Recently, the Supreme Court did well to set a deadline of July 31 for states to implement the One Nation One Ration Card system. Considering the sheer scale of the migrant crisis that unfolded last year — foodgrains were distributed to a staggering 2.8 crore migrants under the government’s Aatma Nirbhar Bharat scheme — and the still precarious financial position of households, especially of migrant labourers working in the informal economy, the Court has rightly reminded states of the urgency of implementing this scheme. Citizens must not be denied basic welfare benefits simply because they have migrated beyond state boundaries.
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The concept of One Nation One Ration Card revolves around the idea that citizens should be able to avail of their entitlements irrespective of where they reside in the country. In this framework, migrant workers can access the subsidised foodgrains under the National Food Security Act from any of the 5.4 lakh fair price shops across the country, and not be bound to the fair price shop near the place where their ration card is registered.
But there are several issues that require careful consideration.
First, shifting to such an architecture will also require continuous and real-time information on migration across the country. But there has been little progress on this front. The Court recently chastised the Centre for the delay in setting up a portal to register migrant and unorganised workers.
Second, foodgrain allocations across states will need to be more flexible in nature, taking into account seasonal fluctuations in migration.Thus the information technology infrastructure needs to be robust to ensure effective inventory and stock management.
Third, as entitlements tend to vary across states, migrants will not be able to access the full benefits available to them in their home states, unless those costs are borne by the states. But this would require integrated, regularly updated, dynamic systems.
Fourth, not all the 5.4 lakh fair price shops have installed ePoS machines. For instance, as reported in this paper, Delhi is yet to start using ePoS in fair price shops.
Fifth, there is also the issue of allowing for the updation of household member details on the ration card, and seeding of ration cards with Aadhaar only in the home state.
To incentivise states to shift to this architecture, last year, the central government had made states’ additional borrowings conditional on the successful implementation of the One Nation One Ration Card system. More such measures may be needed to ensure a quick and effective rollout of this scheme.
The migrant crisis last year threw into sharp relief not only their precarious economic situation, but also the absence of comprehensive safety nets to fall back on. Shifting to this new framework would be a step towards strengthening existing social security nets whose glaring holes have been exposed by the pandemic.
What is the ‘One Nation, One Ration Card’ system?
Under the National Food Security Act, 2013, about 81 crore persons are entitled to buy subsidized foodgrain — rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Re 1/kg — from their designated Fair Price Shops (FPS) of the Targeted Public Distribution System (TPDS). Currently, about 23 crore ration cards have been issued to nearly 80 crore beneficiaries of NFSA in all states and UTs.
In the present system, a ration cardholder can buy foodgrains only from an FPS that has been assigned to her in the locality in which she lives. However, this will change once the ‘One Nation, One Ration Card’ system becomes operational nationally. This is how it will work:
Suppose a beneficiary lives in the district of Basti in Uttar Pradesh and migrates to Mumbai for work. Currently, she is no longer able to purchase subsidised foodgrains from a PDS shop in her new locality in Mumbai. However, under the ‘One Nation, One Ration Card’ system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs, and enable that person to purchase the quantity of foodgrains to which she is entitled under the NFSA.
How will the system of ration card portability work?
Ration card portability is aimed at providing intra-state as well as inter-state portability of ration cards.
While the Integrated Management of Public Distribution System (IM-PDS) portal provides the technological platform for the inter-state portability of ration cards, enabling a migrant worker to buy foodgrains from any FPS across the country, the other portal (annavitran.nic.in) hosts the data of distribution of foodgrains through E-PoS devices within a state.
The Annavitran portal enables a migrant worker or his family to avail the benefits of PDS outside their district but within their state. While a person can buy her share of foodgrains as per her entitlement under the NFSA, wherever she is based, the rest of her family members can purchase subsidised foodgrains from their ration dealer back home.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.