Business Today

All Cost, No Benefit

The government's direct benefit transfer scheme is riddled with problems
By Joe C. Mathew   Delhi     Print Edition: March 12, 2017
All Cost, No Benefit

J-PAL, the research institution assigned with the task of monitoring the direct benefit transfer (DBT) scheme in the public distribution system - currently being piloted in the three union territories of Chandigarh, Dadra and Nagar Haveli and Pondicherry - has found serious flaws in its implementation. The first two reports, released in a span of one year, reveal that while some of the eligible citizens were getting no money at all in their accounts, in many cases the cash transfers was erratic. Even more striking was the finding that the opportunity cost was much higher in the case of cash transfers than direct purchase of subsidised food grains from the nearest fair price shop. The beneficiaries found the cash to be inadequate to buy the same quantity of food grains that they would have got through the PDS system. Majority preferred the time-tested ration shops to bank-account-linked cash transfers.

The report also found that the grievance redressal mechanism, in the form of a toll-free phone number, was not utilised at all by most beneficiaries. Although the study is ongoing, the reports submitted so far to the food ministry and government think tank Niti Aayog point to the need for serious introspection of the DBT plan. Not just in the PDS sector, but elsewhere, too.

The use of biometric identification in authenticating social sector beneficiaries had run into problems due to issues such as inconsistent/ worn-out fingerprints of those involved in manual labour. Several studies, similar to that of J-PAL, done by other agencies had found the transfer of funds happening to dubious accounts, while people who had laboured under the government's employment guarantee schemes like MGNREGA were not finding their wages credited to their bank accounts.

Will the Modi government shelve DBT plans altogether? Unlikely, as the government has been consistently projecting DBT as the only way to reduce leakages in subsidised food grain supplies; the only way to weed out fake or ghost beneficiaries.

One cannot blame successive governments for being paranoid when it comes to food subsidy, the budgetary allocation for which has only been increasing over the years, and touched `1.45 lakh crore in the 2017/18 Budget. The current Budget also hiked the allocation to be given as assistance to state agencies for intra-state movement of food grains and fair price shop dealers' margin, under the National Food Security Act, from `2,500 crore to `4,500 crore.

The government had identified two models to eliminate leakages in the PDS system - one was to dismantle PDS and move to DBT, and the other to automate fair price shops, and ensure accountability and transparency. The digitisation of ration cards is 100 per cent complete; Aadhaar seeding of cards has been progressing. Perhaps, digital supply chain management and real-time tracking of food grain movement need to be pushed further.

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