UID-based system can make 15% one-time, 10% recurring savings in PDS: Sumit BoseIn
Q&A with Business Standard, Expenditure Secretary says pilot
projects in 50 districts will be implemented by year-end
Santosh Tiwari / New Delhi Jul 13, 2012, 16:02 IST
The Budget has estimated the oil subsidy bill in 2012-13 at Rs 43,580 crore, compared with Rs 68,481 crore in 2011-12, while the food subsidy for running the public distribution system (PDS) is pegged at Rs 75,000 crore this fiscal as against Rs 72,823 crore in 2011-12 and fertiliser subsidy bill has been kept at Rs 60,974 crore, compared with Rs 67,199 crore last year.The government is now banking critically on the Unique Identification Number (UID) based subsidy disbursal mechanism for better targeting and savings for attaining fiscal consolidation. Expenditure secretary Sumit Bose, who is leading the government effort for implementing UID-based pilot projects in 50 districts as proposed in the budget, outlined the progress in this regard in an interview with Santosh Tiwari and said that current experience indicated that in PDS alone, a one-time 15 per cent and incremental 10 per cent savings could result through this mode. Edited excerpts:
What is the progress on implementation of pilot projects?
These are 50 districts where we would take up reforms based on UID. We have taken this up with the chief secretaries of the concerned states. The idea is to give freedom to the states to pick up schemes that they want to be covered under UID-based reform so that the interests of the centre and the states could be aligned. Like in food, many states are coughing up subsidies over and above what the centre is providing and it is in their interest to get it covered under the scheme. It also creates a sense of empowerment among the beneficiaries. We have seen this happening in Ranga Reddy district of Andhra Pradesh. Madhya Pradesh has been doing PDS reform based on coupons but now they are about to launch UID-based system now. UID has a great power of de-duplication and ensuring that the duplicates are weeded out and based on what we have seen in Hoshangabad district of Madhya Pradesh and Ranga Reddy district pilots, there is a huge potential for savings – 15 per cent one-time and even on a recurring basis.
What happens otherwise, all these fair price shops tend to show
a zero balance at the end of the month. When they are linked to UID, at
the end of each day, even if they are not online, all the sales related
data are transmitted to the headquarters. So, their stocks are
monitored and at the end of the month, they are not able to show zero
stock balance. Then, there is another 10 per cent recurring savings so
this has a great potential. These are early days though as I am talking
on the basis of few pilots.
How have you selected the fifty districts for pilots?
They have been selected on the basis of penetration and twenty of these are the districts where Aadhaar coverage is already 80-85 per cent or more. In others, it will obviously pick up now. The system can also be used in other areas of government spending sucha s distribution of scholarships and social security pension. Maharashtra government for example has grant-in-aid schools, they did a little campaign earlier this year without UID base and they found substantially high duplicate enrolments because of which their payouts was rising. They have now mandated that from next fiscal the state will give grant-in-aid only if all children have a UID number and they expect the savings to the tune of Rs 2,000 crore on that account. So, based on what Maharashtra has done, we are looking at the application under Sarva Shiksha Abhiyan under Right to Education so that the possibility of duplication could be weeded out.
What is the time-frame for implementation of the 50 pilot projects?
This has to be done in close co-operation with states. It is all in the districts so we are pushing it through the committee with representatives from concerned ministries and the states and I expect that by the end of this year, it would be rolled out in these 50 districts.
By the end of calendar year?
Yes. It’s not that every program would roll-out in every district. That’s not the idea also. We are trying to see, where, which is the most important program for the state as well as for us. For central government, for example, PDS is one and then on Kerosene which has been tried out in Alwar, where the beneficiaries have been transferred cash into their account and then Kerosene moves to the fair price shop at the market rate, without any subsidy. Beneficiary has to come and purchase the Kerosene at the market rate, which is without the subsidy. So, in advance, they have been given the cash. In Hyderabad also, we are going to roll this out as a pilot. It’s very encouraging. In Alwar, the savings are immense.
So, any projections on savings?
For fair price shop, I mentioned earlier 15 per cent in one go and 10 per cent recurring. For other areas, savings would be different. For pension, education, it is going to be different and hard to estimate but Maharashtra for example has estimated Rs 2000 crore in education. So flavor of each district has to be different but the movement is clear. Its towards better service delivery also, it’s not just a question of savings only. You are going to the shop and you are getting your due and you are not told there is no stock.
Subsidy reduction is the main purpose though. Isn’t it?
And better delivery. This is equally important. Certainly, rationalization of subsidy is also important but in all these cases, you are ensuring better delivery. Take the case of Kerosene, it hardly reaches the actual beneficiary at present. There is so much scope for diversion the way Kerosene moves at the subsidized rate and the difference with the market rate. When it moves at market rate, chance for diversion isn’t there. Beneficiary goes and pays cash and gets it. It’s equally important for better, targeted delivery as well as certainly to the extent that all this will cut down subsidy. These 50 pilot projects are crucial because once you roll out, pilot projects in fifty districts, extending it to 100 and then 200 districts would be much easier.
Santosh Tiwari / New Delhi Jul 13, 2012, 16:02 IST
The Budget has estimated the oil subsidy bill in 2012-13 at Rs 43,580 crore, compared with Rs 68,481 crore in 2011-12, while the food subsidy for running the public distribution system (PDS) is pegged at Rs 75,000 crore this fiscal as against Rs 72,823 crore in 2011-12 and fertiliser subsidy bill has been kept at Rs 60,974 crore, compared with Rs 67,199 crore last year.The government is now banking critically on the Unique Identification Number (UID) based subsidy disbursal mechanism for better targeting and savings for attaining fiscal consolidation. Expenditure secretary Sumit Bose, who is leading the government effort for implementing UID-based pilot projects in 50 districts as proposed in the budget, outlined the progress in this regard in an interview with Santosh Tiwari and said that current experience indicated that in PDS alone, a one-time 15 per cent and incremental 10 per cent savings could result through this mode. Edited excerpts:
What is the progress on implementation of pilot projects?
These are 50 districts where we would take up reforms based on UID. We have taken this up with the chief secretaries of the concerned states. The idea is to give freedom to the states to pick up schemes that they want to be covered under UID-based reform so that the interests of the centre and the states could be aligned. Like in food, many states are coughing up subsidies over and above what the centre is providing and it is in their interest to get it covered under the scheme. It also creates a sense of empowerment among the beneficiaries. We have seen this happening in Ranga Reddy district of Andhra Pradesh. Madhya Pradesh has been doing PDS reform based on coupons but now they are about to launch UID-based system now. UID has a great power of de-duplication and ensuring that the duplicates are weeded out and based on what we have seen in Hoshangabad district of Madhya Pradesh and Ranga Reddy district pilots, there is a huge potential for savings – 15 per cent one-time and even on a recurring basis.
| How is it happening at the ground level? |
How have you selected the fifty districts for pilots?
They have been selected on the basis of penetration and twenty of these are the districts where Aadhaar coverage is already 80-85 per cent or more. In others, it will obviously pick up now. The system can also be used in other areas of government spending sucha s distribution of scholarships and social security pension. Maharashtra government for example has grant-in-aid schools, they did a little campaign earlier this year without UID base and they found substantially high duplicate enrolments because of which their payouts was rising. They have now mandated that from next fiscal the state will give grant-in-aid only if all children have a UID number and they expect the savings to the tune of Rs 2,000 crore on that account. So, based on what Maharashtra has done, we are looking at the application under Sarva Shiksha Abhiyan under Right to Education so that the possibility of duplication could be weeded out.
What is the time-frame for implementation of the 50 pilot projects?
This has to be done in close co-operation with states. It is all in the districts so we are pushing it through the committee with representatives from concerned ministries and the states and I expect that by the end of this year, it would be rolled out in these 50 districts.
By the end of calendar year?
Yes. It’s not that every program would roll-out in every district. That’s not the idea also. We are trying to see, where, which is the most important program for the state as well as for us. For central government, for example, PDS is one and then on Kerosene which has been tried out in Alwar, where the beneficiaries have been transferred cash into their account and then Kerosene moves to the fair price shop at the market rate, without any subsidy. Beneficiary has to come and purchase the Kerosene at the market rate, which is without the subsidy. So, in advance, they have been given the cash. In Hyderabad also, we are going to roll this out as a pilot. It’s very encouraging. In Alwar, the savings are immense.
So, any projections on savings?
For fair price shop, I mentioned earlier 15 per cent in one go and 10 per cent recurring. For other areas, savings would be different. For pension, education, it is going to be different and hard to estimate but Maharashtra for example has estimated Rs 2000 crore in education. So flavor of each district has to be different but the movement is clear. Its towards better service delivery also, it’s not just a question of savings only. You are going to the shop and you are getting your due and you are not told there is no stock.
Subsidy reduction is the main purpose though. Isn’t it?
And better delivery. This is equally important. Certainly, rationalization of subsidy is also important but in all these cases, you are ensuring better delivery. Take the case of Kerosene, it hardly reaches the actual beneficiary at present. There is so much scope for diversion the way Kerosene moves at the subsidized rate and the difference with the market rate. When it moves at market rate, chance for diversion isn’t there. Beneficiary goes and pays cash and gets it. It’s equally important for better, targeted delivery as well as certainly to the extent that all this will cut down subsidy. These 50 pilot projects are crucial because once you roll out, pilot projects in fifty districts, extending it to 100 and then 200 districts would be much easier.
