Can you explain the cash transfer system under NFSA, 2013?
The law categorises beneficiaries as priority households and antyodaya anna yojana (AAY) families. The AAY families (the poorest of the poor) get 35 kg of ration. Otherwise, it is 5 kg per person. We are giving two options to the states. One, cash transfer; and second, the states can chose to install point of sale (PoS) devices and computerise the system end-to-end so that there is a near zero leakage diversion. When you have a digitised list on the portal – where anyone can see family details per ration shop and see real time Aadhaar-based transactions – then chances of leakage is negligible. For example, if there are 1,000 families in a village and all of them collect their ration after biometric authentication then it is as good as transferring cash. In fact, it is better than transferring cash because you are transferring food grains. Since there can be seasonal price variation, there could be variation in use of cash that you [government] are giving and the usage could also be for non-food purposes. It might happen that there is a medical emergency in a family. In such a situation it might be wise to use the money for medical purpose but certainly this may not be in the interest of a family’s food security. Hence, there is a possibility of cash not being used for food requirement. All these options are obviated when you give food grain.
The second way for states is to go for cash transfer. We have advised that UTs, which are smaller units, urban and generally better administered, can go for cash transfer depending on the demand from people. For others we have suggested that states should start with urban areas in small pockets. The area should have good production, surplus food grains. In such areas, no one will mind if you start cash transfer as there is no variation. There is availability of food grain in town, semi-urban areas. But it is up to the states and UTs where they want to start it.

The Shanta Kumar committee has recommended phasing out PDS and introducing cash transfer. Will the government move in that direction?
The implementation part does not depend on the centre. It depends on states and UTs. In a federal structure, food is a state subject. States handle distribution. We do the procurement, give that ration to states and make policies. It is up to the states to decide the system that they want. Most states are gearing towards point of sale (PoS) devices. They are improving their system, making it more transparent and accountable. The fact is that in most parts of the country there are seasonal variations. The production is there for one or two months. For the rest of months, there may be scarcity of food grain. Maybe, when you stop the [ration distribution] system then the fluctuations may be more because then beneficiaries are on the vagaries of the market. Most states are not comfortable with cash transfer. We have advised states that before they implement cash transfer they should look at the ground situation; what is the general consensus and whether beneficiaries want cash or kind. 

Are states doing public consultation?
Obviously, no state can go against the demand from the ground [people]. If people want in kind, you can’t impose cash.

There were protests in Puducherry. Your views?
Puducherry started on its own. It was a state project where they were giving cash. But they implemented it without full preparation. People didn’t know the amount of money that they were supposed to get. They were not able to remit it to all beneficiary accounts. We were aware and that’s the reason we asked them to make full preparation in terms of Aadhaar seeding of bank accounts and checking while we introduced cash transfer under NFSA in September. It has been taken up well. In addition, Puducherry is also giving 10 kg of rice on its own. [Now] there are no protests.

Beneficiaries complain that the amount remitted under DBT is far less than the market price and so they are not able to get the same quality of ration.
We are not giving less. We are giving 1.25 times of the MSP so that it equals to market price. Both systems [ration and cash transfer] cost us the same. There are two important things to note here. Initially, when people went to buy ration they also spent a few rupees from their pocket as their contribution at the FPS. If you are an AAY family then you spend '2 and '3 [for rice and wheat respectively] or if you are a BPL family then you contribute Rs. 4.15 and Rs. 5.65. Now, when the beneficiary goes to ration shop he wants to buy the same ration with only that amount [transferred into the bank account]. But in reality you have to add your own contribution. But if states and UTs find that it is not commensurate with what facilities they were getting earlier they can always revert to the older system.

What about people not having Aadhaar? In Chandigarh, 13,000 NFSA beneficiaries are not covered under cash transfer because their bank accounts are not seeded with Aadhaar?
If a beneficiary has been identified under the NFSA, the state or UT has to provide ration or cash. Having Aadhaar is not a criterion for getting the benefits under the NFSA. Aadhaar is just for de-duplication. It is not a mandatory requirement. One person can’t have multiple ration cards. Aadhaar is used to avoid duplicates.

But Chandigarh administration has made it mandatory?
I don’t think that is the technical and legal position. I will have to check with the UT administration. We have not put any such condition. We have made it very clear to states and UTs not to make Aadhaar mandatory. But at the same time they have to seed it. They have to request them, take it from them. Then they have to seed it in their list [the beneficiary list] and in their [bank] accounts also.

What will happen to minimum support price when the government procurement of food grains falls due to introduction of cash transfer?
That is still being worked out. The government will have to procure from farmers. We can’t put a cap or limit the procurement. The government will have to provide MSP. It will have to explore new way of disposing this ration, which could also be done in open market sale.

Also read - DBT Chandigarh: An idea whose time hasn’t come

The interview appears in March 16-31, 2016 issue