297 - 763 - Inflation fix is UPA’s underbelly - Live Mint

Inflation fix is UPA’s underbelly

The only way to bring parity, especially when it comes to dealing with a vital commodity like foodgrain, is to meet some of the excess demand by offloading stocks in the PDS—which by definition provides foodgrain at subsidized prices, mostly to those living below the poverty line (BPL)

In the next few weeks, the arrival of the kharif, or summer, crop in the local grain markets will begin gathering momentum, kicking off the annual procurement by the Food Corporation of India (FCI). This time, however, it is going to give rise to a piquant situation that further exposes the fallacies of public policy pursued by the Congress-led United Progressive Alliance (UPA), especially with respect to managing inflation.

Though the country’s granaries are overflowing with surplus food stocks, the UPA will have no option—unless it is willing to court a political backlash from the farmer lobby ahead of key elections in Punjab next year—but to go ahead and procure more. Since it has not been able to offload the current surplus, either through the public distribution system (PDS) or the open market, it would mean that more foodgrain will rot away (as detailed in the Tracking Hunger series done jointly by Mint and the Hindustan Times) and the food subsidy bill will burgeon. A supreme irony, considering that food inflation was, as on 9 October, at the level of 15.63%; it has averaged double digits for most of the last 18 months.

Also Read | Anil Padmanabhan’s earlier columns

Common sense economics tells us that prices increase when there is a mismatch between demand and supply. The only way to bring parity, especially when it comes to dealing with a vital commodity like foodgrain, is to meet some of the excess demand by offloading stocks in the PDS—which by definition provides foodgrain at subsidized prices, mostly to those living below the poverty line (BPL).

This then begs the question: Why has the surplus food stock not found its way into the system? Not only will it help meet excess demand, it will also help reduce the food subsidy since the government will not have to bear the carrying cost of these foodgrain. Particularly since the Central government has instructed FCI to offer more food grains through the PDS and the open market.

Perusal of the data available on FCI’s website reveals that in the last one year, beginning October 2009, states and the Union territories (UTs) lifted only 45% of the 1.46 million tonnes of rice and little less than 8% of the 2.16 million tonnes of wheat allotted to them. On the face of it this seems counter-intuitive: when food prices are in double digits, why would the authorities not acquire stocks for distribution through the PDS?

Not really. The states and UTs have clearly been influenced by the price at which FCI has offered the foodgrain. In the case of wheat the price band is Rs. 10-14 per kg and for rice Rs. 14-16 per kg. Most states offer foodgrains to the BPL population at about Rs. 2 per kg. In other words, the states and UTs need to incur a loss of upwards of Rs. 9 on every kg of foodgrain that they distributes through the PDS.

Politically, yet again it makes no sense. Why wouldn’t states and UTs absorb the cost differential, because after all they risk the wrath of the people. The answer may lie in the fact that most states are fiscally stretched and would find it very difficult to absorb the cost. In other words, the onus, inevitably as it does in such extenuating circumstances—and the current bout of inflation is nothing but a national calamity—falls on the Union government. Understandably, the Central government has similar compulsions. But then it has no one to pass the buck to. And it also flies in the face of its otherwise generous spending when it comes to populist programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme—on which annual spending is above Rs. 40,000 crore. The government is now readying, under the urging of Congress party president Sonia Gandhi, a Food Security Act that will guarantee foodgrain at subsidized prices to the poor.

The reluctance may have a lot to do with the linear manner in which the Central government approaches fiscal reforms and the belief that the PDS is a waste since large allocations leak from the system. Alternatively, albeit a more cynical surmise, it could well be that the political arithmetic of bailing out the states would allow the UPA only indirect credit at a time when seven states in the country are ruled by the principal opposition Bharatiya Janata Party.

While tackling wasteful subsidies is without question critical, it makes no sense in doing so in a mechanical manner. The thrust of public policy cannot ever be to prevent misuse; instead, it has to encourage use of such subsidized initiatives by those at which it is targeted. The solution is to fix the PDS—the only demonstrable urgency for which seems to be coming from the newly created Aadhaar programme to provide a unique identity to all residents of India—or find another alternative. The strategy of throwing the baby out with the bath water is hardly desirable.

In a few weeks from now, when the results of the ongoing elections to the Bihar assembly will be declared, we will know whether inflation was a factor with the voters. If indeed it proves to be a factor, the ruling parties in the crucial states of Kerala, Tamil Nadu and West Bengal that would follow Bihar to the polls will need to find ways to counter electoral fallout from inflation.

Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com 

255 - Aadhaar and the myth of lack of identity - Money Life

October 05, 2010 08:19 PM
Samir Kelekar
 

What is needed today to solve the problems of the poor is not so much esoteric technology but first and foremost clear logic as to where the problems lie. Most poor get deprived of what they should get because of corruption, and not lack of identity

The UID programme has been launched without any legal and constitutional sanction for it as yet. In the name of the poor, a huge amount of money is being spent.

And, in spite of severe criticism from rights organisations including warnings by eminent academicians such as Nobel Prize winner Amartya Sen, no action of reviewing the project has been taken.

The main argument of the UID that it will help plug leakages in NREGA and PDS is fallacious.
Consider these two videos from the ground:

1) MREGA corruption video
http://indiaunheard.videovolunteers.org/ajeet/rural-workersdenied-wages/

2) Villagers expose corrupt dealer http://indiaunheard.videovolunteers.org/varsha/villagers-exposecorrupt-pds-dealer/

The first video shows how the supervisor who is in charge of the NREGA programme takes a bribe to mark the attendance of the workers.

It is not that the workers don't have a form of identification. They do have a job card. Their work does not fetch them anything unless their attendance is marked, and for that they have to depend on the supervisor. And the supervisor asks a bribe for it. UID or for that matter no amount of identification can solve this problem.

Consider the second video which is about PDS. Here the ration shop owner charges more money for the grain. Here too, lack of identification is not the problem, and hence UID will be of no good to solve this problem.

If one goes by estimates done by various sources, the leakage in the government schemes due to fake cards is about 8% to 10% - a miniscule part of the whole lot of leakages. In the case of PDS for instance, most leakages do not take place at the last mile as per the UIDAI hypothesis; instead it is the big corrupt sharks who are involved in siphoning grains before they reach the ration shop itself.

Thus, it is clear that not enough study is conducted by UIDAI in concluding that lack of identification is the real problem. No wonder, there was no independent impact assessment study of what the UIDAI project can lead to, which if done, the above problems would have been revealed. This begs the question - is the amount to be spent on UIDAI in the name of plugging of leakage of government aid justified?

A cost-benefit analysis would have given the right answers.

Jean Dreze, who conceived NREGA, has said that the UID project is a security project camouflaged as a welfare initiative.

The examples shown above reveal that the UIDAI project will not be able to plug other than minor forms of leakages from the government aid programmes; further, that too at huge costs and many other negative fallouts.

Also, some of the technological choices made by the UIDAI project may just be not the best ones available, but in fact could be counterproductive.

A recent report based on a multi-year study by the US-based National Research Council states that biometrics are inherently unreliable for authentication as a replacement for other forms of authentication.

The reasons given are as follows:
First of all, biometric authentication is called "inherently probabilistic." That is, the match between sample and master record will always include some uncertainty - no matter how good a sample, the sensor reading the sample and the information technology system matching the sample to a master record.

Among the reasons for that uncertainty is the nature of biometric identifiers themselves. Human bodies and the features on them aren't necessarily constant over time.

 Also, biometric identifiers, while difficult to duplicate on the body of another person, are still available for surreptitious collection through fingerprint gathering, as per the report. It concludes that an imposter could be detected by a human operator administering the biometric authentication system, but that "significantly constrains remote or distributed applications of biometrics."

The report doesn't dismiss the possible usefulness of biometric authentication, however, noting that in combination with other methods, it can augment security at least in applications "where user cooperation can be inferred."

Interestingly in the case of UIDAI, none of the above cases apply. Specifically, the human operator says the ration shop owner administering the biometrics in the case of UIDAI should be considered an adversary as he would himself have interest in stealing the biometrics of the ration card holder.

Further, he operates in a remote area where what he does is not visible to the authorities unlike say in a setting such as an international airport.

Thus, he could probably design a number of ways of beating the authentication process of biometrics. It is precisely these kinds of use case scenarios that haven't been thought through thoroughly by the UIDAI folks.

Another argument given by the UIDAI authorities is that of inclusion, and that 120 million migrants have no form of identity.

Consider the following scenario: A genuine migrant with his home town from Azamgarh moves to Delhi and goes to a bank there for a loan. Since his permanent address is not Delhi, banks could deny him a loan. In fact, instead, he might be put on a terror watch list. Is there a guarantee that his UID won't be used against him, in fact to exclude him rather than for inclusion?

All the above issues point out that Aadhaar is using lack of identity as a myth to justify its spend. Remove the myth and Aadhaar stands bare, without any justification other than mainly as a national security project and for purposes of targeted marketing, linking data, tracking and surveillance, and yes, some amount of convenience due to easy check of one's identity.

What is needed today to solve the problems of the poor is not so much esoteric technology but first and foremost clear logic as to where the problems lie. Most poor get deprived of what they should get because of corruption, and not lack of identity. The bull of corruption needs to be taken by the horns and not by the tail which Aadhaar tries to do.

Secondly, the poor should be made aware of their rights, and empowered to tackle corruption. As is shown in the two videos (linked above), if at all technology should be used, it should be stealth cameras which should be given to the poor free; instead Aadhaar fetters the poor by taking their biometrics.

(The author has a B Tech from IIT Bombay, and a PhD from Columbia University, New York. He currently runs a start-up, Teknotrends Software Pvt Ltd that does cutting-edge work in the area of network security).

212 - UID is an Identity Crisis in the Making - Tehelka

USHA RAMANATHAN
Independent law researcher

AN EXERCISE is currently underway to enter every resident in India on a database. In a few years, the unique identification (UID) is intended to become a ubiquitous number, to be used in many operations: enrolling in a school, maintaining a bank account, ticketing for travel, seeking treatment in a hospital and having one’s death recorded in a mortuary register.

The sales pitch for the UID is, like most advertisements, intended to mislead. Enrolment is said to be voluntary. But, and as is now acknowledged, other agencies may refuse to provide a service if an individual is not enrolled, making it compulsory. The Working Paper of the UID Authority of India (UIDAI), which has been the basis of many discussions, starts with a claim that the UID will bring down barriers that prevent the poor from accessing services; but quickly adds: “UID will only guarantee identity, not rights, benefits and entitlements.”

The Public Distribution System (PDS) is the moral fulcrum on which the UID poises itself. Yet, the UIDAI admits to its interest in PDS being closely linked with completing its enrolment targets. Listing the ‘benefits to the UID’ that can flow to it from PDS: “The ration card is today the most prevalent form of identity in rural areas. If the UID enrolment is integrated into the process of the creation of a beneficiary database for PDS, the coverage of UID will improve significantly.” This is such a giveaway.

As with banks, those who have no documents
to vouch for them would face exclusion

The potential that the number may have to enable tracking, profiling, mounting surveillance and ‘convergence’ of information, which will aid market profiling, is being studiously ignored. There are deeply disconcerting facts about the project that should wake up even those dwelling in the slumber of denial.

There has been no feasibility study preceding the setting up of such a pervasive project. There has been no cost-benefit analysis of the project. All calculations are of the back-of-the envelope variety. Data theft is a serious threat. But other than asking us to leave it to the experts, there is nothing more that we know before we give information to the UIDAI. We have as yet no law relating to privacy.

The infallibility of biometrics, including fingerprints and iris scan, is still being tested: evidence has begun to emerge that callused hands, corneal scars and cataract induced by malnourishment may leave many millions outside this pattern of identification. Even as enrolment is poised to begin, authentication is still an unstudied field.

The promise of inclusiveness is belied by the ‘approved’ introducers; that is, where the poor are unable to provide any supporting documents to prove their identity, a network of approved introducers are to “introduce and vouch for the validity of a resident’s information”. UIDAI’s website admits this idea has been borrowed from the account opening procedure in commercial banks.

So, as with banks, those who have no documents to vouch for them would be threatened with exclusion. Where being a legal resident is to be closely tied in with having a UID number, it could render the poor vulnerable to having the legitimacy of their staying in the country being placed in the shadowy terrain of illegality and exclusion.

In an interview telecast on 14 August, UIDAI chairman Nandan Nilekani explained: “I think the core thing will be our ability to show that it is beneficial for people to have this number. If our ‘customer’, the resident of India, sees value in this number, if he sees that possessing it will bring in a material change in his life, he will come and take it. If he doesn’t do that, then we have lost what seems to be a marketing battle.” The State may have some explaining to do.

ILLUSTRATION: ANAND NAOREM

uramanathan@ielrc.org

204 - Foundations of Aadhaar - Live Mint

Even as the UID project is touted as medicine for many an ill, there is cause for concern about its effectiveness
Farm Truths | Himanshu


The unique identification number (UID) project, branded “Aadhaar”, seems to have carefully articulated itself as a panacea for all the evils that plague our public service delivery mechanism. So much so that it is now being talked about as the magic bullet for all the failures in every possible dimension of public service delivery. Last month alone saw views expressed (including in this newspaper) about the utility of UID in monitoring enrolment for the Right to Education Act, financial inclusion, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), facilitating employment search, and so on. This is beyond the greatest benefit that UID is supposed to deliver by making the below poverty line (BPL) census an integral component of the proposed Food Security Act, foolproof.

The idea of a unique identity number that can eliminate ghost beneficiaries is appealing. However, concerns remain on how effective this will be in solving the problem of leakages and misidentification, which derives its strength from the basic nature of class relations in the poorest areas, particularly villages. This is apart from the important concerns about the way privacy and security will be handled, and the possibilities of data theft and abuse.

So how will UID plug leakages? The argument is that it will help remove bogus BPL cards. True, but this is only a fraction of the problem, and there is no accurate estimate of the extent of bogus or fictitious cards. If the recent example of Tamil Nadu weeding out bogus cards is any evidence, then it is only 2%.

However, the fact that there are more than 110 million BPL households while estimates are of only 60 million households, is seen as evidence of the existence of a large number of fake cards. This is an erroneous conclusion and there is reason to believe that the number of ghost cards is in fact only a small proportion of the “excess” cards in circulation.

There is a higher number of BPL cards because many state governments (for example, Tamil Nadu, Chhattisgarh and Andhra Pradesh) have decided to include more people in the BPL net. Moreover, there is also a difference between the government’s definition of a household and ground realities. In a system where most benefits are household entitlements, there is an incentive to show a smaller household size. The result will obviously be a higher number of “households” declaring themselves eligible for benefits, than what the government stipulates based on the common kitchen definition. Given that UID is an individual attribute and not a household one, there is little it can do about this.

Further, as far as the Public Distribution System (PDS) is concerned, a large part of the leakage happens before the foodgrains reach the PDS dealer. UID has little role in these distribution and delivery systems. Another major problem with the current targeted PDS is that the beneficiaries are incorrectly identified, with large inclusion and exclusion errors. That is, many poor families are not identified as being poor. Instead, the financially well off get the benefits. Will UID help in correcting this? No, because UID will only verify if the beneficiary exists and is unique; it will not be able to identify whether she is genuinely in the BPL category. This problem can only be resolved either by universalizing essential services such as food or by designing a foolproof system for identification. UID can do neither.

Responding to privacy concerns, the UID Authority of India (UIDAI) claims it is a voluntary, not mandatory, exercise. But linking it to programme delivery for MGNREGA or PDS in effect makes it mandatory if people want to benefit from these schemes. For UID to play any role in plugging leakages in these schemes, it is essential that the entire population is covered by it. But even with universal enrolment, UID might not be able to prevent corruption and leakages at the lowest level. Take the case of a well off influential household wrongly identified as BPL. This is perfectly plausible even with UID. The beneficiary strikes a deal with the PDS dealer to show that he has actually taken the grain, using the biometric identification. But the grain is instead diverted, with the beneficiary and the dealer sharing the difference between the PDS price and market price.

Similarly, in the case of lump sum benefits such as housing subsidy, bribery is more the rule than the exception. UID can do nothing to eliminate this, but will surely add to the cost of availing the subsidy by adding a layer of middlemen who will pocket charges for authenticating a person’s uniqueness.

Clearly, while the potential for UID in reducing leakages is small (assuming everything works), it may in fact be used to deny benefits to beneficiaries. There seem to be two reasons why UIDAI is selling itself to the millions of poor in the country. First, by doing so, it is actually creating a foundation (aadhaar) of legitimacy for itself against the valid criticism of it being misused, technologically unproven and costly. Second, the UID mechanism works on external registrars, the biggest of whom are PDS and MGNREGA. At this stage, UIDAI needs to piggyback on these schemes to reach a large number of people. It is then understandably important for it to claim itself to be the foundation for public service delivery.
Source:- Livemint

198 - Time To Stem The Rot - Logistics Week.com

By Jayashree Kini-Mendes

Sprucing up infrastructure, both warehousing and supply chain, bringing in the private sector, and improving quality of grains are some of the steps that can be taken to quicken the public distribution system, says Jayashree Mendes.


Back in 1957, Mother India, the movie, showed the poignant struggle of a mother who feeds her two children roots plucked from a barren field after the village is stricken by a flood. Elsewhere in the village, the local landlord’s henchmen are guarding a warehouse stocked with grains.

Circa 2010: National newspapers and television channels publish pictures of children in the hinterland sustaining their frail bodies with rice and a curry devised from water and chili powder. Not much has changed in these four decades.

The press is agog with reports about thousands of ton of food grains rotting at warehouses across the country. Meanwhile, statistics indicate that almost half of the children under the age of five in India are chronically malnourished. Forty-three percent of the children under the age of three are underweight, which is double the Sub-Sahara Africa average. Against this backdrop, thousands of sacks of rotting grains kept out in the open with a tarpaulin sheet thrown over them casually make for a sordid picture.

According to reports, in Sirsa (Haryana) alone, about two lakh quintals of wheat were discovered submerged in water. Though the Food Corporation of India (FCI), the body responsible for storage and distribution of grains for the Public Distribution System (PDS), could have salvaged the grains, the authorities reportedly did not act on time. Similarly, in Gondia in Maharashtra, four thousand metric ton of wheat has been lost. Many other states too have similar stories to tell.

How can a food-starved country be so cavalier about food grain storage? Veena Goel, Economist, Punjab Agricultural University, says, “It’s evident that the government lacks serious, efficient administrators who can be entrusted with the task of food safety. Otherwise we wouldn’t have food grains rotting.”

So much was the rot that last month, as a short term measure, the Supreme Court of India directed the Center to distribute the grains to the poor at very low cost or no cost instead of leaving it to rot in warehouses.

However, economists Log.India spoke to fear that rotting grains could be a blind used by officials with vested interests to continue with a certain level of inflation. Consider India’s production of wheat and rice. From July 2009-June 2010, the country’s estimated production of wheat, rice and pulses was around 218.2 million ton (mt), a little more than it consumes in the same period, according to Rajender Parsad, Head (Design of Experiments) at Delhi-based Indian Agricultural Statistics Research Institute (IASRI) – a body under the Ministry of Agriculture that undertakes research, education and training in agricultural statistics for research. Of the 218.2 million ton, wheat production is estimated to be 98 million ton; rice around 100 million ton, and the rest is pulses. If the distribution of grains were to happen with promptitude, then chances are with the next harvest round the corner, there wouldn’t have been several million ton of grains lying at warehouses.

R Rukmani, Program Director (Food Security) at MS Swaminathan Research Foundation (MSSRF) – a globally renowned, a Chennai-headquartered no profit research organization – says, “Governance is only part of the problem. There has been certain apathy on the part of the government in allocating resources to quicken the pace of supply chain in PDS.”

For Rajesh Rajaguru, Assistant Professor, (Marketing), SolBridge International School of Business in South Korea, whose main research interest is logistics and supply, rotting of food grains is a serious supply chain problem. “It arises due to a lack of co-ordination and information sharing in the supply chain communication systems. Effective and efficient supply chain are rooted in a combination of information and product flow,” he adds.

There are several reasons to the case of the rotting food grains. Besides poor infrastructure, quality of grains, warehouse mismanagement and poor storing conditions, officials, on their part, are not prompt in quick distribution of the grain.


Infrastructure Glitches

Rotting of food grains is not new to India. The supply chain that starts from the time of harvesting and ends at local fair price shops or retail outlets are bogged with several constraints. State agencies buy the harvested grains from farmers at minimum support prices, which are then purchased by FCI. These are exclusively meant to be channeled to the PDS and distributed to the poor through fair-price shops (see diagram: The Long March). But insiders say most of the time the officials move new stocks, thus leaving older stocks alone. Goel says, “State Grains Procurement Corporation and the Civil Supplies Corporation do not adopt scientific methods to store the stocks. Regular disinfection and fumigation of the warehouse is a must after a stockpile of grains have been cleared out. This helps retain the quality of the next incoming stock, along with the hygiene of the warehouse. This (process) is not followed at most warehouses.”

Obviously, grains as a seasonal and perishable commodity require safe warehousing. According to figures available on the FCI website (as of June 2010), FCI-owned covered depots have a capacity to store 129.7 lakh ton. Hired depots at state and central level of the SWC (state warehousing corporation), CWC (central warehousing corporation) and those set up with the help of private participation comprise another 143 lakh ton. Besides this, the agency maintains another economical method to store bagged grains – Cover and Plinth (CAP), a damp- and rat-proof elevated plinth in the open space at depots, and covers them with 250 micron low-density polyethylene sheets made for the purpose.

An expert says that tarpaulins and open storage systems assure minimum safety and the food grains stored using these methods cannot withstand adverse environment and climatic conditions. Grains, in this method, can be stored for up to a year. He adds that since the quality of grains do not match global standards, its storage longevity cannot be guaranteed.

For the distribution of food grains to various warehouses across the country, FCI uses the services of Indian Railways. Although most FCI warehouses are situated close to railway lines, a majority of them are not equipped with rail sidings for quick and easy loading. Officials, on their part, too are not prompt in securing timely and regular availability of rail wagons to push forward the grains into the supply chain. So grains tend to remain at warehouses for long durations under unhygienic circumstances thus hastening its rot.

The right storage of grains also requires the officials in charge of warehouses to take precautions. Rakesh Singh, Founder and Chairman of Mumbai-based Institute of Supply Chain Management (ISCM), opines, “The agency in charge of procuring the grains for FCI also needs to plan the quantity and time of procurement. Upon procurement, grains need to be sorted out for long-term and short-term storage. For instance, grains with ideal moisture content and maturity have a long vase life and should be stored in warehouses for long-term purpose with care. Certain food grains don’t have the feature of long-term storage and hence it needs to be processed and distributed, instantly. Ideally, the grains should be stored in third-party warehouses in each territory and distributed to the point-of-sale (POS), upon request.”

Procurement of grains also calls for skills in forecasting. Officials responsible for moving the grains are well aware of demands across various states. Singh says, “Indian companies are unsure of what the harvest will bring next season. There is a tendency to hoard. Grains cannot and should not be stored for more than a year. It becomes seed for the next year.”

 Chandigarh-based FCI official, on condition of anonymity, refutes this statement saying, “There is no question of hoarding. Last season, an increase in production resulted in higher procurement. This caused a shortage of space at warehouses. So while older grains from inside the depot have been channeled into the PDS, newer grains have been stored in CAP.”

Goel refutes this, saying that most of the stock lying under CAP at Chandigarh warehouses is more than two years old.

Ideal Warehouses

Warehousing is part of the large supply chain and are scientific storage structures constructed to protect goods from elements, theft, rodents, etc. An ideal warehouse should be computer-administered and must have ready infrastructure to monitor incidence of pests and diseases, internal and external temperature, humidity, aeration, moisture content of the food products, among other things.

There have been several feeble attempts to spruce up warehousing facilities since the Agricultural Produce (Development and Warehousing) Corporation Act, 1956, came into being. It has come to evolve over the years as the Warehousing (Development & Regulation) Act, 2007. While the Act has yet to see the light of day, its essence was to introduce the concept of negotiable warehouse receipt, wherein farmers could store their produce at accredited warehouses and avoid distress sale. The other benefit would have been the involvement of the private sector to maintain warehouses specially marked for grains meant for PDS.

Warehousing (for PDS) was solely the government’s responsibility. There has also been this idea of roping in the private sector, but it was not until 2002 when the first tenders were floated for private sector participation.

Agro-economists have, for some time, been suggesting roping in the private sector for warehousing. The public-private-partnership (PPP) in warehouses would ease many time-lag issues, especially if the public sector will build the warehouses and the private sector will maintain it. According to Singh, “At a time when the public sector has failed to avoid grains rotting, an effective cure would be involving the private sector. By eliminating the problem of PDS supply chain malfunction, it will facilitate effective and efficient flow of products to the beneficiaries. There are several private and co-operative warehouses operating profitably in India. However, farming communities and food storing agencies have a lack of awareness and interest in warehouses. Steps should be taken to encourage them so that it can act as an incentive to private investors to invest in warehousing businesses. Required technological and financial support needs to be provided.”

Technology also plays a crucial role in warehousing systems. The introduction of advanced information and communication technologies (ICT) assisted systems provide assurance for safe, long duration storage of food grains. The PDS should take appropriate measures to shorten the length of the supply chain and efficiently manage procurement, warehousing, processing, transportation and distribution using advanced ICT.


Quality Of Grains

Quality of grains has a direct bearing on the longevity of storage. According to Parsad, “There were three species of wheat used last crop season: T. aestivum, T. durum and T. dicoccum. Of the three, durum has higher potential for long term storage, is export-quality, and is resistant to Karnal bunt, a fungal disease that reduces the lifespan of the wheat. However, this variety of grains is mostly available in central India and in Punjab. Good quality wheat can be produced in dry areas of Rajasthan, Madhya Pradesh and Maharashtra.”

But durum is quickly picked up by the food processing companies as the main ingredient in the manufacture of pasta, noodles, white bread, etc. The reason attributed to this is that since its hard quality wheat, it’s ideal for storing for longer than the designated one year.

However, the lack of education to farmers and a sheer ignorance on their part to ignore modern production methods also has an effect on the quality of grains. There is a tendency among farmers to procure seeds from FCI and other government agencies at minimum support price. With wheat and paddy being the staple of diet of people in the country, farmers across various states are required to produce a certain quantity of the grains. The assured protection offered through the use of procurement prices presses farmers to diversify from pulses to wheat and paddy. Rajaguru clarifies, “This tendency to move from pulses to other grains makes them liable to compromise on the quality of the seeds. So it makes room for contamination. Sometimes, grains are mixed after harvesting. This is one of the prime reasons for quick rotting.”

Packing of grains in poor quality jute can hasten the rotting of grains. Grains travel across several states and loading and unloading at regular intervals subject the bags to wear and tear. Rajaguru adds, “Research indicates the highest incidence of grains’ rotting is when it is stored in bulk quantity. Food grains stored in airtight silo bags in small quantities well protect the grains from pests, diseases and adverse climatic conditions.”


Seeds Of Corruption

Beneficiaries of grains under the PDS are mainly two categories – Below Poverty Line (BPL) and the poorest of the poor who fall under the Antyyodaya Anna Yojna (AAY). A third category of people under the Above Poverty Line (APL) has also been included, though they are liable to receive grains for a slightly higher price. Colored cards are allotted to beneficiaries seeking to accrue the benefits of the PDS.

Identification of right beneficiaries for the PDS can offer huge benefits with little intervention of channel members. But most of the times the grains do not reach the fair price shops. The lack of supply chain security systems provides enough room for an unholy nexus between warehouse managers, transporters and fair price shop owners, thus restraining the rights of real PDS beneficiaries. Theoretically, a good supply chain also promises efficient money flow from the end consumers to producers.

Unfortunately, the PDS supply chain supports the flow of corrupted money along the channel members. An agro-economist remarks on a recent article that highlights the PDS officials’ demand to fair price shop owners to forfeit `15,000 per month for regular supply. The fair price shop owners are forced to forward the burden to consumers by denying product supply to consumers and/ or reduced quantity. Transporters and other PDS supply chain members are not infrequently involved in selling the products in the black market.

While most people falling under APL may not exact any of the facilities, there is little change in the buying patterns of tier II cities and the villages.  Singh says, “Food grains may be rotting, but officials will not put more grains on the market. Officials are worried that prices may fall. So there’s a tendency to hoard, which are then put on the market when the prices are high.”

 
For Want Of Equitable distribution

The entire system of PDS hinges on the theory of equitable distribution of grains to the poor. The government and the Supreme Court of India have chalked out schemes, such as food coupons, Food Security Bill, Unique Identification Authority of India, etc.

The food coupons scheme will offer direct subsidy to the poor, who can avail of this to buy the quota of grains allotted for a family. However, there were glitches such as an assurance that all BPL and AAY would receive the coupons. To overcome any chance of this, the UPA government has awarded HCL and its consortia the contract to implement the food coupons scheme by linking it with the UIDAI. This is expected to take 16-18 months over four phases. There are suggestions that HCL should also consider the inclusion of census information and data. The food coupon system will be a tool that will facilitate food security. The caveat here is that if correct identification of the poor does not happen at the village level, it renders the scheme worthless.

Meanwhile, the Food Security Bill is still in the draft stage, and is being looked at by the National Advisory Council (NAC) comprising a special panel of educationists, NGOs, among others. The bill, if passed in the Parliament, would entitle poor families to receive 35 kgs of grains every month.

In all the solutions suggested and being followed, a most constructive one that would work in the long-term is linking the PDS with the UIDAI. Data of the poor can be collected from the village Panchayat for those who will live in villages. The tier II cities might face problems, as it comprises mainly migrants. But they could be given one identity. Rajaguru says, “The UIDAI will bring in transparency, because the government will have captured data of 90 percent of the population through the Census. That will help them design all kinds of policies around the 90 percent. The entire FCI concept will go for a toss, because the poor can buy based on the UIDAI.”

As the UIDAI commissioned system expects to capture data on each and every citizen’s biometric, tax, demographic and personal information details, the proposed time limit for the accomplishment of project seems rational. Many countries introduced such a kind of systems decades ago. Considering the vast Indian population, their living patterns and social circumstances, the proposed project is a challenging one.

Meanwhile, the grains continue to rot.

194 - UID Project: Identity Crisis - India Today

September 3, 2010

He was Prime Minister Manmohan Singh's choice to number India's teeming millions. Nandan Nilekani was the rock star of corporate India delivered to Yojana Bhavan as if by FedEx to head the Unique Identification Authority of India (UIDAI). The UPA Government had taken inspiration from Nilekani's own thinking-which he espoused in his book Imagining India: Ideas for the New Century-on the need for a unique identity number for citizens. Nilekani quit his much-respected job as co-chairperson of Infosys last year to take up the new assignment with a sense of duty for the larger cause.

But as he moves beyond the rhetoric of Imagining India to the task of Imaging India, the UID project is coming under the scanner for its utility in a country that has already become a house of identity cards. Though the authority is all set to roll out the process this month, the UID's ability to give a massive jolt to the flawed public delivery system based on identity numbers is being questioned. Many social activists, thinkers and even leaders like the Congress's Mani Shankar Aiyar are wondering whether the project is worthwhile.

The UID will assign a unique number (Aadhaar number) to each enrolled individual. Various registering agencies like banks or insurance companies will be appointed to identify the person in case of his dealings with a public organisation, regulatory authority or law enforcement agency. The information on the UID database will be basic-name, date of birth, place of birth, gender, the name and UID numbers of both parents, address, and photograph and fingerprints.

"UID is an important part of public service delivery reforms. Its benefits will be far greater than its cost."
Nandan Nilekani, UIDAI chairman
Unlike the pan card or the voter's id card, the UID number will not ensure any benefits or rights. It will only help in identifying the person while opening bank accounts or enrolling for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) jobs. The Government has approved a budget of Rs 3,170 crore for the first two phases spread over five years. It is selling the new UID number as a system that will uniquely identify each person and enable it to target and deliver services effectively, especially in the Public Distribution System (PDS). With a network of over four lakh fair price shops selling commodities worth more than Rs 15,000 crore to about 16 crore families every year, the PDS is one of the largest distribution networks of its kind in the world.
One of the key challenges most Indians face is the difficulty in establishing their identity. The UID claims to end the menace of having to hold more than one ID card to access entitled benefits. According to the UIDAI, "The singular problem that it will seek to solve is of 'identity'. Once a person has a UID number, their basic identity, linked to their biometrics, is established and can be used to uniquely identify the individual."

But many think that the scheme is a step behind social realities that reduce the access of needy sections to welfare schemes in spite of a series of identity cards. Questions are being asked about introducing a new number-based identity when several identity proofs already exist. "The Aadhaar number will not do away with all the other cards. Over time, it will be the unifying number across various cards. It will enable online authentication of identity and will be a proof of identity, especially for those sections of society that have no such form now," says Nilekani.

This article appeared in the India Today magazine dated August 23, 2010. Subscribe to the print copy or read it on Zinio and Kindle.

The recurring problem with the PDS is not that above poverty line families creep into the system but that many worthy BPL families are out of the ambit of the scheme. A 2005 Planning Commission study found that about 58 per cent of subsidised foodgrain does not reach BPL families. The UID in no way guarantees benefits and the new law doesn't prevent various service providers from seeking other background documents even if an applicant has a valid UID number.

"Hi-tech without Panchayati Raj is just a bogus stunt for geeks and nerds." Mani Shankar Aiyar, Congress leader
Thus, it is no guarantee for an immigrant worker from Bihar to get a ration card in Delhi. In effect, the number may add to the existing set of worries. Nilekani agrees that it is still the responsibility of the state governments to determine the eligibility for benefits. But he insists that the Aadhaar number will facilitate the process. Others argue that the UID is a wrong solution for a bigger problem.
 

"The problem with our social investments is not duplication of cards but exclusion of a large number of citizens. Instead of pouring money to remove duplication, which is only a minor part of the problem, the Government needs to expand the schemes to include more needy people," says R. Ramkumar of the Tata Institute of Social Sciences, Mumbai.

When the Planning Commission first decided on the scheme, it was not about numbers being assigned to people but smart cards, much like a multi-storied building where each scheme is "housed" in one floor. Now the idea of the card has been abandoned and the UIDAI's purview will be limited to issuing unique identification numbers. If you are asking for a job under the MGNREGS, the authorities will send your number to the UIDAI centralised office and a message will be sent saying yes or no. This will verify whether you are the person you are claiming to be.

UID for Dummies

Five-year plan: Over five years from this year-end, the authority plans to issue 600 million UIDs through various "registrar" agencies across the country, which include both Government and private sector agencies like insurance companies and banks.

Database: A resident will have to go to an enrolling agency, fill up a form and provide the supporting documentation, including a photograph, all 10 fingerprints and iris scan. The enrolling agency will collect this data that will be passed on to the UID database.

Reaching the masses: If the individual is not already in the database, a UID number will be issued and sent to him at his home by speedpost. The tear-away portion in the letter can act as a card to reference the number.

Not proof enough: The UID number will not be proof of citizenship. It will include all residents who are in India and want to use public services.

Single window: It has been marketed as the single source of identity verification. People would be spared the trouble of repeatedly providing identity documents. They need to give their number as residence proof, which will be verified with the centralised data. 


A FULL DECK
India has already become a house of ID cards
CARD :                                                              COVERAGE
PAN Card:                                                    Every person with taxable income
Election Photo Identity Card:                   Indian citizens above 18
Employee Provident Fund Org:               Employees in the formal sector
Multi-Purpose National Identity Card : Citizens of India. Is issued by the Central Govt.
Rashtriya Swasthya Bima Yojana Card : Provides insurance cover to all BPL families
MGNREGS card :                                        Citizens of India seeking employment under the        scheme
Driving Licence :                                         Citizens who are 18 and above
Passport:                                                      Citizens of India who travel abroad
Ration Card :                                               Cards issued to those families who use the PDS system. Only BPL families qualify.

 UID will not remove the pitfalls of the PDS. The exclusion that denies people access to food cannot be corrected by electronic identity. In fact, it will deepen the exclusion and criminalise the excluded," says social activist Vandana Shiva. The UID also cannot address two major sources of leakage in the PDS and MGNREGS. First, the diversion of grains and pulses happen on the way to the ration shops. Second, the dealers only sell part of the entitled food to the poor and testify on official documents that they have got their full quota.
0
"The innocuous application of UID to social policy does not diminish the danger of state control."
Jean Dreze, Economist 

Foreign Hands

Privacy concerns have made ID cards a non-starter in many countries

European Countries
Most European Union members have voluntary and compulsory ID cards, except Denmark, Latvia and Lithuania. In Sweden, information is stored on a chip in the card and not in any central database.

United Kingdom
The government's attempts to impose compulsory ID cards sparked off fury early this year. The Home Affairs committee shot down the idea as its benefits outweighed the increased data protection risks.

United States
The Social Security programme number is also used as the national identification number. But attempts at introducing biometric national cards have come under fire from rights groups.

China
Early this year, China began issuing smart cards to its citizens. The cards can also help identify those who use ATMs, enter a building with an electronic guard system or even pick up their children from kindergarten.

Australia
In 1985, the government proposed Australian cards, mostly to curb tax evasion. Following a vigorous opposition campaign, the proposal was withdrawn in 1987. 

Tech Troubles

UID faces the biggest challenge from its focus, the rural poor

Identity parade: Nilekani will bank on unique patterns on our fingers to identify 1.14 billion people. While two metrics will be used in issuing the UID number-an iris scan and a photograph-fingerprinting will be the metric used in authentication.

Quality check: Worn-out fingers of farmers and manual labourers have made the task tough for UID technicians. These fingers, euphemistically referred to in technical literature as "low-quality" fingerprints, exist precisely in the demographic segment the UID aims to help.

Blind reality: An iris scan can't be done on people with corneal blindness or corneal scars. The number of people with corneal blindness alone is estimated at six to eight million. Only a photograph can be used for identity determination until competent technology is developed.

No minor issue: Children's fingerprints, iris scans and photographs will be updated every five years till the age of 18. Till then, either of the parents will need to provide their biometric information for authentication.

This article appeared in the India Today magazine dated August 23, 2010. Subscribe to the print copy or read it on Zinio and Kindle.
 

191 - AN APPEAL TO PARLIAMENTARIANS - Reasons why you should oppose the UID Bill

The draft National Identification Authority of India (NIDAI) Bill will be placed before the Lok Sabha in the current session. Touted by its promoters as a landmark initiative for “good governance”, the concept and basic premise of the Bill has been critiqued and challenged on multiple grounds by experts as well as ordinary
citizens. Here are some reasons why you should oppose and vote against the bill when it is placed before the House.
  
1. False claims
The Government of India and Nandan Nilekani, Chairperson UIDAI, have been claiming that the UID scheme will enable inclusive growth by providing each citizen with a verifiable identity, that it will facilitate delivery of basic services, that it will plug leakages in public expenditure and that it will speed up achievement of targets in social sector schemes. These claims are false and unjustified. Exclusion and leakages are not caused by the inability to prove identity – they are caused by the deliberate manipulation of the system by those who have the power to control the flow of benefits.

For instance, BPL families who have valid ration cards are unable to get their quota of foodgrains – not because the validity of the card is disputed, but because the ration shop owners exploit them and force them to take less than their due. 

Scholarships meant for them are denied to children from Dalit families – not because they cannot prove they are Dalits but because teachers and school administrators pocket the money after forcing the parents to sign on false receipts. 

Women workers in NREGA are paid less than their due  – not because they cannot prove that they have put in the full quota of work, but because the supervisors and paymasters believe that women do not deserve the same wage as men, and pocket the extra money.

None of these problems will be solved by the possession of a UID number. In fact, a confidential working paper prepared by the UIDAI states that “the UIDAI is only in the identity business. The responsibility of tracking beneficiaries and the governance of service delivery will continue to remain with the respective
agencies – the job of tracking distribution of food grains among BPL families for example, will remain with the state PDS department.

The adoption of the UID will only ensure that the uniqueness and singularity of each resident is established and authenticated, thereby promoting equitable access to social services.” In other words, the possession of a UID card can at best serve only as proof of a “unique and singular” identity and does not guarantee either citizenship or benefits. This being the case, it is strange that this scheme is touted as a step for good governance.

2. Violation of privacy and civil liberties
The UID scheme violates the right to privacy. International law and India’s domestic law have set clear standards to protect an individual’s privacy from unlawful invasion. Under the International Covenant on Civil and Political Rights (ICCPR), ratified by India, an individual’s right to privacy is protected from arbitrary or unlawful interference by the state. The Supreme Court has also held the right to privacy to be implicit under article 21 of the Indian Constitution (Rajagopal v. State of Tamil Nadu, 1994 and PUCL v. Union of India, 1996). India has enacted a number of laws that provide some protection for privacy. For example the Hindu Marriage Act, the Copyright Act, Juvenile Justice (Care and Protection of Children) Act, 2000, the Indian Contract Act 1
and the Code of Criminal Procedure all place restrictions on the release of personal information. Section 33 of the draft bill empowers NIDAI to disclose personal data on an order of a court or in case of “national security” on directions of an officer not below the rank of joint secretary. This is a dilution of existing provisions for protection of privacy under Supreme Court judgments (PUCL versus Union of India) and the IT and Telegraph Acts, all three of which state that such orders can be passed only by the Union or State Home Secretary. There is a high likelihood of this provision being misused by persons in power to access private details for use in ways that may pose a risk to the life or security of the person concerned.

Personal and household data is being collected through the Census 2010 with a view to establishing  a National Population Register. It is proposed to make this information available to the UIDAI. This is in contravention of Section 15 of the Census Act which categorically states that information given for the Census is “not open to inspection nor admissible in evidence”.

Moreover, although participation in the UID scheme is supposed to be voluntary and optional, Census respondents are being told that it is mandatory to submit personal information for the National Population Register. The enumerators who are collecting data for the Population Register have been instructed to flag the details of “doubtful cases” who will then be subject to further investigation to determine whether they are “genuine citizens”. Enumerators are generally not able to explain the criteria for categorising a particular individual or family as “doubtful”.

3. “Functionality creep” and misuse of data
The centralised database where personal data will be stored can easily be linked with other databases, such as the Employees' State Insurance Corporation and databases maintained by the police and intelligence agencies.  This raises the risk of “functionality creep”, as for instance the use of the UID database for policing
and surveillance. There is a serious concern that the biometric information collected as part of the UID project would be used for
policing purposes. The regular use of biometric data in policing can lead to a large number of human rights violations, especially given the possibility of errors in fingerprint matching.

The proposed Bill does not contain any mechanisms for credible and independent oversight of the UIDAI. This increases the risk of ‘functionality creep’ - the government may add features and additional data to the database without informing or taking the consent of citizens and without re-evaluating the effects on privacy in each instance.

There is no guarantee that the personal data collected and stored in a centralised database will not be misused for purposes other than mere confirmation of identity. The several instances of the involvement of the state in mass carnage (as in Delhi in 1984 and Gujarat in 2002), and the Government's support to and defence
of the widespread use of  “encounter killings”  and other extra-constitutional methods by the police and armed forces, has already created an enabling environment for abuse of the UID database to serve undemocratic, illegal and unethical purposes.

The Bill does not have any provisions to penalise misuse of data by authorised persons (eg UIDAI officials), and therefore has an in-built potential for use of personal data to identify and eliminate “maoists”, “terrorists”, “habitual offenders”, political opponents and others who are perceived as threats by those in power.

4. Inappropriate and unproven technology
Instead of facilitating inclusion, around 150 million people are likely to be excluded from benefits because of the UID scheme.
Millions of Indians working in agriculture, construction workers and other manual labourers have worn-out fingers due to a lifetime of hard labour, resulting in what is technically referred to as ‘low-quality’ fingerprints. These are precisely the people who are currently excluded from government records and welfare schemes.

This means an NREGA beneficiary with worn-out fingers may present his newly-issued UID number as a conclusive proof of identity to claim payment, but could find the application rejected. The authentication process using a fingerprint scanner could classify the applicant’s worn-out fingers as a so-called ‘false
negative’. This is a serious concern, since NREGS has been listed as one of the pilot schemes where the UID identification process will be introduced - the 30 million people currently holding NREGS job cards will be put at risk of exclusion.

This limitation is well recognised by the UIDAI in its working paper, which states that fingerprint authentication is not foolproof, since multiple factors (such as the degree and direction of the pressure applied while placing the finger on the sensor, excessively greasy or dry skin, and distortions caused by rendering a three-
dimensional object into a flat plane) can result in “noise and inconsistencies” in the captured image. According to the paper, these distortions result in impairing the system performance and consequently limiting the widespread use of this technology”.

The other biometric data to be collected by the UID are iris scans and photographs. An iris scan cannot be done on people with corneal blindness, glaucoma or corneal scars. There are an estimated 6-8 million people in India with corneal blindness, according to researchers at the All India Institute of Medical Sciences, New Delhi. The number of people with corneal scars (caused by infections or injuries to the eyes) will be much
more. It is reported that Cabinet Secretary K.M.Chandrasekhar has opposed the collection of iris scans, terming it a “waste of money.”

5. Database security not assured
India does not have a robust legal framework or infrastructure for cybersecurity and has weak capabilities in this area – several of our high-security databases have been hacked in the recent past. The huge amounts of personal information collected in the UID database will most likely not be adequately protected and will be
vulnerable to hackers and identity thieves. It is important to note that no country or organisation has successfully deployed a database (biometric or otherwise) of the size envisioned for the UID project, and no technical or corporate body in the world has the experience necessary to ensure its security. The possibility of corruption and exploitation of data is far greater in a centralised database than when the information is dispersed across different databases. There is also a high risk of errors in the collection of
information, recording of inaccurate data, corruption of data and unauthorised access.

Other countries with national identification systems have tried and failed to eliminate the risks of trading and selling of information. India, which has no generally established data protection laws (like the U.S. Federal Privacy Statute or the European Directive on Data Protection) is ill-equipped to deal with such problems.

The US - arguably the most surveillance-prone society in the world - passed a Federal law (the REAL ID Act, 2005) requiring the States to allow the Federal Department of Homeland Security to access State databases such as drivers' licences and motor vehicle registration. As of 2008, not a single State has ratified this Act, and
25 States have passed legislations to exclude themselves from its purview.

Ironically, a confidential working paper titled "Creating a Unique Identity Number for Every Resident in India" was recently posted on the transparency website Wikileaks. The leaked document admits that  "the UID database will be susceptible to attacks and leaks at various levels". If they cannot protect their own confidential documents, we cannot trust the UIDAI to protect the data they propose to collect from us.

6. Unjustifiable costs
The UID project has been launched without a feasibility study or cost-benefit analysis. The current costs are estimated at Rs.45,000 crores. A budget provision of Rs. 1950/- Crores has been made for the current year, of which over 200 crores has already been spent.
Nandan Nilekani claims that several thousand crores of rupees would be saved by the scheme, through prevention of duplicate/fake IDs for claiming benefits under schemes such as the public distribution system and the NREGS. This claim has not been supported with data, and is not substantiated by any studies so far.

Operationalising the UID scheme on the ground for NREGA and the public distribution system would require placing fingerprint readers at every panchayat office and every ration shop. The cost of a fingerprint reader at this time is around USD 50. The total costs of placing fingerprint readers in each PDS outlet and in each of India's 600,000 villages have not been taken into account in official cost calculations.

Verification of identity by the UIDAI will be charged at Rs.10 per query. This being the case, several private agencies may bypass the UIDAI and give preference to other identity proofs.

7. Bypassing of Parliament and democratic processes
The UID Authority has been set up with considerable powers and resources, without any approval from Parliament or discussion in the public domain about the necessity of such a scheme. In the absence of a Constitutional provision or legal framework (such as that set out in the proposed Bill), all the actions of the UIDAI are technically unconstitutional and illegal. There is no transparency either on decisions or on expenditure, no oversight and no mechanisms for accountability in the functioning of the UIDAI. 

Nandan Nilekani has been given sweeping powers, and is now demanding the right to select “good officers” to serve under him,  bypassing the usual procedures for deputation of officers.
Despite the continuing debate on public platforms, and being repeatedly questioned about the risks, costs and benefits of the UID scheme, Nilekani and the Government of India have remained silent on the contested aspects of the scheme.

8 Lessons from other countries
Several countries (including the USA, the UK, Australia, China, Canada and Germany) have tried such projects and have given these up as impractical, unjustified and  dangerous. One of the first acts of the new government in UK after tasking office in June 2010, was to scrap the UID project in that country. According to Theresa May, the UK Home Secretary, “The national identity card scheme
represents the worst of government. It is intrusive and bullying. It is ineffective and expensive. It is an assault on individual liberty that does not promise a great good...The government will destroy all information held on the national identity register, effectively dismantling it. The role of the identity commissioner, created in an
effort to prevent data blunders and leaks, will be terminated.”
It is noteworthy that the reasons cited by the UK government for rejection of the UID scheme -  higher costs, impracticality and ungovernable breaches of privacy and civil liberties – are all valid in the Indian case as well.

 In view of this, it is fair to expect UIDAI to present a comprehensive argument to justify why what was rejected in the UK is good enough for India. It seems clear that the public pronouncements on the UID scheme being a step towards good
governance and inclusive growth are red herrings to divert the attention of the public from the real purpose of NIDAI – to strengthen India's e-surveillance capabilities!

The passage of the IT Act, 2008, was the first step to making India a country where “Big Brother” is watching everyone, all the time – the NIDAI Act will be another great leap forward in this direction!

Please do not remain silent - oppose the NIDAI Act to defend democracy & protect human rights.

CONTACT:
A CAMPAIGN FOR NO UID, C/o. INDIAN SOCIAL ACTION FORUM (INSAF),
A124/6 1st floor, Katwaria Sarai,
New Delhi  110016.                                     
Tel: +91-11-26517814/ 65663958;
Fax: 011-26517814;
Email: insafdelhi@gmail.com

Alternative Law Forum,
Citizen Action Forum,
Delhi Forum,
PEACE,
People's Union for Civil Liberties (PUCL) – Karnataka,
Moving Republic,
Indian Social Action Forum (INSAF),
National Campaign for Dalit Human Rights (NCDHR),
Slum Janandolana – Karnataka,
The Center for Internet and Society (CIS)
and many other organisations and concerned individuals.

170 - Behind the success story of universal PDS in Tamil Nadu - The Hindu

Behind the success story of universal PDS in Tamil Nadu
S. VYDHIANATHAN
R. K. RADHAKRISHNAN
August 10, 2010


Rice at Re.1 a kg is an essential part of Tamil Nadu's Public Distribution System.

Technological interventions, innovative and fool-proof delivery mechanisms, constant reviews and fixing responsibility at each level ensure that an effective delivery system is in place.

The Public Distribution System in Tamil Nadu is a success story, in its coverage as well as its pricing. Each family, whether below the poverty line or not, is entitled to 20 kg of rice at Re. 1 a kg. The State Government opted for universal coverage for both practical and good political reasons. Effective targeting of Below Poverty Line (BPL) families was felt to be an administratively difficult task, and there was a genuine risk of the people most in need of food security being left out. The State is now deservedly held up as a model for effective implementation of a comprehensive food security system.

When the DMK Government took office in 2006, one of its first steps was to supply rice through the PDS for Rs.2 a kg. This was a key election promise of the party. In September 2008, the PDS price was reduced to Re.1 a kg of rice.

From May 2007, in addition to rice, kerosene, and sugar, Tamil Nadu has been issuing wheat, wheat products, pulses and palmolien to cardholders — under the Special Public Distribution System. It is the only State do so.

At present, the monthly offtake of rice under the PDS is 317,000 tonnes, though the Central allotment is only 296,000 tonnes (supplied at Rs.5.65 a kg). The additional quantity of rice needed is being met from the open market sales scheme (OMSS) allotment by the Food Corporation of India and also from other State Civil Supplies Corporations (the price ranges from Rs.11.50 to Rs.15.70 a kg). In the case of sugar, the requirement is of the order of 33,055 tonnes as against the Central allotment of 10,832 tonnes. As the Central allotment is not sufficient to meet the demand from cardholders, the State is purchasing sugar from the open market at the prevailing rates. By streamlining the distribution, Tamil Nadu is able to meet the demand of kerosene to a certain extent. Moreover, distribution of free LPG connections has helped bring down the offtake of kerosene in the PDS.

By selling rice and other commodities at prices much lower than the price fixed by the Central Government, the State Government has been incurring substantial expenditures by way of food subsidy. From Rs. 734.85 crore during 2003-04, the subsidy increased to Rs. 1,017.78 crore in 2004-05, Rs. 1,559.64 crore in 2005-06, Rs. 1,833.02 crore in 2006-07, Rs. 1,961.06 crore in 2007-08, and Rs. 2,795.85 crore in 2008-09. During 2009-10, Tamil Nadu had to enhance the subsidy to Rs. 4,000 crore. This was because it had to provide for an increased offtake of rice over and above the Central pool allocation, and also for the purchase of sugar and pulses from the open market. The allocation for 2000-11 is pegged at Rs. 3,750 crore as there is an expectation that the market prices of sugar and pulses will come down.

The success of the scheme in Tamil Nadu relies heavily on groundwork. The mammoth task of minimising diversion and reaching 317,000 tonnes of rice to more than 1.97 crore cardholders who draw rations from about 31,439 outlets in 32 districts (including the newly formed Ariyalur and Tiruppur) involves technological interventions, drawing up innovative fool-proof delivery mechanisms, old-fashioned policing, surprise checks and constant reviews, and fixing responsibility at each level.

The movement of stock from the 310 warehouses across the State to the PDS outlets begin from the 20th of the preceding month (August 20 for September, for instance). By the end of the month, 60 per cent of stocks for the next month reach the PDS outlets. By the 5th of the month of issue, the whole quota reaches the shops. At any given point in time, Tamil Nadu maintains six months' supply of rice, wheat, and other commodities in its warehouses. The movement from the warehouses to the PDS outlets is through trucks — which are tightly controlled by route charts. The charts display the route the truck has to adhere to, details of commodities it carries, and the shop to which the goods are to be delivered. Any elected representative or government official who notices any deviation from the route is authorised to check the vehicle and report to the nearest police station.

Control rooms have been opened in all districts, including in Chennai, to receive information on diversion of PDS commodities. As a trial measure, a GPS-based vehicle movement monitoring system has been implemented in Thiruvallur and Krishnagiri districts to track the movement of vehicles carrying PDS goods. Similarly the State Government has introduced an online godown monitoring system for enabling online capture of all transactions in warehouses in a phased manner. To prevent mass diversion of goods by lorry drivers, every vehicle is accompanied by a department assistant who is provided with a special SIM card attached to a BSNL tower and through this the movement of the vehicle can be tracked from the control room in the Civil Supplies Corporation.

Further, SMS-based fair price shop stock monitoring has been set up by the Cooperative Department to track the stock of every commodity at each fair price shop on a daily basis. This enables officials to identify stock levels at each shop every day and move stocks swiftly as needed. Under the present network, it is possible to identify a shop that may be involved in diversion of stocks by keeping tabs on sudden increases in rice offtake in a month. When there is an abnormal increase in the offtake, vigilance teams swing into action to find out whether the increased offtake is genuine or bogus.

Handheld billing machines with a GPRS connection have been installed in all fair price shops in Chennai to enable real time monitoring of sales and stocks. A usual complaint of cardholders is short measurement and to avoid this fair price shops are being supplied electronic weighing machines. In the present setup, cardholders can register their complaints against the shopkeeper through an online service.

A majority of fair price shops in the State are run by the Cooperative Department. In fact, Tamil Nadu is the only State where fair price outlets are run either by the Government or by its agencies. This system has proved to be advantageous since the wholesaler is a government corporation and all the retail shops are either Government-run cooperatives or under the control of the Civil Supplies Department. Most shops run on a loss. The Government routinely provides about Rs.300 crore as subsidy to run the Cooperative shops (to cover establishment costs, wages, etc). Tamil Nadu is the only State to do this, says Food Minister E.V. Velu.

Despite all these measures, some shop keepers indulge in malpractices; and where these are discovered criminal prosecution is launched against them. Similarly, vehicle permits and driving licences are cancelled if the vehicles and drivers are found indulging in the diversion of commodities.

For the universal PDS across the State, the going has been good so far. The concern is that with the United Progressive Alliance Government set to prescribe 35 kg of rice or wheat a month at BPL prices for each Below Poverty Line family and also set to bar Above Poverty Line families from accessing rice or wheat at subsidised rates at PDS outlets, Tamil Nadu's subsidy burden will rise hugely.

Keywords: Public Distribution System, Tamil Nadu, BPL, APL, food security

136 - Supreme Court resets contours of the debate by Liz Mathew & Surabhi Agarwal

SC resets contours of the debate
Apex court suggests making unique ID programme centrepiece of public distribution system’s revamp
by Liz Mathew & Surabhi Agarwal

In a move that will likely accelerate the acceptance and impact of Aadhaar, the Supreme Court has recommended

102 - PDS in a shambles - Source Hindu Business line

PDS in a shambles

The time has come to examine whether there could be an alternative to the existing PDS. Experts suggest giving cash directly to the eligible poor through a coupon system as an option.

The poor seldom get PDS foodgrains in proper quantity and quality.

S. D. Naik

The Supreme Court-appointed Central Vigilance Committee's report on the sale of foodgrains through the public distribution system (PDS) throughout the country will not come as a surprise to anyone.

The Committee's finding that shop-owners, transporters, and officers have been colluding to deprive the poor and that the whole system is in a shambles, only reinforces what earlier studies had pointed out more than a decade ago.

The Committee headed by the retired Supreme Court judge, Justice D. P. Wadhwa, found that there was large-scale diversion and black marketing of PDS foodgrains. “Subsidised PDS foodgrains does not reach the poor who desperately need the same. These poor people never get PDS foodgrains in proper quantity and quality. The fair price owner is aware of bogus/fake ration cards and uses these for black marketing of PDS foodgrains,” the Committee's report said.

Commenting on the State-wise situation, the Committee said the PDS has collapsed in Rajasthan; in Jharkhand, the system is a glaring example of what the system ought not to be; in Bihar, the beneficiaries get ration of a month after a wait of three-four months; in Gujarat, shop-owners admitted bribing the officials; in Orissa, grain storage agents are susceptible to political influence; in Karnataka, there is collusion between officials, investigating agencies, dealers, wholesalers and other vested interests.

A study in 2007 had revealed that over a three-year period alone Rs 31,586 crore worth of wheat and rice meant for the poor were siphoned off and sold in the open market illegally.

GROWING CORRUPTION

The number of “ghost” ration cards at that time, were found to be at a staggering 2.3 crore, while as many as l.21 crore deserving poor had been left out of the food security umbrella.

The study had also pointed out that every year the poor were cheated out of 53.3 per cent of wheat and 39 per cent of rice allocated for PDS. The worst offenders were Uttar Pradesh, West Bengal, Madhya Pradesh, Rajasthan and Maharashtra. The North-East was worse off: Of the eight North-East States, not a single grain supplied to Sikkim, Meghalaya, Manipur, Mizoram, Nagaland and Assam reached the targeted population. In fact, it was found that the grains allotted did not even reach the States concerned and were siphoned off from Delhi itself.

Similarly, in the case of PDS kerosene too. About 35 per cent of it finds its way to the open market where it is sold at about Rs 25 a litre against the controlled price of Rs 11. It is also used to adulterate diesel and petrol.

Every year lakhs of tonnes of foodgrains are allowed to rot and go waste because of the severe erosion of PDS-related infrastructure, improper warehousing facilities, decline in the number of fair price shops, understaffed monitoring mechanism, and laxity in anti-hoarding laws.

In fact, coinciding with the release of the report, there have been reports about foodgrains worth crores of rupees rotting on roads in Punjab for want of warehousing facilities. The Punjab Government has reportedly requested the Centre to lift the stock and distribute the same to the poor free of cost, if necessary.

According to the State Government sources, the stocks are already pledged to the Centre, but the Centre has not lifted the same. Consequently, some 70 lakh tonnes of stocks have been rotting. Still greater worry is, fresh harvest will be arriving within the next few weeks and the State Government is finding itself in a difficult situation.

The Agriculture Minister, Mr Sharad Pawar, has promised hiring of more godowns to store the excess stocks. One wonders why the Government is not off-loading more stocks in the open market, instead of allowing the excess stocks to rot in warehouses and on the roads at a time when the high food inflation continues to remain a major worry.

In fact, this is a recurring problem. In July 2008, for instance, it was reported that over 10 lakh tonnes of foodgrains, that could have fed one crore hungry people for one year, were damaged in FCI godowns. The damages were incurred, despite the FCI spending Rs 242 crore to prevent such losses.

Meanwhile, the food subsidies paid by the Centre have more than doubled over the last four years to Rs 56,000 crore in 2009-10, but the Centre and the State governments have failed to reduce wastages and improve delivery mechanisms by plugging the enormous leakages.

WAY FORWARD

Clearly, the time has come to examine whether there could be an alternative to the existing PDS.

In fact, this assumes greater urgency since the Empowered Group of Ministers (EGoM) headed by the Finance Minister, Mr Pranab Mukherjee, has now cleared the National Food Security Bill, guaranteeing 25 kg of wheat and rice to the poor every month at Rs 3 a kg.

The Bill is expected to be tabled in Parliament in the monsoon session to fulfil the poll pledge of the UPA Government. Once it becomes law, the Government's food subsidy bill is expected to go up further.

To eliminate, or at least minimise, the prevailing corruption and wastages, a better alternative suggested by many experts is giving cash directly to the eligible poor through a coupon system. In fact, the latest Economic Survey has also come out with a similar suggestion which appears to be quite pragmatic. It says:

To make PDS more effective, and leak-proof, the subsidy should be handed over directly to the households who should be given the freedom to choose which store it buys the food from.

The households should be given the coupons which can be used at PDS stores in lieu of money when buying wheat or rice and the stores should be free to charge the prevailing market rate.

Such a system will be more impervious to corruption, says the Economic Survey. However, for the full success of this “coupon system” what is needed is an effective method of identifying the poor.

This is where the proposed Unique Identification (UID) System would come into play. Hopefully, the UID System would be in place before the passing of the National Food Security Act.