How digital reforms in food subsidy settlements can speed up intergovernmental transfers in India

• by Akshit Saini and Ritika Singh
• Mar 31, 2026
• 1 min
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This note examines systemic delays in the settlement of food subsidy accounts between the Center and states in India. It unpacks the structural, administrative, and coordination challenges underlying these delays and outlines how targeted digital and process reforms can significantly improve the efficiency of intergovernmental transfers.

India’s food subsidy system supports nearly 800 million people, but delays in account settlement between Center and states create fiscal risks. In 2023, MSC engaged with the Department of Food and Public Distribution (DPFD) and multiple state governments to diagnose the challenges and address them. Fragmented workflows across settlement phases, weak accountability, and limited transparency are at the root of these delays. This note presents the digital governance reforms that emerged from this engagement, such as process reengineering, system digitization through a centralized portal, and standardization of cost calculations. It also demonstrates how these reforms can reduce turnaround times and strengthen fiscal discipline for large-scale welfare programs.