Government of India (GoI) implemented the National Food Security Act (NFSA) in 2013 to provide food and nutritional security to vulnerable households. Simultaneously, to make the system more efficient and to plug leakages, GoI requested States/Union Territories (UT) to implement a Direct Benefit Transfer (DBT). Two suggested methods were: 1) installation of point-of-sale (PoS) devices at fair price shops (FPSs) for biometric authentication of beneficiaries, and physical off-take of food grains, or 2) direct cash transfer to the beneficiary’s bank account. The UTs of Chandigarh, Puducherry, and Dadra & Nagar Haveli (DNH) opted for DBT through cash transfer. Chandigarh and Puducherry launched DBT in PDS in September 2015. However, DNH postponed the pilot roll-out due to upcoming local elections. To assess the performance of these pilots, MicroSave conducted a baseline assessment in August 2015, and a midline assessment in November 2015. We presented the baseline assessment in a separate note and this note looks at findings from the mid-line assessment. Progress in both the UTs of Chandigarh and Puducherry is chequered and needs streamlining before the pilot for DBT in PDS can be scaled up. On parameters such as access to market, availability of withdrawal points, and use of the subsidy payments, the pilot has done well in both UTs.

However, the pilot has highlighted the need for additional work on awareness – a recurring theme (see “Communication: The Achilles Heel of Direct Benefit Transfer – 1 and 2”) ― and grievance redressal. There are also challenges in terms of adequacy of subsidy amount and whether there is subsidy diversion by male beneficiaries in the household. In Chandigarh, FPS shops closed down after the pilot launch. However, not all beneficiaries have managed to enrol for DBT, due to requirements related to the opening of bank accounts and linking these to their Aadhaar numbers. Puducherry has seen similar challenges. The administration will have to look into this aspect, as exclusion can be detrimental to the overall success of the scheme.

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