To build upon the digitization of the Public Distribution System (PDS) and with a focus on beneficiary-centric reforms, the government launched a new scheme – Integrated Management of PDS (IM-PDS), also known as One Nation One Ration Card (ONORC) or portability, in April 2018. Recently, the Finance Minister announced that the scheme will be rolled out by March 2021.

Under ONORC, PDS beneficiaries can lift their entitled food grains from any fair price shop (FPS) across the country with their existing ration cards. ONORC builds on the reforms under end-to-end computerization of PDS to digitize beneficiary database and supply chain mechanisms, among others.

While ONORC remains a work in progress, several states have implemented intrastate portability (within the state). The adoption of portability in a state is primarily dependent on their readiness and progress under end-to-end computerization of PDS. However, national portability will need integration of existing PDS portals of states/UTs with the central PDS portal. This means that all the states participating in interstate portability (between states) must have basic digital readiness.

Readiness for all-India portability under PDS?

As of January 2020, the Aadhaar details of about 83% of the beneficiaries have been seeded with their ration card details in the digital database across India. Moreover, only 89% of the total FPS across India, have been automated with the installation of an e-PoS device. Under digitized PDS, beneficiaries are provided with food grains only after their biometric authentication through Aadhaar on the e-PoS devices at the FPS. In the absence of a digital database and automated FPS, the beneficiaries will be unable to access portability.

Moreover, before moving to interstate portability, it is also intended that the states implement intrastate portability. As of January 2020, the intrastate portability has been either partially or fully implemented only in 18 out of 36 states/UTs in India.

In April 2020, over 11 million transactions were carried out under intrastate portability whereas, only 351 transactions were through interstate portability. The differential use of intrastate and interstate portability by beneficiaries can be attributed to a low level of awareness on interstate portability facility amongst beneficiaries as well as FPS dealers, as assessed by a pilot study conducted by MicroSave Consulting in September 2019. Intrastate portability provides beneficiaries the convenience to access food grains at FPS of their choice.

Simultaneously, FPS dealers are able to earn an extra commission for an increase in the number of ration card holders uplifting food grains from their shop. While the FPS dealers receiving a lower turnout of beneficiaries, earn a lesser amount of commission. Under portability, the FPS dealers are also met with unpredictable demand, which could possibly lead to a shortage of food grains as well.

Additionally, on the operational front, most of the states follow different timelines and processes for the allocation and distribution of food grain stocks to FPS, this could act as a hindrance in the process of reconciliation and allocation of stocks.

The way forward

It is evident that beneficiaries have utilized intrastate portability more than the interstate. However, a shift towards a national rollout of ‘One Nation One Ration Card’ will need a lot of work across participating states and at the center, for which the government will have to ensure the following:

  1. Fix strict timelines for the digitization of PDS and Aadhaar seeding of the PDS database.
  2. Adopt the best practices from states which have effectively automated their PDS and draft guidelines on fixing the timelines for the uptake of food grains by beneficiaries, stock reconciliation, and on FPS dealers request for extra food grain stocks.
  3. The government should explore ways to compensate the FPS dealers through a model with a fixed and a variable component for their commission.
  4. Respective state governments should assess the data on intrastate portability transactions and optimize the locations of FPS.
  5. Awareness regarding interstate portability and its operational details should be effectively communicated to beneficiaries through SMS, posters at FPS, and imparting of information through FPS dealers.

While adopting the above measures with regards to portability, it should further be implemented in a phased manner across India prioritizing states with a high migrant population.

The blog was first published on Zee Business on 23rd of May, 2020

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