New Delhi: The task force set up to frame an information technology (IT) strategy for the direct transfer of subsidy for food and kerosene to beneficiaries has suggested the creation of a separate company to implement and operate the technology infrastructure for the public distribution system (PDS).
The government has given in-principle approval and will now start the process of implementing the recommendations, said Nandan Nilekani, who heads the task force. Nilekani expects to secure all necessary approvals by December and set up the PDS network by April.
Revamping the current PDS system is crucial for the successful implementation of the government’s food security Bill, which is expected to be introduced in the winter session of Parliament. India’s PDS is one the largest distribution networks in the world, with more than 460,000 fair price shops distributing commodities worth more than Rs30,000 crore annually to about 180 million families.
NandanNilekani. File photo
“It will be a very complex task to integrate all the various supply chains,” said Navin Agrawal, executive director at consulting firm KPMG. “They may first start the monitoring of the PDS process at the district level, and put in place a mechanism that can then be followed at the village or taluka level for linking of various fair price shops.”
Finance minister Pranab Mukherjee, in his budget speech, announced the task force to work out a method for the direct transfer of subsidy for kerosene, cooking gas and fertilizers, aimed at reducing pilferage and ensuring that the aid reaches the targeted beneficiaries. The terms of reference were later extended to include an IT strategy for PDS. The task force, which also has representatives from various ministries, submitted its report to Mukherjee on Wednesday.
The task force’s report on direct transfer of fertilizer and cooking gas subsidy, which was submitted earlier, has been accepted and the pilots will start shortly.
“Given that the government intends to implement the food security Act, it is very important that the the actual beneficiaries are identified and they get the right commodities at the right price and at the right time,” said Nilekani. “To manage such a complex supply chain involving millions of beneficiaries, tonnes of commodities and almost 500,000 PDS shops, an institutional arrangement is required.”
The computerization of the PDS will involve coordination among multiple state governments and various stakeholders.
The task force has suggested the creation of a firm having “both technical and professional expertise, which will build this system that can used by the state governments”, Nilekani said. It will, however, be voluntary for states to partner with the PDS network. Called PDS network, the proposed entity to manage the IT infrastructure will integrate the various supply chains in the distribution system in the first phase.
The second phase will deal with the delivery of the direct subsidy to beneficiaries.
While implementation of the first phase will not be dependent on the rollout of Aadhaar, the second phase that envisages direct subsidy transfers will leverage the scheme to ensure that subsidies reach the targeted beneficiaries.