Lessons for One Nation One Ration Card

GOVERNANCE/ FEDERALISM/ ECONOMY

Topic: General Studies 2,3:

• Government policies and interventions for development in various sectors
• Issues and challenges pertaining to the federal structure 
• Indian Economy and issues relating to planning, mobilization, of resources

Lessons for One Nation One Ration Card

Context: The economic crisis precipitated by COVID-19 has focussed the country’s attention on inter-state migrants and the need portable welfare benefits.

Did You Know?

• Portable welfare benefits mean that a citizen should be able to access welfare benefits irrespective of where she is in the country. 
• In the case of food rations, the idea was first mooted by a Nandan Nilekani-led task force in 2011. 
• 45.36 crore people or 37% of the population is that of migrant labourers.

What is One Nation One Ration Card (ON-ORC)?

• The scheme seeks to provide portability of food security benefits all across the nation.
• Families who have food security cards can buy subsidized food from any ration shop in the country. 
• Ration cards should be linked with Aadhar Number to avail this service. 
• It was started in mid-2019 with pilot project in 4 states and was supposed to be rolled-out across country by June 2020
• However, the government has extended the deadline of March 2021 in the wake of COVID-19 pandemic

What are the challenges with ON-ORC?

• First, the fiscal implications: ON-ORC will affect how the financial burden is shared between states. 
• Second, the larger issues of federalism and inter-state coordination: Many states are not convinced about a “one size fits all” regime.
• This is because States have customised the PDS through higher subsidies, higher entitlement limits, and supply of additional items. 
• Third, the technology aspect: ON-ORC requires a complex technology backbone that brings over 750 million beneficiaries, 5,33,000 ration shops and 54 million tonnes of food-grain annually on a single platform.

Learning from GST to resolve above challenges of ON-ORC

1. About Fiscal Challenges – Compensation to States

• • Fiscal concerns had troubled GST from the start Ex: States like Tamil Nadu and Gujarat that are “net exporters” were concerned they would lose out on tax revenues to “net consumer” states like UP and Bihar
  •  Finally, the Centre had to step in and provide guaranteed compensation for lost tax revenues for the first five years
  • The Centre could provide a similar assurance to “net inbound migration” states such as Maharashtra and Karnataka that any additional costs on account of migrants will be covered by it for the five years.

2. Issues of Federalism- Creation of inter-state council

• • In the spirit of cooperative federalism, the central government created a GST council consisting of the finance ministers of the central and state governments to address the issues of inter-state coordination
  • The government could consider a similar national council for ON-ORC. 
  • To be effective, this council should meet regularly, have specific decision-making authority, and should operate through consensus building.

3. Technology Aspect – A special Vehicle for faster implementation

• • GST is supported by a sophisticated tech backbone, housed by the GST Network (GSTN), an entity jointly owned by the Centre and states.
  • The Nilekani-led task force recommended setting up of a PDS network (PDSN) 
  • PSDN would track movement of rations, register beneficiaries, issue ration cards, handle grievances and generate analytics.
  • Such a platform should incorporate principles such as inclusion, privacy, security, transparency, and accountability. 

4. Learning from the shortcomings and challenges of the GST rollout. 

• • Delay in GST refunds led to cash-flow issues. Similar delays in receiving food rations could be catastrophic
  • Compliance burden for MSMEs during GST implementation. Likewise, PDS dealers need to be brought on board with adequate training

Conclusion

If done well, ON-ORC could lay the foundation of a truly national and portable benefits system that includes other welfare programmes like LPG subsidy and social pensions. 

Connecting the dots:

• Cooperative Federalism and Competitive Federalism
• Direct Tax Code