IT can solve Public Distribution System mess, says Nandan Nilekani

A panel headed by Unique ID Authority chairman Nandan Nilekani has suggested computerisation of public distribution system (PDS) and use of cash transfers and coupons to streamline subsidy distribution. "The large focus of the report is to make system more efficient (and) to make sure people have choice," Nilekani told reporters on Wednesday after submitting the report to finance minister Pranab Mukherjee. The first phase of PDS revamp will focus on supply chain improvement while the second on direct transfer of subsidy, according to the task force. Nilekani has proposed use of coupons, smartcards, and direct cash transfers, along with GPS tracking of trucks carrying ration, as some methods of cleaning the system. It has suggested creation of a National Information Utility or Public Distribution System Network (PSDN) by April 2012 and initiation of pilot projects by December 2012. There are about 4.62 lakh fair price shops (FPS) that distribute commodities, like wheat, rice, sugar and kerosene, worth over Rs 30,000 crore every year to 18 crore families. The government has accepted the report of the Task Force in principle, Nilekani said adding that it will now process it and take appropriate action. "We have serious issues in terms of leakages in subsidy transfers and any system that controls these leakages is a good idea...The only issue is with execution and as long as that is taken care of, it's a smart way of dealing with the problem," said Sonalde Desai, Senior fellow, National Council for Applied Economic Research. "A significant proportion of subsidised fuel does not reach the targeted beneficiaries and there is largescale diversion of subsidised kerosene...to ensure greater efficiency, cost effectiveness and better delivery...the goevrnment will move towards direct transfer of cash subsidy...," Mukherjee had said in the last budget. PDS is fraught with problems. "The PDS suffers due to wholesale problems such as largescale pilferage and diversion, duplicates and ghost beneficiaries, wrongful exclusion and inclusion," the report said. About 29 lakh fake ration cards were seized in Maharashtra alone, while Tamil Nadu is estimated to have about 15 lakh fake cards in circulation.