How the world’s largest public distribution system is robbed

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When most young Indians imagine the ration shops of old, what they visualize is a long queue leading to a tiny shop manned by an unscrupulous thief who pilfered the goods of the needy in the guise of a PDS (Public Distribution System) dealer.

When one is asked to imagine the same shop after the arrival of the biometric ID system and the Unique Identification Cards, the image is that of the same shop, with shorter queues and a disappointed dealer who can no longer pilfer from those in need.

Key to both of these visions, however, is that they are both imaginary.

Pilfering of rations continues to run rampant across India, but now it is done by dealers who have evolved with the times. Below are listed some of the schemes these unscrupulous people employ.

Overload and under-deliver. This is the most common technique that runs rampant in Rajasthan state. Dealers withhold someone’s rations for a month and let them carry over to the next month, when the receiver should be entitled to double the quantity. When the next month comes, the receiver’s finger is placed on the point-of-sale (POS) machine and then he or she is only given one month’s worth of rations, with the dealer complaining of a stock shortage. This is then repeated for years on end – in one case, 430 kilograms of wheat was pilfered from just one family in one village.

There are approximately 535,000 PDS shops across the country, servicing tens of millions of households.

Handwriting games or false entry. This is a technique used against the uneducated and the impoverished (often synonyms in Indian villages). The dealer starts the process and, upon reaching the final stage, records the quantity given, for full and successful deliveries for multiple months, while giving the receiver a different (obviously lower) amount in person.

Another variant of this that is rampant in Rajasthan state is simply to sign the ration book without actually stating the quantity transferred and then giving people less than the amount they are entitled to. This is done so that in the unlikely event of a raid by the government, there is no evidence to hold against the dealer for under-delivering rations.

With a low literacy rate, many villagers remain clueless as to what has happened for years on end, and the scam continues to extract from them the meager entitlements they are afforded by the government.

Playing with lack of knowledge. Yet another classic scheme is very straightforward, as it involves misinformation at the grassroots level. APL (Above Poverty Line) cardholders are told that they aren’t entitled to certain items (for example kerosene and sugar). Their fingers are placed on the POS sensor, and then they are given their wheat, while their sugar and kerosene (that they are actually entitled to) is pilfered for sale on the thriving black market.

The same scam is then replicated on BPL (Below Poverty Line) cardholders, and the exploitation of the already exploited continues, with the state and national governments washing their hands of the responsibility to ensure end users understand these programs.

Exclude within the family. Yet another technique that has become popular involves utilizing database mismatches. If someone has linked his or her family members to the online list of those entitled after the actual printing of the ration card, vendors only make transfers as per the names printed on the back of the card and not according to the updated amount on the online system. The difference in these amounts quite inevitably finds its way into the vendors’ pockets, and the government is blamed for the shortfall.

Three tries and theft. This method was the most convenient and has fortunately been halted since February. However, the glaring inadequacy in the policy’s formulation makes it worthy of this list.

Here a vendor could place someone’s finger on the POS sensor three times and if their transaction failed and their ID number wasn’t linked to their Bhamashah (Rajasthan’s own Unique Identification Card) for a one-time-password (OTP) bypass, then, quite inexplicably, people were automatically entitled to get their ration anyway without any process of verification.

Quite understandably, this turned into a virtual goldmine for vendors as most villagers didn’t know of such a scheme. Hence when their biometric identification failed three times and they  hadn’t linked their ID number, villagers left the store disappointed, not knowing that the minute after they left, their rations were being pilfered, with the government accounting for all of these as successful deliveries.

While this phenomenon is known to be commonplace across the state, the Mazdoor Kisan Shakti Sangathan (MKSS) social movement has focused on the Bhilwara district in Rajasthan to collect data on the nature and extent of the fraud.

Withholding receipts. Another classic method for bilking the largely illiterate populace has been a variant of the “under-delivery model” that involves giving them less than the entitlement and then providing them with a receipt for the full amount. The difference is swallowed and the technique works because, in Rajasthan, a state where only 66% can read their vernacular language, their ability to understand the receipt, which comes out in English, will remain a dream for at least another generation.

Use the Aadhaar (India’s Unique ID Card) to benefit the vendor. This is one of the newer techniques. Here vendors blame the government for a shortfall and take note of the villagers’ Aadhaar numbers. Next they place their fingers on the POS sensor to create a verification mismatch thrice, thus triggering the OTP bypass mechanism that has been linked to their own phone (as a lot of villagers find it difficult to understand how to use the OTP mechanism with their own mobile devices). Finally their entire ration is claimed and recorded as a successful delivery and the government remains none the wiser.

Credit for documenting this technique extensively must go to Shyam Lal and other workers of the MKSS, who have gone from village to village over the past eight months collecting evidence of the same phenomenon across the state of Rajasthan to build a comprehensive case against the mandatory linking of social-welfare mechanisms to the biometric ID card, arguing that instead of curbing corruption, it has only changed the form it takes.

Shyam Lal was asked about this and said (in English translation): “What do you think, that the UID will curb corruption? These vendors are extremely smart, they incorporate the UID into their scam and the only thing that happens is that common people suffer because of the identification process.”

What this means for the PDS

This level of pilfering across the country has led to an estimated national diversion rate of 41%, with large states like Bihar registering a diversion rate of a whopping 75%, in the world’s largest public distribution system. The financial estimates of the losses would quite easily run into hundreds of millions of dollars in a country where, as of 2014, 58% of the populace lived on less than US$3.10 a day.

This phenomenon in itself characterizes a massive gap between the social-welfare policy formulation in New Delhi and its actual impact on the ground – a gap that, if allowed to grow, would condemn the vast majority of Indians to a lifetime of immiseration and lead to increasingly difficult questions about India’s commitment to the inclusive development rhetoric peddled by its prime minister.

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