Three ingredients – jan dhan bank account, Aadhaar and mobile phone – can help the government prepare an entitlement portability menu
Shubhendu Parth | April 20, 2015 | New Delhi
The focus on one number ID will soon become a passé. At a time when many developed countries like the US are harping on one ID that aims to shape their social landscape, India has coined a new jargon. In fact, the Narendra Modi government, which went ahead with the Aadhaar or the unique ID project, is now looking at empowering individuals through three unique numbers, and improving citizen service delivery.
Take heart, the numbers that the government, particularly the department of electronics and information technology (DeitY), is talking about are the Aadhaar number, the mobile number and the jan dhan yojana (bank account) number – or the JAM Number Trinity as it has been referred to in the economic survey 2015 and the budget document in much detail.
These three numbers will also serve as the pillars of the digital infrastructure that India wants to build for ensuring electronic delivery of citizen services and the entitlement portability – anytime, anywhere access to government services and benefits.
While Aadhaar is fast emerging as the most reliable identity document, mobile phone with over 600 million unique users has the potential of becoming the preferred means of authentication in the digital space. Since India’s mobile phone penetration is higher than computers, the government is also looking at using the handset as the key end-user device through which it can deliver citizen services.
The issuance of bank account number, on the other hand, is an enabling factor that will drive people’s participation in the financial space. Combine the digital identity with the financial identity, and one has a combination that allows the person to initiate any financial transaction from the comfort of home or while on the move. In that sense, the jan dhan yojana should be seen as part of the Digital India project.
The good news is that DeitY is already working towards creating an architecture that will help the government interlink these three numbers.What this means is that, using the mobile phone a person will be able to connect to one’s Aadhaar database which will then help authenticate the digital identity for any government service delivery application.
Since the government expects to exceed 1 billion Aadhaar enrolments by December 2015, seeding bank account with the Aadhaar number is the key to implementing income transfers. With the introduction of jan dhan yojana, the number of bank accounts is expected to increase further offering greater opportunities to target and transfer financial resources to the poor. This can cover not just the subsidies but pension, scholarship, and special financial assistance for physically challenged, lactating mothers and the girl child.
Trinity for portability
Portability of entitlement is an extremely important component of citizen service delivery, the lack of which makes it difficult for individuals to access and benefit from the government schemes since the entitlements are linked to a particular service delivery point – be it the ration shop or a bank for access to pension or scholarship.
Senior citizens with entitlement to pensions, for example, till recently had to submit a proof in person every year that they are alive. The Aadhaar-based jeevan pramaan facility launched in November 2014 is an enabling mechanism that uses the power of the trinity to enable pension portability.
Using the new solution pensioners can record their Aadhaar number and biometric details with the help of a mobile device or a computer, by plugging in a biometric reading device. The solution captures key details of the pensioner, including date, time and biometric information, which is then matched with the central database on real-time basis to issue a Digital Life Certificate to the pension disbursing agency, thereby making entitlement and delivery of pension as a service to senior citizens completely an anywhere, anytime affair.
Let’s take another example that impacts a larger section of the population – the entitlement under the public distribution system (PDS), which is linked to a particular shop in the vicinity.
Now, what about a person who relocates from one city to another or to a city from a village for any reason like job, or for better education? The person might be a rickshaw puller or anybody doing some odd job and is largely dependent on the supply of subsidised food grain for sustenance.
While the food security bill provides that a person shall not be denied of their entitlement, a lot of migrating and floating population is not able to avail the benefits at their (present) place of residence. However, with the government now focusing on porting citizen data and digitisation of records on the cloud, technologically the country can also push through portability of entitlement pretty soon.
Like in the case of the pensioners, a digitised ration card linked with the individual’s Aadhaar can enable the person to authenticate entitlement and draw subsidised food grains from any of the designated fair price shops (FPS) across the country.
Under the present structure, one may argue that since stock allocation to FPS – food grains or other essentials – are based on the number of ration card holders allocated to them and allowing the beneficiary to buy from any FPS would create a supply chain problem. However, this could be handled by creating a state-wide inventory management system that could be integrated with FPS point of sale system. The system then is linked to the food corporation of India’s (FCI) procurement and supply chain software to give a clear picture of who availed what and from which shop.
A system like this can also provide details of the inventory levels at each shop and trigger orders to replenish the stock at each level. Link it with the central plan scheme monitoring system, and the ministry of food supplies can get a dashboard view of the supply chain. This is particularly important since the central government is responsible for procurement, storage, transportation and bulk allocation of food grains under the PDS.
The portability of ration entitlement has other benefits too. It will create a competition among the fair price shops that will be compelled to improve their quality of service to retain clients. Compare this with the present scenario where such shop owners rule the roost, deciding whom to give what despite the entitlement. Not to mention the fact that better quality food grains provided by the government is usually sold in the open market in connivance with the supervisors replacing the supply to the needy.
Plugging the leakages
The quantum of the problem can be guaged by the 2010 report on PDS in Karnataka submitted by its former lokayukta Santosh Hegde. It indicated that the state government spent an average of '54.4 crore every month as subsidy on families that no longer existed. The report also found that while the state lost food grains worth '56.6 crore per month due to distribution leakages, it spent '24.5 crore on subsidies to those who weren’t poor at all.
If Karnataka’s annual loss due to the inefficient PDS, as estimated by the report, is '1,737 crore, imagine the saving that the government can make at the national level.
Linking the ration card with Aadhaar, which in turn gets seeded with bank account number and mobile number, would mean a paradigm shift. One, it will ensure that no bogus cards get issued. Also, since the entitlements will be linked to Aadhaar database, a mechanism could be created to verify applicants and their entitlement based on the inference and records pulled from other records like income tax, and certificates like caste, birth and education. The recently launched ePDS initiative of the Delhi government is the right step in this direction.
Two, it could also help the government cut down on the subsidy regime through direct benefit transfer (DBT) to those in the BPL list, something that the national food security bill, 2013 does touch upon as part of the PDS reforms. Three, the beneficiaries can get real-time update on their entitlements, availability of stock and the nearest PDS shop on their mobile handsets.
With the DBT for ration in place, the buyer will have a choice to buy food grain from any FSP or from any other grocer. This will reduce the scope of black marketing and also serve as a social leveler; since there will be no visible indicators of the difference in the quality of food grain purchased.
Watch this space for the final announcement of service portability.
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