2011

Impact of AADHAAR on TPDS

A Research Study by Wipro Consulting Services

Acknowledgments
This report, prepared by Wipro Limited, assesses the impact Aadhaar will have on TPDS (Targeted Public Distribution System) in India. The findings of this report are based on the survey of 105 respondents belonging to various stakeholder groups such as UIDAI, FCI, district magistrates, NGOs, academicians and more. It summarizes the various existing TPDS challenges and the strengths of Aadhaar that will prove instrumental in addressing the identified TPDS challenges. Our foremost thanks goes to all the respondents from across India who participated in this survey through internet, phone and in person. We would also like to thank members of the editorial board, AzimPremjiFoundation, Global Research Center for Consulting and other colleagues at Wipro Limited, specifically Wipro Consulting Services, the publisher and survey partners who have helped in bringing out the final report by ensuring critical review and providing their expert inputs.

105 respondents participated in the survey Authors:

Michael Sequeira Wipro Consulting Services Pratik Rajiv Jindal Wipro Consulting Services Neeti Gupta Wipro Limited Saumar Deka Wipro Consulting Services

A Research Study by Wipro Consulting Services

About the Survey

This is one of the first survey conducted with various stakeholders in the system to study the Impact of Aadhaar on TPDS, to capture the different viewpoints that exist on the ground. The impact specified has an action-oriented flavour by pointing out the Aadhaar features that would be instrumental in the resolution of TPDS challenges. The challenges of implementing Aadhaar in TPDS have been considered and presented in a model. The model is the distilled output of this study and presents findings of the study in a holistic manner.
Respondents Profile
The survey covered 105 respondents from all over India. Respondents include 26 district magistrates, 15 FCI officials, 8 FCS officials, 7 Aadhaar officials, 11 State warehousing corporation officials, 11 IT Department officials, 6 officials from other Government departments and 21 Non-government respondents. The diverse mix of respondents was designed to ensure that varying opinions are accounted for. UIDAI officials accounted for only 7% of the respondents as the focus of the research was TPDS, and Aadhaaris considered as an enabler to resolve the identified TPDS challenges. and anything below 2.5, signifies a low scoring impact of Aadhaar feature(s) on a particular TPDS challenge. For challenges that cannot be addressed by Aadhaar, the score is nil. The implementation of Aadhaar is in the early stages and hence understanding of Aadhaar varies across groups. Departments at the strategic level have a clearer view of how Aadhaar will shape up than departments at the operational level. The differences in understanding become clearer due to this kind of grouping. Awareness of the extent of TPDS problem also varies across groups. Departments at operational level are in a better position to evaluate the extent to which a particular Aadhaar solution will address the TPDS problem in question. Hence the opinions of different groups assume importance at the strategic and operational levels. The solution proposed by the influencer group gains importance at that stage. These details have been captured by the proposed model of implementation.

Profile of Survey Respondents

Approach
7% 20% 6% 10% 25%

14% 10% 8%

Survey respondents were given a questionnaire with questions eliciting responses on how Aadhaar will impact the TPDS and, if yes, how. The below groups were formed depending on the role played by the department in question. Using the survey results, a Confidence Index (CI) and Solvability Matrix was designed to measure the confidence of each dominant stakeholder on Aadhaar feature(s) capability to solve a particular TPDS challenge. The CI and Solvability Matrix score range from 1 to 5 where a score of above 3.5 is high, score between 2.5 to 3.5 is medium,

District Magistrates FCI FCS State Warehousing Corporation

IT Other Government departments Non-Government UID

Survey Respondent Groups S. No. 1 2 Group Decision Makers Implementers Composition Unique Identification Authority of India(UIDAI), Food Corporation of India(FCI) District Magistrates, IT department officials, State Warehousing Corporations, Food Civil Supplies & Consumer Affairs (FCS) Other Government departments, NGOs, Academia Sample size 22 55 Percentage ~21% ~53%

Influencers TOTAL

28 105

~26% 100%
Impact of AADHAAR on TPDS

Table of Contents

Foreword Executive Summary Chapter 1 Background & Introduction Chapter 2 Key Findings of the Research Survey Chapter 3 Way forward TPDS Enhancer Chapter 4 Implementation Challenges Chapter 5 Conclusion Definition and Acronyms References

1 2 4 8 13 17 20 21 22

Tables and Figures

Table 1: Table 2: Table 3: Table 4: Table 5: Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Figure 11: Figure 12: Figure 13: Figure 14: Figure 15: Figure 16: Figure 17: Figure 18: Figure 19: Figure 20: Impact of Aadhaar features on implementation challenges Subsidised Prices Confidence Index Solvability Matrix TPDS Pain Point Table 3 4 8 9 15

How Aadhaar Features Can Impact TPDS Value Chain (Explained later in the report) 2 Procurement Value Chain 5 Allocation and Estimation process 5 Last Mile Distribution 5 Delivery to BPL Family 5 Aadhaar will capture the following data 6 What Aadhaar Is 7 Overall Impact of Aadhaar on TPDS 10 Impact of Aadhaar on TPDS problems 10 Overall Impact of Aadhaar on Complaint Tracking 10 Impact of Aadhaar Features on Complaint Tracking 11 Overall Impact of Aadhaar on Lack of Accountability 11 Impact of Aadhaar Features on Lack of Accountability 11 Overall Impact of Aadhaar on Leakage of Food Grains 11 Impact of Aadhaar Features on Leakage of Food Grains 12 Impact of Lack of Awareness on Implementation Challenge 17 Impact of Infrastructural issues on Implementation Challenge 17 Impact of Voluntary Nature of Aadhaar on Implementation Challenge 17 Impact of Insufficient Collaboration on Implementation Challenge 18 Impact of Innovative Bypassing Methods on Implementation Challenge 18

A Research Study by Wipro Consulting Services

Foreword

The report titled, Impact of Aadhaar on TPDS establishes Wipro as a Thought Leader, whose innovation and relentless effort in the IT space continues to have a huge impact on the Indian economy. As a technology leader, Wipro has recognized the Aadhaar project as a one of a kind opportunity to make a significant contribution towards addressing some of the most critical challenges in the functioning of the TPDS. Wipro embarked on this study by undertaking a comprehensive survey among 105 senior government officials across India. These senior functionaries were categorised into Decision Makers, Implementers and Influencers in the TPDS value chain. The survey was conducted via a carefullydesigned questionnaire that sought to assess the potential impact of Aadhaar on some of the toughest TPDS challenges such as leakage of foodgrains, complaint tracking and lack of accountability.

The findings of the research are promising. They reconfirm the fact that Wipro is not merely a service provider but first mover in identifying technology solutions and furthering economic development. The research sought to establish the overall impact of the Aadhaar in TPDS, while analyzing the challenges in the TPDS at the ground level. It highlights that the Aadhaar can, if successfully implemented, solve some of the most critical problems associated with the TPDS, such as duplication of ration cards and leakage of foodgrains. The report is bound to revive the optimism of those stakeholders who continue to invest a lot of faith in the system, and supports the opinion that Aadhaar comes as a ray of hope for those wanting to change the system for the better. It helps provide a possible action plan for policymakers and implementers, looking for innovative solution to tackle the challenges associated with the TPDS in India.

Anand Sankaran
Senior Vice - President and Business Head Wipro Infotech

Impact of AADHAAR on TPDS

Executive Summary

Introduced in June 1997, Targeted Public Distribution System (TPDS) is an ambitious project aimed at delivering foodgrains to identified families through the Fair Price Shop (FPS). The scheme, when introduced, was intended to benefit about 6 crore poor families for whom a quantity of about 72 lakh tonnes of food grains was earmarked annually. Only wheat, rice and sugar are the goods which are subsidized and provided by the government through the TPDS.

Aadhaar is an initiative by the Government of India that has the mandate to provide a Unique Identification to every Indian citizen. This initiative is expected to have an impact on various government schemes that are riddled with huge losses by ensuring the benefits reach the deserving populace. The questions are, whether Aadhaar will impact TPDS, and if yes, how. The study, Impact of Aadhaar on TPDS makes an attempt to answer this and more questions.

The report discusses three key challenges associated with the TPDS in India, and analyses how Aadhaar can help address them through four key features as depicted below.

Figure 1 : How Aadhaar Features Can Impact TPDS Value Chain (Explained later in the report)

Database Linkage

m-Communication Impact

Leakage of Food Grains Due to Bogus/Duplicate Ration Cards and Malpractices in the Supply Chain

Problem with the Complaint Tracking Mechanism

Anytime Anywhere Authentication

Biometric Based Authentication

Lack of Accountability

A Research Study by Wipro Consulting Services

A survey was conducted across a group of 105 stakeholders. Survey Respondents were given a questionnaire with questions eliciting responses on how Aadhaar will impact the TPDS and, if yes, how. Then the survey respondents were grouped as below depending on the role played in the TPDS value chain. 1. Decision Makers 2. Implementers 3. Influencers Based on the level of confidence of respondents (measured in confidence index or CI) in a particular feature of Aadhaar, with regard to solving a particular problem with the TPDS, a Solvability matrix was identified for each TPDS problem. The findings of the survey were then used to construct a model. The model highlights the painpoints of TPDS at three major stages in the value chain, namely Procurement, Allocation and Distribution, and identifies the extent to which a particular TPDS challenge can be addressed, using the different features of Aadhaar.

This implies that out of the budgetary consumer subsidy of Rs. 7258 crore in 2003-04, only Rs. 3061 crore reached the BPL families. Decision Makers expressed high levels (score of above 4 on 5) of confidence in all four features of Aadhaar in addressing this challenge. On the other hand, Implementers and Influencers are of the opinion that only two features of Aadhaar i.e. Database Linkage (3.83 out of 5) and Biometric Based Authentication (4.14 out of 5) will be instrumental in solving the problem associated with leakage of foodgrains. From these findings it can be inferred that Aadhaar can address one of the most critical problems associated with TPDS, i.e., leakage of foodgrains and, thus, can have a huge impact on the entire TPDS value chain. Overall, the survey finds that all four features of Aadhaar can have mediocre impact on solving the challenge of Lack of Accountability and Complaint Tracking. Among the four features, Database Linkage (3.17 out of 5) and m-Communication (3.17 out of 5) can address these challenges more than any other features. m-Communication via SMS can help farmers and beneficiaries to contact the higher authorities to resolve their problems. The survey results clearly indicate that Database Linkage feature of Aadhaar can result in the creation of a robust tracking mechanism that can track the allocation within the states giving Decision Makers such as FCI higher visibility across the TPDS value chain.

Implementers are not very confident of the Impact of Aadhaar in terms of Complaint tracking. This discrepancy in thought will create problems in implementation of this Aadhaar feature to solve these TPDS challenges. In addition to the Impact of Aadhaar features on TPDS the survey also tries to capture the perception of respondents on five key challenges associated with implementing Aadhaar in TPDS. The five key challenges were identified on priority from a long list of implementation challenges based on an exhaustive secondary research. Lack of Awareness has been cited as the most severe challenges by all three stakeholders. Infrastructural Challenges and Insufficient Collaboration are other key implementation challenges. The Voluntary Nature of Aadhaar is a major drawback of the current system. Majority of stakeholders believe the Voluntary Nature of Aadhaar could hamper the intended purpose of Aadhaar. The survey, however, found that there is no major challenge to Aadhaar based TPDS in terms of Innovative Bypassing Methods. Overall, the survey indicates that Aadhaar can have a huge impact on TPDS. However, there is a need for more collaboration among stakeholders to ensure a greater engagement with people to educate them on the benefits of Aadhaar.

Key Findings of the Survey

Among the TPDS challenges, leakage of food grains has been ranked as the most severe problem by all three groups of survey respondents. According to the data available from Performance Evaluation of Targeted Public Distribution System (Planning Commission, 2005)1 only 42% of subsidised grains issued from the Central Pool reach the target group.

Table 1: Impact of Aadhaar features on implementation challenges

Lack of Awareness Infrastructural Issues Voluntary Nature of UID Insufficient Collaboration Innovative Bypassing Methods

Decision Makers Implementers Influencers

3.82 3.25 3.61

3.23 3.31 3.46

3.23 3.29 3.46

3.41 3.20 3.54

2.77 2.93 2.36

1. Performance Evaluation of Targeted Public Distribution System Programme Evaluation Organisation, Planning Commission, Government of India, New Delhi. (March 2005).
Impact of AADHAAR on TPDS 3

Chapter 1 Background & Introduction

1.1 Targeted Public Distribution System (TPDS)
TPDS was introduced in 1997 to replace the universal ration system and focus exclusively on poor families. Under this scheme, consumers are classified into three groups below poverty line(BPL), Antyodaya Anna Yojna (AAY),above poverty line (APL). Food quotas and prices differ for each class. Under the TPDS, states are required to formulate and implement foolproof arrangements for foodgrain distribution in a transparent and accountable manner at the Fair Price Shop (FPS) level. To provide the benefits of TPDS to the deserving population, the food has to be sold at a subsidised rate to BPL families. This rate is known as the Central Issue Price (CIP). The difference between CIP and minimum support price (MSP) forms a part of food subsidy budget. A study conducted by the Planning Commission of India2 in 2005 found that about 58% of the subsidised foodgrains issued from the Central Pool does not reach the BPL families because of failure in implementing TPDS at various levels. The key issues facing TPDS include errors in identification, non-transparent operation and unethical practices in implementation of TPDS. Targeted Public Distribution System Value Chain Procurement: The various stakeholders involved in TPDS foodgrains procurement system can be represented by the diagram shown in the opposite page (Figure 2). The quantity of grains to be procured is decided by the central government considering the existing requirement and allotting a buffer to meet any emergency situation arising out of flood, famine etc. The foodgrains are then distributed across states depending on the productivity and climate of that state. The states procure these items through procurement centres. Estimation and Allocation The second phase of TPDS value chain is estimation of the number of beneficiaries and allocation of foodgrains and sugar across different states and further across districts and blocks in each state. Traditionally, identification of the poor for TPDS is done by the Planning Commission as per the methodology of the Expert Group on estimation of proportion and number of poor, chaired by Late Professor Lakdawala. This number comprises the base of food subsidy budget for the fiscal year. Food subsidy is the difference between the economic cost of holding grain and the issue price to consumers. The subsidy is allocated amongst states depending on the central government estimates of BPL families in each state. Each state has its own procedure for estimating the BPL and APL families. The estimation is done at different nodal points such as village, block and district. The Gram Sabha in rural areas, local bodies of urban areas, the concerned Special Area Development Authority and Cantonment boards of the Cantonment area get the lists of below poverty line & AAY families reviewed every year for the purpose of deletion of the name of ineligible families and inclusion of the name of eligible families. The Centres estimates are generally at variance with the states estimates. The state, based on allotted food subsidy budget, allocates the food to each of the districts. The decision on how much is to be distributed to the beneficiaries is taken by the district collector at the district level. It is dependent on the utilisation certificates that each FPS has to prepare every month. The utilisation certificate shows how much of the foodgrains sent to the FPS were actually purchased by the beneficiaries. For e.g., if a FPS has been allotted 50 kg of rice for January, and it sells only 40 kg, then it has 10kgs left over. For the next month, it will be allotted only 40 kg to make the total for that month equal to 50 kg (Figure 3). Distribution The third and final stage in TPDS is distribution. The FPS owner collects the allotted ration from a block godown on a monthly basis. Every month a fixed amount of food items is taken from the godown and is distributed through FPS (Figure 4, Figure 5 and Table 2).

Table 2: Subsidised Prices(in Indian Rupees) Effective from July 1, 20023

BPL Families Commodity Price per quintal APL Families

Wheat Rice Common Rice Grade-A

*Applicable to J&K, Himachal Pradesh, Sikkim, Uttaranchal and NE States

415 565 565

610 795* 830

2. Performance Evaluation of Targeted Public Distribution System, Programme Evaluation Organisation, Planning Commission, Government of India, New Delhi. (March 2005). 3. Note on Distribution of Foodgrains under Public Distribution System and Other Welfare Schemes.http://fciweb.nic.in/upload/Public-dist/Note-on-PDS-&-OWS.pdf Accessed on June 14, 2011.
4 A Research Study by Wipro Consulting Services

Figure 2: Procurement Value Chain

FCI godown Farmers Purchase Centers/ Mandi/Open Markets State Warehousing Corporation

Figure 3: Allocation and Estimation process

Estimate BPL Families

Foodgrain Requirement

Subsidy Budget

Allocation Amongst States

Allocation Amongst Districts

Allocation Amongst Blocks and Urban Local Bodies

Allocation to FPS

Figure 4: Last Mile Distribution

FCI or State warehouses (Rented by FCI)

Block level warehouse

FPS

Figure 5: Delivery to BPL Family

BPL Family

Show Ration Card

Check Eligibility

Provide foodgrains

Impact of AADHAAR on TPDS

Chapter 1 Background& Introduction continued

TPDS Challenges Indias food subsidy bill crossed Rs 72,000 crore in 2009-10 fiscal, a 65% increase from the previous year. TPDS is a major component of the food subsidy budget. The increase in food subsidy is largely attributed to the increase in procurement and the rise in the cost of foodgrains. Procurement agencies buy the produce from farmers at the minimum support price. The end retail price is fixed by the States after taking into account margins for wholesalers/retailers, transportation charges, levies, local taxes etc. Despite the implementation of TPDS, India accounts for over 400 million poor and hungry people in the world. The foodgrains supplied by ration shops are not enough to meet the consumption needs of the deserving segment or are of inferior quality. The TPDS has been criticised for its failure in identifying the deserving community and distributing food items in an error-free manner. Accountability Initiative (TPDS, GOI, 2010-11), in its recent study, reveals the problems associated with TPDS value chain. The study finds the following: In FY 2005-06, only 50 percent of allocated foodgrains were lifted. This jumped in FY 2007-08 to 84 percent, decreasing marginally to 81 percent in FY 2009-10. In FY 2006-07, 156 crores were lost due to poor storage of foodgrains and a loss of 134 crores were incurred in transportation of foodgrains. Losses due to poor storage and transportation continued to be high in FY 2008-09 at 101 crores and 133 crores respectively.

TPDS introduced the objective of income distribution by offering food cheaper to the poor than to the non-poor, but according to Department of Food & Public Distribution, TPDS has not only failed to serve the original goal of price stabilisation but also not delivered fully in terms of the new concerns regarding food subsidies to the poor.5
For every Rs.4 spent on the TPDS, only Re.1 reaches the poor- Planning Commission Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

Aadhaar has certain salient features that are mutually exclusive and collectively exhaustive, in addressing some of the key TPDS challenges. In a report titled, Envisioning a role for Aadhaar in the Public Distribution System, UIDAI says, Aadhaar is best translated to mean a foundation, and the number would play precisely this role in the TPDS. The number would be a foundation, over which the government can build more effective TPDS processes, and ensure that the program helps fulfil the broad and admirable vision of Indias proposed national food security act. Aadhaar provides a universal way of uniquely identifying Indian citizens. The impact of Aadhaar will be multi-pronged, ranging from achieving financial inclusion to ensuring that Government schemes benefit the deserving segments. TPDS is one such scheme that would be impacted by Aadhaar.

The primary causes of the failure of TPDS in India are the following: 1. Errors in identification of beneficiaries 2. Lack of accountability in TPDS value chain 3. Malpractices in the implementation of TPDS One of the main problems with this system is the inefficiency in the targeting of beneficiaries and the resulting leakage of subsidies. Several opportunities to manipulate the system exist with widespread collusion across the supply chain, finds UIDAI.6

1.2 Aadhaar
Aadhaar is an ambitious project undertaken by the Indian Government to provide 1.2 billion Indians with a unique identification. The impact of Aadhaar will be multipronged, ranging from achieving financial inclusion to ensuring that government schemes benefit deserving segments. TPDS is one such scheme of the Indian Government to provide food security to BPL segment.

4. Indias food subsidy up 65% in FY10, Business Standard, http://www.business-standard.com/india/news/indias-food-subsidy65-in-fy10/90682/ published on April 8, 2010 and accessed on 14 May 2011 5. Accountability Initiative: Budget Briefs, TPDS, GOI 2010-11. <ftp://ftp.solutionexchange.net.in/public/decn/comm_update/res-55-030311-15.pdf accessed on June 14, 2011 6. UID and PDS System, Objectives of Public Distribution System (PDS) (UIDAI) http://uidai.gov.in/images/FrontPageUpdates/uid_and_pds.pdf accessed on June 14, 2011
6 A Research Study by Wipro Consulting Services

Figure 6: Aadhaar will capture the following data

Figure 7: What Aadhaar Is?

Name Date of Birth Place of Birth Gender Address Name of Parents Biometrics-All Ten Fingers IRIS Face Introducer Information Mobile Number e-mail address

A 12-digit unique identification number for all residents including infants Collects demographic and biometric data for each individual Every individual in a family is eligible for an Aadhaar. Each individual gets a single unique Aadhaar number Voluntary system UIDAI will enable a universal identity infrastructure that any ID based application like ration card, passport, etc., Aadhaar does not establish citizenship Aadhaar will not replace most other IDs Only one Aadhaar is given for an individual UIDAI Information will not be accessible to public and private agencies. UIDAI will give a Yes or No response for any identification queries The chances of uniquely identifying the right person decrease as we move from a block to a district and cross states within India. The present system of collecting demographic data does not address the above problems of uniquely identifying the right person.
UID can address the challenges associated with uniquely identifying the right beneficiary under TPDS. Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

In the long-term linking beneficiary offtake to authentication can have multiple benefits like reducing leakage as no two persons can have their biometrics match although there is a possibility of their demographic details matching(such as name, gender and age). 2. m-Communication: Every person who is receiving Aadhaar will have his/her mobile number present in the Central ID Repository(CIDR), if mentioned during enrolment. This will enable mobile communication in the form of SMS which can be used for multiple purposes, for example, to know the status of food reaching the FPS or to send a single SMS to a central application. 3. Anytime Anywhere Authentication: This feature of Aadhaar enables various agencies involved in the TPDS value chain to contact the CIDR from anywhere in the country to authenticate a persons identity. This feature will benefit beneficiaries as with a unique ID they can be entitled to their offtake at any FPS shop across the country as their identity is portable with an Aadhaar. 4. Database Linkage: Aadhaar does not contain data that can be used exclusively in a TPDS value chain. However, Aadhaar database is designed in such a way that it provides an open platform for any other database to link with it. This linkage enables de-duplication of data using Aadhaar as the primary key and also helps in the removal of ghost or non-existent entities.
Perhaps the greatest value of Aadhaar for the TPDS stems from how it can be easily integrated into the existing infrastructure- UIDAI.. Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

Applicability of Aadhaar Features to TPDS: 1. Biometric Based Authentication: Biometric fingerprint verification at the FPS in addition to demographic data verification ensures that the intended beneficiaries only collect the foodgrains.

Impact of AADHAAR on TPDS

Chapter 2 Key findings of the Research Survey

Based on the secondary research five key challenges were identified with the existing TPDS mechanism. The execution of these checks is not effective in terms of fostering accountability. In case of any complaint, tracking back as to who carried out the approvals at different checkpoints is difficult to establish. It is also difficult to establish whether the check was conducted.
Diversion of food due to inclusion error and duplication of ration cards remains a serious challenge to TPDS. In West Bengal, 53 lakh fake ration cards were cancelled from July 2006 till December 2009 (Accountability Initiative, 2010). A solution that improves the quality of the beneficiary database and can track Individual beneficiary off-take, coupled with a computerised MIS system, can effectively improve the TPDS system UIDAI Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

1. Complaint Tracking Mechanism

There is a gap in the policies that govern the mechanism to file and track complaints. Complaints arise at every level from farmers who are distraught due to late payments or the distribution agents who are affected by the distribution mechanism. These complaints reach district magistrates but there is no mechanism to track the status of the complaint. Beneficiaries tend to register their complaints at the Gram Panchayat (GP) level. A survey7 conducted on TPDS in Madhya Pradesh on behalf of Programme Evaluation Organisation, Planning Commission, Government of India, finds that most of the complaints from the BPL category of cardholders are registered at the GP level. APL and AAY categories register their complaints at the Janpad Panchayat level and block level as well. However, there is no proper system to track the status of these complaints at present, so most of these complaints go unattended.

3. Leakage of foodgrains
Leakage of foodgrains occurs due to the following reasons: a) Diversion of foodgrains to ghost ration cards b) Diversion of foodgrains due to duplicate ration cards c) Truck diversion during grain movement between warehouses d) Under weighing during procurement e) Under weighing by fair price shop owners According to Planning Commission 20058, Bihar and Punjab have the highest rates of leakages; more than 75% of the grain allotted from the central pool fails to reach the intended beneficiaries. States such as AP, Kerala, Orissa, Tamil Nadu, and West Bengal, record leakages below 25% and are considered to be low-leakage states. Earlier attempts at addressing these challenges have focused on preventing the physical thefts using technologies such as GPS tracking of vehicles and electronic monitoring, in addition to human monitoring. Most of these systems are either dead or inactive.
Assuming that all of the systems work efficiently, the problem with food leakage will still remain unresolved because these systems cannot address TPDS leakages that predominantly stem from bogus and shadow ration cards. Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

4. Unscientific Storage
Though there are strict guidelines to store foodgrains, they are not executed as per the existing policy. There has been excess grain flowing to the godowns every year in most of the states. The poor planning and inefficient distribution system make the foodgrains lie in the godowns for several days unattended and rotten. Unhygienic storage of foodgrains has resulted in huge losses to the government.
According to Food Subsidy Budget Brief, Accountability Initiative, 2010, leakages due to improper storage brought a loss of Rs. 101 crore in FY 2008-09.

2. Lack of Accountability
The officials involved in TPDS value chain should demonstrate higher levels of accountability to ensure that the right quantity and quality of subsidy reaches the intended beneficiaries. The current system does not have foolproof methods to track the system and to ensure that the authorities are judiciously fulfilling this role. The inefficiencies in the system and lack of involvement from designated officials are a concern for ensuring accountability within the system. Various checks are done at different points in TPDS value chain to ensure that benefits reach the intended beneficiaries.

5. Diversion to Unintended Beneficiaries

There are certain gaps in the criteria used to classify a family as BPL. This results in a few APL families being marked as BPL families. The inclusion error, apart from other major downsides, has created the impression that the targeted distribution is a failure on the part of the government. As part of a survey9 of a Maharashtra village, Madhura Swaminathan and Neeta Mishra collected data on utilisation of TPDS in village Mohkal of KhedaTaluka of district Pune, Maharashtra.

7. Performance Evaluation of Targeted Public Distribution System, Programme Evaluation Organisation, Planning Commission, Government of India, New Delhi. (March 2005). (Table 3.5: Involvement of Gram Panchayats-II, page 28) 8 Potential Concerns with the Proposed Food Security Bill, Accountability Initiative, YaminiAiyar and GayatriSahgal. < http://www.accountabilityindia.in accountabilityblog/1196-potential-concerns-proposed-food-security-bill> 9 The Game of Targeted Public Distribution System in the Life of Tribal Communities of Madhya Pradesh. (Sampark, Village Raipuriya, Block- Petlavad, District- Jhabua, MP; Sopan, Opposite SP Bunglow, Old ITI building, Barapatthar, Seoni, M P; VASPS, Post and Village-Simrol, Distt-Indore, MP; Debate Alkapuri, Bhopal; and Right to Food Campaign Madhya Pradesh Group, 2005).
8 A Research Study by Wipro Consulting Services

They have found that the system of identifying target groups has inherent weakness of inclusion and exclusion errors. Around 54 % of BPL families were wrongly excluded under the TPDS, as compared to 5.5 % under the previous universal scheme, according to a survey. This error is known as exclusion error and it results in diversion of foodgrains to undeserving families. Inclusion error, on the other hand is the inclusion of APL households by TPDS. This results in over-estimation of the number of BPL families and lower allotments to each deserving family. The reason behind this problem is the criterion that is used to classify a family as APL or BPL. Given the nature of the TPDS challenges identified leakage of foodgrains, lack of accountability and complaint tracking could be directly impacted by Aadhaar.
Table 3: Confidence Index
Complaint Tracking Mechanism

The other two challenges namely Unscientific Storage and Diversion to unintended beneficiaries would require systemic and policy level inputs to overcome them and have been kept out of the ambit of the survey. The survey interviewed three groups of stakeholders, namely Decision Makers, Implementers and Influencers, involved in the TPDS value chain and measured their confidence in four Aadhaar features in solving the three key challenges in TPDS system. Each dominant stakeholder has a particular Confidence Index (CI) for a particular TPDS challenge. Aadhaar feature(s) for which the CI is the highest is adopted as the most useful in addressing the particular TPDS challenge. The Solvability Matrix below then measures the overall impact of the identified Aadhaar

feature(s) in solving the particular TPDS challenge across the group of respondents. A score of above 3.5 is high, score between 2.5 to 3.5 is medium, and anything below 2.5, signifies a low score. For challenges that cannot be addressed by Aadhaar, the score is nil. The survey results indicate that Decision Makers show greater confidence in all four Aadhaar features than other two groups. The difference in the confidence level between Decision Makers and the other two groups is primarily attributed to lack of clarity on Aadhaar, which is in its early stages of implementation.

Lack of Accountability m-Communication

Leakage of Foodgrains

Complaint Tracking Mechanism

Lack of Accountability

Leakage of Foodgrains

Biometric Based Authentication

Decision Makers Implementers Influencers Grand Total Decision Makers Implementers Influencers Grand Total

3.682 2.855 3.393 3.171 3.455 2.909 3.259 3.115

3.591 3.073 3.071 3.181 3.682 2.800 3.148 3.077

4.136 3.309 3.607 3.562 4.045 3.636 3.815 3.769

3.545 2.655 3.000 2.933 3.955 2.855 3.250 3.171

3.727 2.745 2.929 3.000 Database Linkage 4.091 2.727 3.250 3.152

4.136 3.691 4.143 3.905 4.227 3.836 3.964 3.952

Anytime Anywhere Authentication

Table 4: Solvability Matrix

m-Communication Biometric Based Authentication Anytime Anywhere Authentication Database Linkage Overall Impact of the Four Aadhaar Features

Complaint Tracking Mechanism Lack of Accountability Leakage of foodgrains

3.171 3.181 3.562

2.933 3.000 3.905

3.115 3.077 3.769

3.202 3.152 3.952

3.106 3.103 3.797

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Impact of AADHAAR on TPDS

Chapter 2 Key findings of the Research Survey continued

Impact of Aadhaar features on TPDS Challenges

Overall, the survey finds that Aadhaar will impact TPDS in a positive way; however, when we drill down to groups of stakeholders across the TPDS value chain we see there is a difference in how they perceive the different Aadhaar features impacting TPDS as below. The survey analysed the impact of Aadhaar on three critical problems in TPDS: Complaint Tracking Mechanism, Lack of Accountability and Leakage of foodgrains. The results show that Stakeholders have greater confidence in Aadhaar addressing the most severe challenge, i.e., Leakage of food grains. Further, it also shows that Decision Makers have confidence in Aadhaar in creating impact on all three TPDS problems. Implementers and Influencers opine that Database Linkage and m-Communication can solve the problem of Complaint Tracking but the impact is not as pronounced as stated by Decision Makers. This discrepancy in thought will create problems in implementation of this Aadhaar feature to solve the problem of Complaint Tracking. Database Linkage will require high level of collaboration between various stakeholders and hence an agreement is quintessential.
Figure 8: Overall Impact of Aadhaar on TPDS (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers All 3.86 3.09 3.4 3.33

Figure 9: Impact of Aadhaar on TPDS problems (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey Decision Makers Implementers Influencers All 0 Implimenters Influencers 1 2 3 All
2.82 2.84 3.66 3.77 4.14 3.62 3.88 3.80

The reason for not registering the complaints have been cited as (1) lack of awareness (2) lack of a platform for hearing the complaint and (3) fear of facing threat from the shopkeeper. Aadhaar, according to majority of stakeholders, will address these issues to a great extent. According to the survey, the Decision Makers group thinks that Aadhaar will have a high impact in enhancing Complaint Tracking Mechanism of TPDS. However, implementers and influencers are not very confident in this regard. Overall the survey response indicates Aadhaar can have a medium impact on Complaint Tracking. Among the four features, Database Linkage and m-Communication can address the problem of Complaint Tracking more than any other features. Anytime, Anywhere Authentication also can help address some of the issues associated with Complaint Tracking, but may not have a pronounced impact in this regard.
Figure 10 : Overall Impact of Aadhaar on Complaint Tracking (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers All 3.65 2.81 3.17 3.21

3.23 3.10 3.10 3.10

Other two problems, namely, Unscientific Storage and Diversion to Unintended Beneficiaries, have been kept out of the ambit of the survey as Aadhaar did not have the feature to resolve this issue as per our interviews with various stakeholders. 1. Complaint Tracking Mechanism TPDS is monitored by several agencies like Vigilance Committee and Anti-Hoarding Cells, which are established to ensure smooth functioning of the TPDS system. However, their impact is not significant. This fact is evident from the survey10 done on Madhya Pradesh TPDS. For example, the survey finds that overall percentage of cardholders who are satisfied with the performance of FPS is around 58.4%. Out of these 57% are BPL cardholders, 29% are AAY and 12% are APL cardholders. About 53% respondents have reported the irregularities at FPS level. These complaints are related to irregular timing, insufficient quantity and quality of foodgrain available to the cardholders, availability of essential commodities at the shop etc. However, most of these complaints remain unregistered, and if registered, they go unattended.

10. The Game of Targeted Public Distribution System in the Life of Tribal Communities of Madhya Pradesh. (Sampark, Village Raipuriya, Block- Petlavad, DistrictJhabua, MP; Sopan, Opposite SP Bunglow, Old ITI building, Barapatthar, Seoni, M P; VASPS, Post and Village-Simrol, Distt-Indore, MP; Debate Alkapuri, Bhopal; and Right to Food Campaign Madhya Pradesh Group, 2005).
10 A Research Study by Wipro Consulting Services

Figure 11: Impact of Aadhaar Features on Complaint Tracking (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 4 3 2

Figure 12: Overall Impact of Aadhaar on Lack of Accountability (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 5 4

3.17

3. Leakage of foodgrains Leakage of foodgrains has been ranked as the most severe problem by all the groups. All the groups have demonstrated high levels of confidence in Aadhaar in addressing this issue. Overall the survey concluded that Aadhaar can address one of the most critical problems associated with TPDS, i.e., Leakage of foodgrains, and so it can have a huge impact on the entire TPDS value chain. In April 2010, Medak and Krishna, two districts of Andhra Pradesh were chosen for the POC Study by the UIDAI. According to the then Chief Minister K Rosaiah the state has one of the most comprehensive databases in the country as the Food and Civil Supplies department had issued IRIS based biometric cards to more than 4 crore people between 2006-08. Says one of the survey respondents from Karnataka Our state has managed to identify 10 lakh bogus cards in one shot using the biometric data we currently have. Aadhaar would be doing the same check across a central database that firstly would take time and would be compared against people like you and me who dont avail benefits of the TPDS.
Figure 14 : Overall Impact of Aadhaar on Leakage of Food Grains (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey

3.12

2.93

3.17 3 2

3.83 3.11 2.76 3.23

1 0 Comprehensive Database Anytime, Anywhere Authentication System Biometric Based Authentication Process m-Communication

1 0 Decision Makers Implementers Influencers All

2. Lack of Accountability The most serious flaw plaguing the TPDS system at present is the lack of transparency and accountability in its functioning. The system lacks transparency and accountability at all levels making monitoring the system extremely difficult. The Decision Makers group strongly thinks that Aadhaar will have a high impact in solving the problem of Lack of Accountability thus establishing transparency in the system. Implementers, who are a crucial stakeholder in this problem as they do the checks, are less confident that Aadhaar can impact this problem. This implies that more robust mechanisms are required to establish transparency in the system. This problem has been rated severe by the Implementers group and demands greater level of problem understanding at Decision Maker level. Overall, the survey finds that all four features of Aadhaar can have a medium impact on solving the challenge of Lack of Accountability.

Figure 13 : Impact of Aadhaar Features on Lack of Accountability (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 4 3 2 1 0

3.15

3.08

3.0

3.18

5 4 3 Comprehensive Database Anytime, Anywhere Authentication System Biometric Based Authentication Process m-Communication 2 1 0 Decision Makers Implementers Influencers All 4.14 3.72

3.97

3.94

Impact of AADHAAR on TPDS

11

Chapter 2 Key findings of the Research Survey continued

From the graph it can be inferred that all four Aadhaar features will contribute to the successful resolution of leakage problem from TPDS. However, Database Linkage and Biometric Based Authentication are the most pronounced in solving the problem of Leakage of foodgrains. Respondents believe that Aadhaars database feature that allows any other database to be linked with it will play an important role in minimising leakage of foodgrains. They also expect that the biometric fingerprint verification at the FPS will ensure that only the intended beneficiaries will collect the foodgrains and hence reduce leakages.
Figure 15 : Impact of Aadhaar Features on Leakage of Food Grains (Rating on a scale of 1 to 5, where 1 = very low on impact & 5 = very high on impact)
Wipro primary survey 4 3.95 3 2 1 0 Comprehensive Database Anytime, Anywhere Authentication System Biometric Based Authentication Process m-Communication 3.77 3.90 3.56

A number of government initiatives are active for ensuring the safety of stored food items. The Department of Food & Public Distribution under the Ministry of Consumer Affairs, Food & Public Distribution has initiated several programmes to monitor the quality of the foodgrains being procured by the Food Corporation of India (FCI) and state agencies for the Central Pool for distribution under TPDS. Effective storage practices have also been implemented at the farm and commercial level to minimise post harvest grain losses. 5. Diversion to Unintended Beneficiaries Diversion to Unintended Beneficiaries occurs due to inclusion error. The reason behind this problem is the criterion that is used to classify a family as APL or BPL. There are also significant differences in the manner in which the Centre and States arrive at the number of BPL families. As this problem may not go away even after reduction of duplicates, State and Central governments should have clear guidelines in terms of identification of TPDS beneficiaries. This problem cannot be solved by Aadhaar as the reasons behind this problem cannot be addressed by Aadhaar features.
A significant part of the challenges in the TPDS system emanates from Bogus ration cards (belonging to fictitious families) and Shadow (genuine, but used by someone else) ration cards in the system. If the bogus cards can be substantially weeded out and a mechanism put in place to positively confirm and track the individual beneficiary offtake on a monthly basis, the problems relating to TPDS leakages, Transparency and Transportation would get resolved, as leakage would become more difficult to hide.UIDAI. Source: UID and Public Distribution System, Objectives of Public Distribution Systems, UIDAI

4. Unscientific Storage Guidelines to store foodgrains exist as a policy document but execution is not as per the policy .The problem with Unscientific Storage cannot be solved by Aadhaar as the reasons behind this problem cannot be addressed by Aadhaar features.

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Chapter-3 Way Forward TPDS Enhancer

1

CENTRE Planning Commission

Total Food requirement estimation

Number of TPDS beneficiaries (BPL/AAY) DIVERSIONS COMPLAINT TRACKING LEAKAGE OF FOODGRAINS STATE

Total food subsidy

FCI
Food subsidy allocation across states

Allotment

FCI Warehouse
Payment for food grains collected

State Food and Civil Supplies Department

DIVERSIONS LEAKAGE OF FOODGRAINS

Transport foodgrains

MIS report Allotment Intimation

MIS report

DISTRICT

Purchase Centre State Warehouse MANDI

Procurement

District Administration (DC/CEO)

MIS inspection report

UNSCIENTIFIC STORAGE LACK OF ACCOUNTABILITY LEAKAGE OF FOODGRAINS

VILLAGE

Farmers Fair Price Shope

Foodgrains distribution

Food Inspector

COMPLAINT TRACKING LACK OF ACCOUNTABILITY LEAKAGE OF FOODGRAINS

Beneficiaries

DIVERSIONS

Impact of AADHAAR on TPDS

13

Chapter 3 Way forward TPDS Enhancer continued

The model above maps out the entire TPDS value chain from allocation to procurement to distribution and lists the dominant stakeholders part of the survey respondent list. Based on primary and secondary research an array of pain points was identified. As an illustration 15 key pain points in the table below have been shown across the TPDS value chain. Each has been reflected as solvable/not solvable based on the confidence levels expressed by the dominant stakeholder. Please refer to the guidelines further to understand how to interpret the pain points table(opposite page). 1. At a particular node, the dominant stakeholder is identified from the secondary data. Here, dominant stake holder indicates the group of people whose views matter more than others at that particular node. For example, decision makers (such as UIDAI officials) are more dominant at the Centre, implementers (such as district collectors) are more important at the District or State level etc. 2. Next, each of the 15 pain points are bucketed into the five TPDS challenges under consideration as following: Complaint Tracking Mechanism Lack of Accountability Leakage of foodgrains Unscientific Storage Diversion to Unintended Beneficiaries 3. Now the Confidence Index (CI) of each dominant stakeholder for a particular TPDS challenge is taken into consideration. The Aadhaar feature(s) for which the CI is the highest is adopted as the most useful in addressing the particular pain point.

4. Once the Aadhaar feature is identified, its score from the Solvability Matrix indicates how efficient it is in solving the particular TPDS Challenge at that particular node. Values in the solvability matrix indicate the opinion of all respondents and not just the dominant stakeholder. These values determine efficiency because for implementation success, all the stakeholders should have similar level of understanding. 5. For a score of above 3.5, the solvability is high, from score between 2.5 to 3.5 the solvability is medium, and anything below 2.5, the solvability is low. For challenges which cannot be addressed by Aadhaar, the solvability is considered nil. Having plotted the consolidated information in the model, a clear picture can be obtained on how Aadhaar will solve a challenge at different point in the TPDS value chain thus making the recommendations actionable.

The higher confidence level of this group of Stakeholders indicates that Aadhaar can certainly address the problem of Leakage of foodgrains across different nodes. At the village level, Influencers were more confident about the m-Communication, Database Linkage and Biometric authentication of Aadhaar in solving most issues associated with leakage of food grains. Currently the functioning of FPS is not satisfactory at the village level. There is a lot of leakage occurring due to duplicate ration cards. The biometric authentication will ensure that only one ration card is allotted to the beneficiary and that the ration does not get diverted to other non-eligible members.

Complaint Tracking
Another key issue that could be addressed using Aadhaar features is Complaint Tracking. Decision Makers opinion in this regard is crucial because they can play the lead role in addressing the grievances occurring at various nodal points. Currently the FCI lacks visibility on allocation of food items to various states due to lack of transparent mechanism that estimates the quantity of food allotted and distributed at various nodes. The survey results clearly indicate that Database Linkage feature of Aadhaar can result in the creation of a robust tracking mechanism that can track the allocation within the states. At the Village level, Implementers showed confidence in Aadhaar in addressing the problem of Complaint Tracking. According to them, Anytime Anywhere Authentication features of Aadhaar can solve the Complaint Tracking issues the most. For example, the Anytime Anywhere Authentication enables the food and civil supplies agents to contact the Aadhaar CIDR to verify the authenticity of a beneficiary, thus avoiding the delay in distributing foodgrains to him/her.

Leakage of foodgrains
Leakage of foodgrains occurs due to several reasons: At the Centre node, the system fails to estimate the requirements across the states. At the state node, difficulty occurs because of loopholes in identifying the beneficiaries. As a result, the subsidised food goes to undeserving communities. At the District node, especially in the villages the role of panchayats becomes more dominant than district collectors, so several discrepancies arise because of the malpractices involved in assigning ration cards to BPL families. The survey assesses whether Aadhaar features can help fill this gap. The table above shows that solvability matrix is high for the challenge associated with Leakage of foodgrains. Both at the Centre and State level, Stakeholders expressed high confidence in Aadhaar in addressing this key challenge. The decision of Implementers is crucial in this regard as they are the dominant Stakeholders in the State and District nodes where Leakage has been the most severe problem.

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Table 5: TPDS Pain Point Table

Pain Point # Supply Chain Node

Gap in the TPDS System

Type of TPDS Challenge

Dominant Stakeholder

Dominant Aadhaar feature(s)*

Solvability Value^

Solvable?

Centre

TPDS beneficiaries sometime dont get ration cards such as migrant workers, disabled people, and street kids as their name is excluded from the beneficiary list. FCI receives complaints but lacks visibility on foodgrains allocation within states.

Diversion to Unintended Beneficiaries

Decision Maker

NA

NA

No

Centre

Complaint Tracking

Decision Maker Decision Maker

Database Linkage

3.202

Yes (Medium)

Centre

Estimation is a challenge as states Leakage of sometimes use their political pull and foodgrains stop food grains from being transported across borders and shortage happens. APL families are wrongly categorised as BPL and collect foodgrains. Diversion to Unintended Beneficiaries

Database Linkage

3.952

Yes (High)

State

Implementer

NA

NA

No

State

A person name is recorded in reversed Leakage of order leading to him/her being identified foodgrains as another individual in the village. No standard document exists for identification of BPL individuals. Multiple ration cards are given to one family as the panchayat has power in the local village more than the district collectors. Leakage of foodgrains Leakage of foodgrains

Implementer

Database Linkage

3.952

Yes (High)

6 7

State District

Implementer Implementer

Database Linkage Database Linkage

3.952 3.952

Yes (High) Yes (High)

District

Food inspector has done daily checks Lack of and no complaints exist at FPD, but fair Accountability price depos have grain all spread around the place signifying no proper inspection checks and siphoning of grains stored daily. Tracking issues as trucks go missing when grain is transported between depots especially in rural areas. FCI does not have enough warehouses and uses state warehouses; sometimes grain is stored in open fields. Estimation challenges exist causing a delay in foodgrains transportation A person has moved to a another city and not updated their location .The FPS shop owner sells that part in the open market and gives the Food inspector a cut. FPS shop lacks state support for providing timely solution to many problems, for example, lack of sufficient supply of grains, logistical issues, consumer complaints. Leakage of foodgrains Unscientific Storage Lack of Accountability Leakage of foodgrains

Implementer

m-Communication

3.181

Yes (Medium)

District

Implementer

Database Linkage

3.952

Yes (High)

10

District

Implementer

NA

NA

No

11 12

District District

Implementer Implementer

m-Communication Database Linkage

3.181 3.952

Yes (Medium) Yes (High)

13

Village

Complaint Tracking

Implementer

Anytime Anywhere Authentication

3.202

Yes (Medium)

14

Village

Food allocation targets are not met as Complaint farmer does not receive his payment on Tracking time and hence sells the grain in open market creating a shortage. Beneficiaries complain about FPS shop owner who hold the license does not run the shop, timings are not followed, and quality of commodities is bad. Leakage, Complaint, Lack of Accountability, Diversions

Implementer

Anytime Anywhere Authentication

3.202

Yes (Medium)

15

Village

Influencer

m-Communication Database Linkage, Biometric authentication

3.905

Yes (High)

*See Confidence Index | ^See Solvability Matrix on page 9. Impact of AADHAAR on TPDS 15

Chapter 3 Way forward TPDS Enhancer continued

They also showed confidence in other features like m-Communication and Biometric Authentication. The biometric feature of Aadhaar will ensure that the complainant gets his problems addressed at the concerned level and that he/she is allotted the right quantity of food through FPS. Mobile communications via SMS can help farmers and beneficiaries to contact the higher authority to resolve their problems.

Unscientific Storage
Unscientific Storage is another severe challenge in the TPDS. This occurs due to the failure in implementation of food storage policy at various levels, so Aadhaar will not be able to address this issue.

Decision Makers Findings

Decision Makers are the most influential group of Stakeholders in implementing Aadhaar features in TPDS, so their decision could prove more valuable than that of others. The survey findings reveal that Decision Makers are confident in some of the key features (Database Linkage, m-Communication and Anytime Anywhere Authenticity) of Aadhaar in addressing the TPDS challenges like Complaint Tracking and Leakage of foodgrains. However, they were of the opinion that Aadhaar cannot solve the issues associated with diversions which happen mainly due to the error in the system of assigning ration cards for BPL and APL categories of people.

However, the issue with Unscientific Storage could not be addressed with Aadhaar, according to the findings. Implementers at the Village level identified that a key problem associated with TPDS is Complaint Tracking and it can be solved through two features m-Communication and Anytime Anywhere Authenticity.

Influencers Findings
The survey data clearly indicates that Influencers are confident in Aadhaar features in addressing the issues associated with Leakage, Complaint Tracking, and Lack of Accountability. They consider the features like m-Communication, Database Linkage and Biometric Identification useful in addressing most of these issues. Aadhaars m-Communication feature is linked with Complaint Tracking and Lack of Accountability. Database Linkage can prevent Leakage to an extent. Biometric Identification ensures that Leakage of foodgrains doesnt occur due to duplication of ration cards.

Lack of Accountability
Implementers at the District level also feel that m-Communication feature of Aadhaar can impact the TPDS by helping in the Inspection procedure. At the District level, food inspector does daily checks but most of the issues remain unresolved and foodgrains get diverted to open markets. Another challenge associated with Lack of Accountability occurs during the transport of goods. The delays caused in collecting and transporting foodgrains results in huge loss. Further, the FCI depot shortages and pilferage at the stage of FCI loading and unloading is camouflaged and shown as transit losses. These issues can be addressed to a great extent through the m-Communication feature of Aadhaar. According to influencers, Aadhaar features like biometric authentication and database linkage can address the problem of Lack of Accountability at the village level. These systems can ensure that foodgrains reach the FPS at the right quantity and that they are distributed to the deserving card holders.

Implementers Findings
The high level of confidence among implementers in all four features of Aadhaar in addressing the three main challenges of TPDS shows the prospects of the implementation of Aadhaar in TPDS. Implementers at the State, District and Village level expressed solidarity in their views regarding the practicality of Aadhaar in solving the challenges in TPDS value chain. For Implementers at the Centre level, Leakage of foodgrains was the key challenge, and they agreed that Database Linkage can solve the issue successfully. For Implementers at the District level, the main challenges associated with TPDS were Leakage, Lack of Accountability and Unscientific Storage. Among these three, they found that m-Communication feature of Aadhaar can address the challenges associated with Lack of Accountability while Database Linkage can prevent Leakage of foodgrains at the District level.

Diversion to Unintended Beneficiaries

Diversion of foodgrains to unintended beneficiaries happens due to inclusion/ exclusion errors. This occurs due to the error in classification of BPL and APL families. As a result some of the deserving community such as migrant workers, disabled people and street kids are not able to enjoy the benefits of TPDS. However, no feature of Aadhaar is able to address this issue because it can be resolved only through policy changes at the State level.
16 A Research Study by Wipro Consulting Services

Chapter 4 Implementation Challenges

The ability of Aadhaar to resolve TPDS problems largely depends on an efficient execution which faces a number of challenges. Based on the depth interviews conducted with different stakeholders, five challenges that could hamper this execution were identified. The opinion of stakeholders was taken during the survey to understand the severity of every challenge. 1. Lack of Awareness: There may be a lack of awareness amongst beneficiaries about Aadhaar and its linkage with TPDS. The beneficiaries are BPL families in this case with limited access to information. They might not know what benefits does Aadhaar have and how this Aadhaar can help them avail the benefits provided by the government. They might just provide their biometric identification at FPS shop without availing the benefit thus enabling leakage at the FPS shop.
Figure 16 : Impact of Lack of Awareness on Implementation Challenge (Rating on a scale of 1 to 5, where 1 = low severity on impact & 5 = very high severity)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers 3.82 3.25 3.61

This lack of awareness, according to Decision Makers and Influencers, will have a severe impact on the implementation challenges. However, implementers are of the opinion that it will only have medium impact. This difference could lead to disconnect between strategy and execution. 2. Infrastructural Issues: Infrastructure such as biometrics devices and network connectivity may not be immediately available. Electricity is the basic requirement for biometric devices and network connectivity. As per 200911 data, 400 million people in India do not have access to electricity. In the light of such scenario, this challenge assumes importance.
Figure 17: Impact of Infrastructural Issues on Implementation Challenge (Rating on a scale of 1 to 5, where 1 = low severity on impact & 5 = very high severity)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers 3.23 3.31 3.46

3. Voluntary Nature of Aadhaar: Aadhaar may not cover everyone because it is not mandatory yet. This may exclude a number of beneficiaries from being a part of linked systems. To ensure exhaustive coverage in this case would require parallel execution of existing system and system linked with Aadhaar which might downplay the benefits provided by Aadhaar in resolving TPDS challenges.
The inclusion of all families in the beneficiary database is important for an effective elimination of Shadow and Bogus cards.

Figure 18: Impact of Voluntary Nature of Aadhaar on Implementation Challenge (Rating on a scale of 1 to 5, where 1 = low severity on impact & 5 = very high severity)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers 3.23 3.29 3.46

(Please note: A rating above 3.5 is considered highly severe; between 2.5 to 3.5 as medium and anything below 2.5 as low severity)

Despite concerns on infrastructural issues, all the groups opined that lack of Infrastructure such as biometrics devices and network connectivity will only have medium impact on the implementation of Aadhaar and its ability to solve TPDS problems.

Despite concerns about the voluntary nature of Aadhaar, all the groups opined that it will only have medium impact on the implementation of Aadhaar. A possible belief among all groups is that common citizens will adopt Aadhaar as they will immediately benefit from its usage.

11. http://cgpl.iisc.ernet.in/site/Portals/0/Publications/Presentations/EGM/9_villageelectrificationthroughbiomassgasifier-egm.pdf. accessed on April 20, 2011

Impact of AADHAAR on TPDS 17

Chapter 4 Implementation Challenges continued

4. Insufficient Collaboration: Aadhaar is an enabler for ensuring efficiency in the welfare schemes delivery mechanism. A high level of collaboration is required between UIDAI and various departments involved in the implementation of Aadhaar features in TPDS to achieve desired results. Regular communication and free flow of information is essential for successful implementation.
Figure 19: Impact of Insufficient Collaboration on Implementation Challenge (Rating on a scale of 1 to 5, where 1 = low severity on impact & 5 = very high severity)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers 3.41 3.20 3.54

5. Innovative bypassing methods: The incorporation of Aadhaar features in TPDS will make the overall system more robust and less prone to manipulation. It will become more difficult for agents to find loopholes in the new system, which might lead to invention of newer ways to break the system.
Figure 20: Impact of Innovative Bypassing Methods on Implementation Challenge (Rating on a scale of 1 to 5, where 1 = low severity on impact & 5 = very high severity)
Wipro primary survey 5 4 3 2 1 0 Decision Makers Implementers Influencers 2.77 2.93 2.36

Decision makers and Implementers think that Insufficient Collaboration will be a medium challenge. According to them No Silos and a continuous communication culture will be the key to success and this will establish effective communication channels across various departments. However, with 3.54 rating influencers opine that this will be a huge challenge.

No group thinks that Innovative Bypassing Methods is a huge challenge. These findings establish the confidence of stakeholders in the robustness of Aadhaar.

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Chapter 5 Conclusion
Overall Impact of Aadhaar on TPDS
The UIDAI, as of June 201112, has issued 9.5 million Aadhaar numbers and is planning to issue 600 million by 2014. This exponential reach of covering 1.2 billion Indians eventually shows good promise as 70% of the survey respondents are of the opinion that Aadhaar will have an overall impact on the TPDS. UIDAI says the Aadhaar will solve the problem of exclusion as biometric based authentication will ensure only the intended beneficiary can collect the right subsidy. The study identified 3 major challenges that Aadhaar can impact in a big manner, once implemented. They include Leakage of foodgrains, Complaint Tracking and Lack of Accountability. Leakage The survey showed highest impact of Aadhaar on solving the problem of leakage. The system has already proven to be a success in Andhra Pradesh where an iris database collection of beneficiaries ensures easy de-duplication. Aadhaar can ensure beneficiary tracking can be eased as CIDR combined with TPDS databases integration can happen easily using just one common Aadhaar entry in their TPDS database across states. Since Leakage is a major issue affecting the supply chain, the overall efficiency of the system will improve with this solution. Apart from the Biometric feature, Database Linkage and m-Communication features can address the challenge of Leakage of food grains. Complaint Tracking According to the survey respondents Aadhaars m-Communication combined with Database Linkage can solve the problem of Complaint Tracking. Speaking to many survey respondents it was found that in many states complaint tracking is non-existent and even if complaints are recorded they are not tracked effectively. Chhattisgarh is a model state in this regard, where the online systems are updated on a daily basis. A majority of the Decision Makers felt that Infrastructural challenges will be a big challenge going forward. Lack of Accountability Implementers were of the opinion that the problem of Lack of Accountability is something Aadhaar cannot solve, though Decision makers felt otherwise, according to the study. Speaking to the FCI (as per a source in the FCI), one reason for this could be that TPDS is a state-run program and, with Aadhaar, Decision makers seek a bigger role to play. The model and the associated table summarise the findings of the study and can serve as a strong starting point for incorporating Aadhaar features into TPDS. Presently, the study revealed that the impact of innovative bypassing methods on Aadhaar is minimal but, going forward, the UIDAI project claims it has taken care of the security aspects to ensure every Indian citizen has Aadhaar. To conclude, there is a need for more collaboration where the UIDAI will need to partner with the Influencers such as Civil Society Organisation (CSOs), municipal bodies and others, to ensure people who were earlier excluded come forward, learn about, and share the benefits of Aadhaar and that awareness spreads on a voluntary basis. Also infrastructural challenges need to be looked into, and model states such as Andhra Pradesh and Chhattisgarh are studied further. Finally decision makers and implementers see more benefits/spinoffs in working together and developing common standards to share data across states in a secure and reliable manner anytime, anywhere in India.

12. https://portal.uidai.gov.in/uidwebportal/dashboard.do?lc=haccessed on June 23, 2011

Impact of AADHAAR on TPDS 19

Definitions and Acronyms

Term

Pg.No

TPDS: Targeted Public Distribution System FCI: Food Corporation of India FCS: Food and Civil Supplies UIDAI: Unique Identification Authority of India Biometric-Based Authentication: Authentication based on biometric features like iris color, thumb impression, etc. FPS: Fair Price Shop m-Communication: Mobile Communication Diversion: The process of diversion of foodgrains to undeserving category of people AAY (Antyodaya Anna Yojna): A food security scheme launched by Government of India to identify one crore families out of the number of BPL families who would be provided foodgrains at the rate of 35 Kg per family per month APL: Above Poverty Line BPL: Below Poverty Line MSP: Minimum Support Price CIP: Central Issue Price GPS: Global Positioning System Aadhaar: A unique 12 digit number issued by the government as proof of identity and residence in India CIDR: Central ID Repository CI (Confidence Index): The measure of confidence of a stakeholder in particular feature of the Aadhaar POC : Proof of Concept Solvability Matrix: The measure of extent of solvability of a TPDS challenge by a specific Aadhaar feature CSO: Civil Society Organizations

IFC About the survey About the survey About the survey 2 2 2 3 4 4 4 4 4 8 7 7 9 11 14 19

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References:

1. Performance Evaluation of Targeted Public Distribution System, Programme Evaluation Organisation, Planning Commission, Government of India, New Delhi. (March 2005). <http://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf>. Accessed on June 14, 2011. 2. Note on Distribution of Foodgrains under Public Distribution System and Other Welfare Schemes.<http://fciweb.nic.in/upload/Publicdist/Note-on-PDS-&-OWS.pdf>. Accessed on June 14, 2011. 3. Accountability Initiative: Budget Briefs, TPDS, GOI 2010-11. <ftp://ftp.solutionexchange.net.in/public/decn/comm_update/res-55-03031115.pdf>. Accessed on June 14, 2011. 4. Website <www.fcamin.nic.in/dfpd_html/high-level-committee_summary.htm>. Accessed on June 14, 2011. 5. UID and PDS System, Objectives of Public Distribution System (PDS) (UIDAI). <http://uidai.gov.in/images/FrontPageUpdates/uid_and_pds. pdf>. Accessed on June 14, 2011. 6. The Game of Targeted Public Distribution System in the Life of Tribal Communities of Madhya Pradesh. (Sampark, Village Raipuriya, Block- Petlavad, District- Jhabua, MP; Sopan, Opposite SP Bunglow, Old ITI building, Barapatthar, Seoni, M P; VASPS, Post and VillageSimrol, Distt-Indore, MP; Debate Alkapuri, Bhopal; and Right to Food Campaign Madhya Pradesh Group, 2005). Website: <http://www.righttofoodindia.org/data/jain2005-tpdsmp.pdf> 7. Website: <http://en.wikipedia.org/wiki/Rural_electrification#India> 8. Website: <http://cgpl.iisc.ernet.in/site/Portals/0/Publications/Presentations/EGM/9_villageelectrificationthroughbiomassgasifier-egm.pdf> 9. Website: <http://www.planetbiometrics.com/article-details/i/459/>

Impact of AADHAAR on TPDS

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