Home >Opinion >Online-views >Reinventing an inefficient system

Late last month Prime Minister Manmohan Singh set up the architecture for cash transfer of benefits such as pensions and scholarships directly to those individuals for whom they are intended. Last week, the Centre took another similar step when it gave the financial green signal to a scheme for the back-to-back computerization of the targeted public distribution system (TPDS).

These are much delayed steps that are finally being implemented. At one time, nearly half of the grains and other commodities distributed through the PDS were pilfered away. That, however, did not stop the advocacy of expanding this notoriously inefficient system. If anything there were demands that it be universalized.

A better solution to these problems is to operationalize the Aadhaar/UID and/or the National Population Register (NPR) systems to target the individuals who need these benefits. Last week’s announcement points in a different direction: it is quite possible that the refurbished TPDS will be used to implement the national food security law. The time frame by which the “back-to-back" computerization will be completed—around March 2013 (digitization of the consumer database) and October 2013 (computerization of the supply chain)—points to this possibility.

While this plan will indeed weed out ghost consumers, duplicate ration cards and other problems, it, however, does nothing to take care of the original reason for opposing the food security law: the vast expansion of this system and the costs associated with this expansion.

For a government that is serious about taking growth back on track, it is important that it carefully deliberate a step such as the food security law that has far-reaching consequences. This is especially so as credit rating agencies scrutinize every such move for its real and potential impact on the government’s fiscal balance. Another reason why it is important to pause before taking the plunge is that the next Union government will bear the financial burden of the steps taken by this government.

The plan to computerize the TPDS databases coupled with moving forward on the Aadhaar/UID and NPR systems is the right step to take, unless, of course, this government can muster sufficient financial resources for the national food security law. There are no signs of that yet.

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