The Government of India (GoI) implemented the National Food Security Act (NFSA) in 2013 to provide food and nutritional security to vulnerable households. Simultaneously, to make the system more efficient and to plug leakages, the GoI suggested that States/Union Territories (UT) implement a Direct Benefit Transfer (DBT) scheme. Two suggested methods were: (1) installation of point-of-sale (PoS) devices at fair price shops (FPSs) for biometric authentication of beneficiaries, and physical off-take of food grains, or (2) direct cash transfer to the beneficiary’s bank account. The UTs of Chandigarh, Puducherry, and Dadra & Nagar Haveli (DNH) opted for DBT through cash transfer. Chandigarh and Puducherry launched DBT in the Public Distribution System (PDS) in September 2015.
MicroSave conducted baseline assessments in August 2015, just before disbursement of the first tranche of cash transfers in lieu of subsidised food grains. Baseline Assessment for DBT in TPDS: Will This Small Step Become a Giant Leap? pertains to the findings of the baseline assessment. Despite many challenges, the situation was conducive for a pilot for DBT in lieu of food grains in Chandigarh and Puducherry. There were fundamental challenges to DBT in PDS. One of the most fundamental is the amount of money paid to beneficiaries in lieu of food grains. At present, PDS entitles low-income families to get wheat at Rs 2 per kg, rice at Rs 3 per kg and coarse grains such as bajra/ragi at Rs 1 per kg. As against this, the government has fixed the DBT amount at 1.25 times the minimum support price (MSP), which is, in essence, the price at which the government procures food grains from farmers. The recipients are not happy with the amount of money received as DBT under PDS.
To assess the mid-line performance of these pilots, MicroSave conducted a mid-line assessment in November 2015. DBT in TPDS – A Mid-line Assessment: The Road Ahead Seems To Be Long has highlighted the need for additional work on awareness – a recurring theme (see “Communication: The Achilles Heel of Direct Benefit Transfer – 1 and 2”) ― and grievance redressal. There are also challenges in terms of adequacy of subsidy amount and whether there is subsidy diversion by male beneficiaries in the household. In Chandigarh, FPS shops closed down after the pilot launch. However, not all beneficiaries have managed to enrol for DBT, due to requirements related to the opening of bank accounts, and linking these to their Aadhaar numbers. Puducherry has seen similar challenges. The administration will have to look into this aspect, as exclusion can be detrimental to the overall success of the scheme.
The final assessment was conducted in January 2016. Endline Assessment of DBT Pilots in TPDS: Some Success and Few Issues states clearly that the progress was chequered and a number of areas need to be streamlined before the pilot could be scaled up and implemented elsewhere. Our final assessment once again shows mixed results across the key indicators: (1) beneficiary awareness; (2) access to banking; (3) use of subsidy amount; (4) access to markets; (5) subsidy sufficiency; (6) grievance redressal.
We concluded that as and when DBT in TPDS is to be scaled up, the following should be looked into: (1) DBT amount to be market-linked; (2) access to markets and banking be ensured; (3) intimation to beneficiaries of subsidy transfer; (4) DBT to female account holders, to avoid diversion of the money for other purposes.
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