.
So far, 58 million fake or duplicate ration cards have been removed from the system. Each ration card includes four to five members on an average.
In FY23, centre’s food subsidy expenses were Rs 2.72 lakh crore as the centre was allocating double the entitlement of 5kg of grain per person under the NFSA till December, 2023 as part of Covid relief measures. In 2023-24, the expenses (revised estimate) on account of food subsidy were at Rs 2.12 lakh crore.
Currently e-KYCs of all the heads of the family under whose names ration cards are issued have been completed. The food ministry has completed digitisation of 204 million household ration cards with close to 99% of individual recipient of free grain are Aadhaar-seeded,
The beneficiaries who are covered under national portability of ration card (ONORC) also referred as one nation one ration cards initiatives aimed at allowing migrant workers to avails free grain at the place of their work, are allowed to carry out e-KYC at a fair price shops (FPSs) where they currently reside instead of travelling to locations where the person hails.
“Using application programme interface, we have enabled all the FPSs to carry out e-KYCs” an official said.
Currently, 0.54 million FPSs distribute food grain annually under PMGKAY or free of cost.
Under the reforms initiated to improve the targeted PDS, the government has initiated several measures such as digitisation of ration cards, Aadhaar seeding of ration cards and installation of electronic point of sale (ePoS) machines at most of these FPSs.
Officials said that the national portability of ration card under ONORC initiative has ensured regular availability and accessibility of free food grains in any part of the country, through the same existing ration card, irrespective of the state or district from where the ration card was issued.