Targeted PDS using Aadhaar

Developing countries across the world have one common challenge — targeted disbursements of anti-poverty programs. Often these programs have setbacks because of high rates of corruption and exclusion errors. More often than not many of these systemic errors could be solved using a robust authentication and bookkeeping of the stakeholders. Countries are investing in building state capacity with higher returns using digital solutions, the underlying idea being identity authentication as a key solution to the problem.

One such targeted program is India’s PDS (Public Distribution System), the nation’s largest welfare scheme which is managed by the Government of India under the Ministry of Consumer Affairs, Food, and Public Distribution and managed cooperatively with state governments in India. To minimize the leakages in PDS the Department of Food and Public Distribution announced the seeding of Aadhaar for those who seek to receive any subsidy, benefit or service under the welfare schemes of the Government with an added requirement that such individual would be required to undergo biometric authentication (fingerprint/IRlS) at the time of receiving such benefit/subsidy, etc in a circular dated 8th February 2017.

The aim of this study is to look at the shift in the user experience of different stakeholders throughout the pipeline. For which it is important to understand the structure:

  • The Central and State Governments share responsibilities in order to provide food grains to the identified beneficiaries.
  • The centre procures food grains from farmers at a minimum support price (MSP) and sells it to states at central issue prices (CIP). It is responsible for transporting the grains to godowns in each state.
  • States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.

This stark difference in the existing dual prices — subsidised and general price has created strong incentives for corruption and diversion of commodities to the markets with nation-wide estimated rates of leakage at 42% as of 2011–2012.

Margins for FPS Dealers:

Central Government has approved FPS dealers’ margin (@Rs. 87/qtl. in normal States &

Rs.160/qtl. in 13 special category States) under NFSA which also includes reimbursement of

Rs. 17/qt. to the FPS owner for their expenditure towards purchase and operations of the

PoS device/Mobile terminal at FPS. Any further benefits or design changes in this is subject to the State Governments.

Implementation of Aadhaar seeded TPDS and the further reforms made are left in the hands of State governments and varies across the nation, which we will cover in a brief towards the end. Our major focus is the implementation of ABBA (Aadhaar based biometric authentication) itself subject to TPDS.

The FPS owners are licensed and commissioned by the state government. Coming to ABBA, each FPS dealer is given an ePOS device configured to authenticate beneficiaries in one of three modes: online, offline, and partially online. The government accesses transaction data by synchronizing (“syncing”) regularly. Online devices synced their records with a central government server automatically in real-time. Dealers using partially online and offline devices were instructed to sync data within 48 hours of a transaction, but don’t face any obvious repercussions if they don’t. Instead, their binding constraint is monthly: devices would not authorize new transactions in a given month until the previous month’s transactions have been synced.

What this means is that Aadhaar is integrated as an information system at each level of disbursements for bookkeeping wherever the stock changes hands. All the stakeholders are now under better vigilance against inclusion (corruption and diversion of food grains) but this solves only half of the problem, what is more important is lowering down the exclusion rates. So, let’s look at what happens in the last mile:

ePoS at PDS:

In Online Mode when the beneficiary approaches FPS for lifting food grain, has Aadhaar and seeded in PDS Server:

  • Enter Aadhar number in PoS device
  • Capture beneficiary’s biometric
  • Sends biometric and beneficiary name to PDS Server
  • PDS Server further sends details to UIDAI server for authentication
  • If Authentication is successful, then

If the “Yes” message is passed to PDS Server and PoS device and the beneficiary will be allowed to lift commodity as per the eligibility. The PDS Server stores details of the previous transaction and any remaining subsidies are prompted on the POS machine for beneficiaries to track.

As for the pipeline of PDS when it comes to linking with Aadhaar serves as a booking keeping mechanism but a lot of user experience issues rise up because of not just the huge number of authentication error rates as we have seen in other works but also the record-keeping doesn’t ensure beneficiary safety in terms of “quantity fraud”. For example: If a beneficiary gets 2kgs in place of 5kgs there is no way the government can safeguard them and that has to do mainly with the type of goods being disbursed. In schemes like NREGS, SSP where the benefits are in monetary form, the government can keep track of the resources till the last mile.

Reductions in leakage often unintendedly came at the cost of increased exclusion errors and inconvenience to beneficiaries. This particular problem at hand is not one to be solved by technology but requires political/policy reform. We can see this contrasting nature of policies across the states. The states with higher state capacity like WB, Tamil Nadu and Andhra Pradesh have shown tremendous improvements in exclusion rates given the same technological skeleton whereas states like Jharkhand not only haven’t shown significant improvements in inclusion errors but also have been worse off in terms of exclusion errors and opportunity costs of beneficiaries.

I am a student researcher at IIIT Bangalore under Prof. Bidisha Choudhuri looking at Aadhaar ecosystem.

Just another human with a set of perspectives and thoughts of my own.