Tired of its own inefficiency in plugging leaks and ensuring timely delivery of ration, the Madhya Pradesh government has decided to take the privatisation route to improve its ailing Public Distribution System.
The new system is being put in place by a corporate consortium led by HCL Infosystems with Edenred India Private Ltd ― a subsidiary of corporate meal voucher provider and multinational hospitality giant Accor ― and Virgo Softech Pvt. Ltd, an Indore-based IT firm as the other two members.
HCL will put in place a system to computerise the PDS apparatus and register beneficiaries to be linked with UID, while Edenred will print and provide the food coupons.
Virgo Softech will provide the IT manpower and enrolment teams for door to door registration, biographic and biometric data capturing.
With this, Madhya Pradesh will become the first State in the country to link its PDS to the UID with private participation on such a massive scale.
The State government’s move needs to be seen in the context of the larger national picture to scrap the existing Targeted Public Distribution System altogether and replace it with food coupons or cash transfers. The UPA government’s Chief Economic Advisor Kaushik Basu has vociferously advocated the deregulation of the PDS and moving to cash transfers or food coupons.
Interestingly in Madhya Pradesh’s case, HCL infosystems has provided highly inflated figures about the scope and coverage of the project on its website.
According to HCL, the contract would involve setting p an efficient food distribution system with “over 10 million expected transactions per month at Rs. 10.98 (per transaction per family) spread over 78 months”.
Based on these figures, the government ought to be paying the consortium Rs. 131.76 crore per year and over Rs.850 crore for the entire 78-month duration.
However, Dipali Rastogi, Commissioner, Food and Civil Supplies department corrects the figures provided by HCL thus.
“The total cost of implementation for a period of sixty months (not 78) comes to Rs. 454 crore or Rs.98 crore a month but we will be saving Rs. 420 crore by eliminating duplicate ration cards. So the cost to the government is next to nil. What HCL write on their website is their call,” says Ms. Rastogi.
But why privatise?
“Look, plugging leakages and rooting out corruption has proved to be beyond our core-competency. If we can have someone else provide these services on our behalf in a better and cost-effective manner, where is the problem? I admit it is a brave step, but necessary nonetheless,” says Ms. Rastogi.
However, the fact that UID can cure the problem of beneficiaries being left out of the PDS net is contested.
“UID can, at the most, address the problem of duplication of cards. But misclassification of families in the “BPL census” has little to do with identity fraud or “duplication”. Misclassification can occur when the criteria used for identification of BPL families are incorrect,” says development economist Reetika Khera.
“As for food coupons, they can be an important “last mile” authentication measure. However, the Bihar experience shows how this accountability measure can be undermined. For instance, in many cases, the coupons never reached card holders, they went straight into the hands of dealers; or dealers “charged” two months worth of coupons, while distributing only one month’s grains. The accountability measures can only work along with other safeguards, most importantly a good vigilance system, which in turn depends on political will,” says Ms. Khera.
According to UIDAI chairperson Nandan Nilekani the UID card will be voluntary but the MP government is going to make UID mandatory for PDS beneficiaries.
While the Madhya Pradesh government has set an example of sorts by privatising the bulk of its PDS service, neighbouring Chhattisgarh achieved its much celebrated PDS revamp for a mere Rs. 4 crore.
“We had our entire beneficiary database digitised by the National Informatics Centre (NIC). For better monitoring, we put in place a system of doorstep delivery of ration at the fair price shop and intimated people of it by SMS alerts. We also set up a dedicated call centre to receive complaints and grievances. Finally, we brought the supply chain under online monitoring to plug leakages,” says Rajeev Jaiswal, Joint Director, Chhattisgarh food and civil supplies department.
And why did Chhattisgarh decide to skip UID and food coupons?
“Look, the system that is in place is not faulty, its implementation is. We thought messing with the existing system would create a new set of problems. For instance, old or disabled people often have neighbours or relatives bring them their ration. That is not possible with the UID or food coupons. As for bogus cards, we eliminated over 2.5 lakh bogus cards through door-to-door physical verification,” says Mr. Jaiswal.