May 2017

Digitisation of fair price shops in Uttar Pradesh improves efficiency

Implementation of an Aadhar card-enabled public distribution system has helped to tackle corruption and ensure transparency in the ration shops of Lucknow, Uttar Pradesh

The Public Distribution System (PDS) is a vital cog in assuring food security for the less fortunate in India. The final points of interface of the system are Fair Price Shops (FPS), commonly called ration shops, which are responsible for the last mile delivery of food grains and commodities to the end users. These shops have assumed even greater importance since availability of food grains has been made a legal entitlement under the National Food Security Act (2013).

In Lucknow a network of 682 shops, managed by the Food and Civil Supplies Department of Uttar Pradesh, deliver ration to beneficiaries. Over the years the delivery mechanism of grains has evolved and improved, but some problems still hinder the efficient functioning of fair price shops. A typical transaction would involve the FPS dealer entering details of a beneficiary in a register, and then proceeding to hand over the entitled quantities to the beneficiary for cash payment.

The lengthy process results in long queues at FPS shops. There is no mechanism to check if the ration is going to the right person — the bearer of the ration card would be given ration without checking the authenticity of the card and person. Manual recording of transactions meant that the administration had negligible visibility into the process and knowledge about which cardholder has collected ration and who hasn’t. This resulted in leakages at FPSs throughout the country.

An Aadhar card-enabled Public Distribution System (AePDS) aims to tackle these issues. It involves installing electronic point-of-sale (ePOS) devices equipped with biometric authentication capability at ration shops. Transactions are conducted digitally through the device, and identities of beneficiaries collecting ration are authenticated via Aadhar or a One-time Password (OTP).

Tata Trusts took the responsibility of implementing AePDS in Lucknow as a pilot. The implementation involved a multi-stage approach which included:

  1. Identification of hardware, application solution and authentication agencies.
  2. Setting up the back-end database in coordination with the UP Food and Civil Supplies Department   (UPF&CS) and National Informatics Centre, Lucknow (NIC).
  3. Rollout of devices and training of FPS dealers.
  4. Providing monitoring tools and real-time transaction data to UPF&CS and NIC.

Distribution through the ePOS devices went live from August 5, 2016. Over the course of August, ration to 10 lakh beneficiaries through more than 2 lakh cards was distributed through ePOS devices. The total value of ration distributed amounted to Rs1.3 crore. There has been a constant increase in the number of ration cards passing through the devices; by December 2016, transactions have increased to 249,990. Not only have the number of transactions increased, but the percentage of authenticated transactions have increased from 58% (49% Aadhar-based and 9% OTP) to 76% (59% Aadhar-based and 17% OTP).

The ePOS devices have made it possible to monitor each shop at beneficiary level. Further, as there is a digital record of each transaction, charges of corruption are investigated and followed up. The implementation has started to show savings of 10-20 percent.

Earlier, if a beneficiary did not come to the FPS shop, the ration would be siphoned to the open market for gains, but with the Aadhar-based monitoring this has become difficult for the shopkeeper. Even if the shopkeeper uses the option to skip authentication, the beneficiary gets an SMS informing her/him of the transaction, and many a time the beneficiary actually comes to the shop after seeing the messages.

A digital signature from the ARO office is required for authentication. However, up till now, unsigned cards were also accepted as there was no process to know if the card was digitally signed or not, but with the new system in place only digitally signed cards can be accessed through the POS device.

“With the earlier system of registers, the process of conducting transactions was too lengthy. Now I can conduct double the number of transactions in a day,” says Ateek Ahmad, an FPS dealer in Gomti Nagar, Lucknow. Beneficiaries have expressed appreciation of the fact that they get a receipt and a confirmation SMS showing the quantity they’re getting and the price they are required to pay.

The success achieved in implementing AePDS has encouraged UPF&CS to initiate digitisation of ration distribution across all of Uttar Pradesh.


Also read the press release: Government of Uttar Pradesh and Tata Trusts - towards health, development and progress