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
- 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.
- 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.
- 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.
- 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
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