Ration card (India)

Republic of India

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The Indian ration card is mainly used for drawing subsidized food and fuel (LPG and kerosene). The card is an important document for the poor people for subsistence, identity and to remain connected with the government database. It has become the proof of their existence. The identity, eligibility and entitlement of entire public distribution system (PDS) works on it.^[1]^[2]^[3]^[4]

Physical appearance

The ration card is either A-4 size folded paper card or chip-embedded smart card. It bears photograph of head of the family (HoF). It is issued one per family by the state government. It has three categories – extreme poverty level (Antyodaya), below poverty line (BPL) and above poverty line (APL). These poverty lines are defined by the Planning Commission of India every few years based on the data collection and analysis from various sources.^[5]

Obtaining ration card

It is voluntary to obtain ration card in India however it they are required in order to obtain subsidized rations. Eligibility for the Antyodaya, BPL and APL ration cards are based on the economic status of the family.

To get an APL card in the state of Delhi, the applicant must present; two copies of photograph of the head of the family (HoF), proof of ID, and proof of address, Rs.25/= fee along with old ration card, if any. Processing typically takes 1 month.^[6]

A BPL card entitles the holder family to more benefits for example, more rations and more kerosene at the subsidized rate. Acquiring a BPL card is the same process as an APL card.

Social security benefits

The following table shows financial size of the social security benefits / subsidies funded by the Union government of India. The table does not cover other programs operated by various State governments, see Public welfare in India. The social security benefits / subsidies offered by various state governments is estimated to be above Rs. 600 billion (US$10 billion). Thus total subsidies become Rs. 3,600 billion (US$60 billion).^[7]^[8]

Thus PDS related subsidy alone for food is Rs. 1,250 (US$ 20.83) plus kerosene (Rs.xxxx) plus LPG (Rs.xxxx).

Social security budget 2013–14
Region	Social security program	Billion Rupee	Billion US$
Pan India	Total subsidy for FY-2013-14 (approx)	3,600	60.00
Pan India	Food Security (PDS) (subsidy)	1,250	20.83
Pan India	Petroleum (subsidy)	970	16.17
Rural	Fertilizer (subsidy)	660	11.00
Rural	NREGA (non-subsidy)	330	5.50
Rural	Child development (ICDS) (non-subsidy)	177	2.95
Rural	Drinking water and sanitation (non-subsidy)	152	2.53
Rural	Indira Awaas Yojana (IAY) (non-subsidy)	151	2.52
Rural	Maternal and child malnutrition (non-subsidy)	3	0.05
States	Various programmes of state govts (subsidy/non-subsidy)	600	10.00

Problem areas

There are plenty of problems with PDS ration system. There are millions of ineligible, fake and bogus ration cards.^[9]

At the same time, there are millions of poor without given any ration card.^[10]^[11]

PDS shop owners in collusion with government officials divert the subsidized food supply and petroleum to black market. Inflated number of ration cards – bogus ration cards, fake people (imaginary, dead, real person but nor eligible) and duplicates from other areas. The ration quota of fake people and unused quota by real beneficiary is shown as fully used-up and material is diverted to black market, causing huge subsidy loss of public money.^[12]^[13]

Steps to resolve problems

Government is taking various steps to prevent corruption, leakage and diversion of PDS ration.^[14]

Aadhaar-enabled beneficiary

The bank account and ration card of eligible beneficiary is linked to Aadhaar number. A pre-existing or new bank account can be enabled as AeBA by seeding (linking) it with Aadhaar number. Seeding makes mapping information stored onto NPCI payment-gateway, that facilitates the subsidy payment. The seeding helps identify the genuine and eligible beneficiary, and prevents duplicate and nonexistent (fake, dead) persons.^[15] One can link bank account as self-service option thru ATM kiosk, Internet, bank website, telephone or by providing a copy of the Aadhaar letter to bank. Bank links the account with Aadhaar number after online verification thru RASF (Remote Aadhaar Sharing Framework link).^[16]

Prior to Aadhaar, the issues that have been plaguing and derailing all social security programs in India, were caused by corrupt officials and middlemen by manipulating the paper-records and stand-alone databases of the social security services.Due to lack of unique identifier like Aadhaar, stand-alone databases cannot detect and eliminate duplicate & fake beneficiaries. So the most common modus operandi adopted by these corrupt people have been to inflate the beneficiary list 10 times larger, by inserting duplicates and fake people (imaginary, dead, real person but not eligible). Then steal the 90% of the social security benefits money, thus depriving the deserving poor.^[17]^[18]^[19]

Aadhaar-enabled DBT

Aadhaar-enabled service delivery (AeSD) prevents corruption in retail area by directly crediting the benefit money into beneficiary's bank account (called Direct Benefit Transfer – DBT). It eliminates the middlemen, duplicates, fake and ineligible beneficiaries. Thus Aadhaar saves public money to the tune of multi-billion rupee annually from the corrupt, and also enables poor to access various social security benefits.^[13]^[20]^[21]^[22]^[23]

Various financial as well as non-financial services are being made Aadhaar-enabled, called Aadhaar-enabled Service Delivery (AeSD) in phased manner.^[24] By 1 January 2014, half of India (289 districts across various states) has been covered under DBT for subsidised LPG. By August 2013, 6.3 million duplicate connections of LPG were detected by Aadhaar-seeding and cancelled. Thus government saved $1 billion on reduced import by mid-2013.^[25]

Aadhaar-enabled eligibility check

Eligibility check of beneficiaries is done by comparing the service delivery database with other databases. Example – PDS kerosene eligibility check is done by comparing PDS database with LPG database; and subsidy on kerosene allocation is reduced if LPG subsidy is detected for that house-hold.^[26]

Aadhaar-enabled direct benefit transfer (DBT) is an Aadhaar-enabled financial service used for direct payment of social security benefits into the bank account of the Aadhaar holder.^[20]^[27]

Eligibility of beneficiary is applied based on rules and is cross-checked with other related databases which are also Aadhaar linked. This approach is designed to improve the audit trail, add efficiency; prevent corruption, middlemen and delayed payments; eliminate non-existent, duplicate and ineligible beneficiaries. It results in direct benefit access to the eligible people; and saves multi-billion rupee from corruption annually.^[18]^[28]

Tangible benefits become visible from 2014. A report of UBS Securities published in January 2014 shows that Aadhaar DBT can save 1.2% of GDP. GDP of India is $1,800 billion, thus the saving is $22 billion (Rs. 1.32 trillion), which ultimately translates to 33% savings on overall social security spending.

Finance Minister informed the Parliament during Vote on Account that as of 31 January 2014, under DBT Rs. 33 billion for 21 million LPG subsidy and Rs. 6.28 billion (628 crore) have been transferred for various social programs in 5.4 million transactions.^[29]^[30]

e-Ration Card Services

Through e-Ration service people can apply and obtain ration cards and also check the availability of food grains and their cost online. This will help in ending the corrupt practice of holding back rations and ensuring that the cards reach the needy. Anyone who has a Aadhaar card can apply for e-ration card. The website of Department of Food Supplies and Consumer Affairs will provide the details of people coming under food security scheme. This service is introduced in Delhi for the first time.^[31]

PDS ration in Andhra Pradesh

PDS ration in some districts of Andhra Pradesh can be an illustrative example of using modern technology to prevent retail corruption. Here ration card and corresponding bank account of the head of the family (HoF) have been seeded (linked) with Aadhaar Numbers of family members.^[14]^[32]^[33]

When a person goes to PDS shop to buy ration, the person is authenticated instantly thru Aadhaar KYC handheld device. The PDS computer system reads out the quantity eligibility and balance of each item in local language. After purchase, the balance quantities for that month are read out. The buyer pays the open market rate to the PDS shop. Computer printed receipt is generated with all purchased item, balance items, money paid and subsidy amount. The subsidy amount is credited to the bank account of the beneficiary under DBT program.^[34]^[35]

Since the PDS computer system is connected to the central server, therefore people can by ration items from any PDS shop. If some item is not available at one shop, then people can buy from another shop. It is like anytime anywhere bank ATM. Thus it provides tremendous flexibility, access and options to the general public that was never see before in PDS.^[36]

Once all PDS shop of the state are linked to Aadhaar-enabled central server then people can buy their ration anywhere in the state without changing ration card (like bank ATM card). It will prove to be a boon for the migrant workers in the state.

In the similar way, subsidized LPG is linked with Aadhaar Number and delivery is made at market rate. The subsidy amount is credited as DBT to the eligible beneficiary. Thus leakage and diversions of subsidized commodity do not give any benefit to the middlemen, hence this retail corruption comes to halt.

PDS ration in Karnataka

It is similar to PDS ration in Andhra Pradesh except that it is not yet Aadhaar enabled, hence there is no DBT. The PDS computer system reads out the quantity eligibility and balance of each item in local language.

DBT on LPG is same standard process all over India.

Low acceptance of ration card as ID and address proof

It has very low acceptability and reliability as ID and address proof. Therefore, it is not considered the primary proof by various agencies. Because there is no mechanism to authenticate it online instantly at the point of service unlike digital Aadhaar. And there are millions of defunct, invalid, fake ration cards. Therefore, passport office and banks consider it only as secondary proof, not the primary.