The government on Wednesday accepted in principle recommendations of a task force headed by UIDAI chairman Nandan Nilekani to computerise the public distribution system (PDS) across the country to bring transparency to plug corruption and massive pilferages in the subsidised sale of commodities, like wheat, rice, sugar and kerosene, worth over Rs 30,000 crores a year.

The task force suggested a two-phase strategy to use IT to improve the PDS network in the first phase and then go for direct subsidy to the poor, Nilekani told reporters after submitting the report to Finance Minister Pranab Mukherjee. It proposes a dedicated institutional mechanism to implement an end-to-end computerisation of PDS across the country by April.

Nilekani reportedly told Mukherjee that he was shocked to find the haphazard handling of supplies under the PDS that has given a bad name to the government for no effective check on the private dealers through which the subsidised foodgrains are sold. The new flagship programme of food security to all would have failed if launched with the current PDS network, he observed.

An official announcement said Mukherjee accorded an immediate "in-principle" approval to the recommendations and directed the Ministry of Consumer Affairs and Food and Public Distribution to examine them for implementation in a time bound manner.

He also directed the ministry to seek guidance of the empowered Group of Ministers (eGoM) he heads to seek guidance on any unresolved issues. The report is available on the Finance Ministry's website under <http://finmin.nic.in/reports/IT_Strategy_PDS.pdf>.

The first phase will revamp the supply chain of 4.62 lakh privately-run fair price shops servicing 18 crore families while the second will focus on direct transfer of subsidy, using the information technology (IT) to completely eliminate any scope of irregularities, Nilekani said. The first phase will bring transparency while the second phase will create a core subsidy management system.

This is the second report submitted by the task force which was set up in February and submitted its interim report in June on direct transfer of subsidies on kerosene, LPG and fertilisers as announced by the Finance Minister in his budget speech. It was further tasked in July with an extended mandate to recommend an IT strategy for PDS and direct transfer of subsidy for Food and Kerosene.

Its main recommendation is to create a national information utility called the Public Distribution System Network (PDSN) to implement and operate the IT infrastructure for PDS, given the mammoth scale and complexity of operations.

The report talks of effective computerisation as a must to achieve the scale, speed, cost-effectiveness, and quality in operations, while respecting the federal structure of the country, the need for empowerment for the ultimate beneficiary and the likelihood of asynchronous rollout of the suggested mechanism.

Participation of the state governments in the PDSN would be voluntary and would not hamper the current efforts in computerisation of the PDS in the states, the report said.