Economy Watch – Aadhar , PDS and the Unavailability of Internet

India’s Public Distribution System (PDS) has improved steadily during the last 10 years. The system used to be most ineffective and corruption-ridden, with leakages of around 50 per cent at the national level, going up to 80 or 90 per cent in some States.

Around 2007, Chhattisgarh took the lead in reforming the PDS — making it more inclusive, methodical and transparent. Within a few years, the system was overhauled. Today, most rural households in Chhattisgarh have a ration card, and are able to secure their entitlements (typically 7 kg of rice per person per month) on time every month.

The ‘Chhattisgarh model’

Later on, it turned out that the Chhattisgarh model (so to speak) was replicable. Odisha was among the first States to emulate Chhattisgarh’s experience, with similar results. Many other States also initiated Chhattisgarh-style PDS reforms: broad coverage, clear entitlements, de-privatisation of PDS shops, separation of transport agencies from distribution agencies, computerisation, fixed distribution schedules, tight monitoring, active grievance redressal, and more.

The National Food Security Act (NFSA), enacted three years ago, was — and still is — a chance to complete the process of PDS reform and ensure a modicum of food security for everyone.

Under the NFSA, the APL category is abolished and eligible households come under two well-defined categories: priority households, entitled to 5 kg of foodgrains per person per month at nominal prices, and Antyodaya households (the poorest), entitled to 35 kg per household per month.

The PDS is to cover at least 75 per cent of rural households at the national level, rising to 80-90 per cent in the poorest States.

The recent  Central government’s   push for Aadhaar-based biometric authentication in the PDS. This involves installing “Point of Sale” (PoS) machines at PDS shops, and verifying the identity of cardholders by matching their fingerprints against the Aadhaar database over the Internet.

This system requires multiple fragile technologies to work at the same time: the PoS machine, the biometrics, the Internet connection, remote servers, and often other elements such as the local mobile network. Further, it requires at least some household members to have an Aadhaar number, correctly seeded in the PDS database.

This is a wholly inappropriate technology for rural India, especially in the poorest States. Even in State capitals, network failures and other glitches routinely disable this sort of technology. In villages with poor connectivity, it is a recipe for chaos. Note that Internet dependence is inherent to Aadhaar since there is no question of downloading the biometrics.

Recent developments in Rajasthan illustrate the dangers of forcing biometric authentication on the PDS. During the last few months, the Government of Rajasthan has tried hard to enforce the system. The use of PoS machines is compulsory and every PDS shop has one. Yet, according to official data  , only 61 per cent of Rajasthan’s foodgrain allocation found its way through the PoS system in July 2016, with a similar figure (63 per cent) for August. The rest is either siphoned off or delivered using the old “register” system — which of the two is hard to say since utter confusion prevails about the permissibility of using registers as a fallback option.

Further evidence comes from Ranchi district in Jharkhand where the PoS system is also mandatory. In July 2016, NFSA cardholders in Ranchi district received less than half of their foodgrain entitlements through that system, according to the model website mentioned earlier. The situation was much the same in August.

As in Rajasthan, it is not clear whether those for whom the PoS system does not work in Ranchi are getting any grain through the old “register” system. Officially, that is not allowed, according to local PDS dealers and officials (indeed, some dealers have been suspended for using this fallback option). Even if it happens unofficially, this dual system, where PDS grain goes partly through the PoS system and partly through the fallback register system, is the worst. The reason is that only PDS dealers know whether and when the register system is permissible, and they have no incentive to share that information with the cardholders. Quite likely, the new system is reviving PDS corruption in Jharkhand, reversing a healthy trend towards lower leakages in recent years.

Even those for whom the system works face huge inconvenience. Often they have to make repeated trips to the PDS shop, or send different members in turn, until the machine cooperates. Sometimes schoolchildren are asked to skip classes and try their luck at the PDS shop. This unreliable system causes a colossal waste of time for everyone.

The Aadhaar juggernaut

In spite of ample warnings, the Central government continues to push for compulsory Aadhaar-based biometric authentication in the PDS. Incidentally, this is a violation of Supreme Court orders. The court did allow the use of Aadhaar in the PDS, but not making it compulsory for PDS users. Nor can the government invoke the Aadhaar Act to justify this move: the relevant sections of the Act are yet to be notified.

PoS machines seem to be expected to ensure a corruption-free PDS. This expectation, however, builds on a misunderstanding of PDS leakages. The main vulnerability today  is not identity fraud (e.g. bogus cards), but quantity fraud: PDS dealers often give people less than what they are entitled to, and pocket the rest. PoS machines are ineffective in preventing quantity fraud. They may help in reducing identity fraud, such as it is, but that does not justify depriving people of their food entitlements when the technology fails.

 The drive to impose biometric authentication on the PDS must stop immediately to avoid further damage. There are better ways of plugging last-mile leakages, including the use of simpler technologies not dependent on the Internet. Imposing a technology that does not work on people who depend on it for their survival is a grave injustice.