Aadhaar enabled Public Distribution System
Office of the District Colletor, Krishna District, Andhra Pradesh

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The Public Distribution System (PDS) of India is one of the largest food security programs in the world. It delivers essential staple food commodities like rice, wheat, sugar, dhal (pulses) to more than 400 million families living below the poverty line (BPL). PDS is a poverty alleviation program contributing towards social welfare of poor people in the country. Andhra Pradesh implements a quasi-universal system of PDS covering nearly 80% of the total population providing food security to 38,3 million of the total 49,3 million population. The entire population is catered through 28.642 Fair Price Shops (FPS) located in the state. However the PDS program had several shortcomings leading many vulnerable sections of the population to miss out their food subsidies, causing inefficiency and poor service delivery through the program. Some of the main problems in the PDS program were: 1. Lack of monitoring mechanisms in the supply chain management led stocks to be diverted from the warehouses to the black market before the they could reach the FPS. 2. The FPS dealers created many bogus ration cards and ghost beneficiaries siphoning food stocks intended for poor beneficiaries. There have been reports of shadow ownership of cards where dealer keeps the card for himself instead of providing entitlements to beneficiaries. 3. Illicit practices by fair price shop dealers like deliberate under-weighment of commodities enable diverting and holding the stock for black market. 4. Irregularity in delivery of food stocks at the outlets required beneficiaries to make several trips to the shop. FPS declares 'no stock' even when there are sufficient stocks, leading to unnecessary trips made by beneficiaries. Sometimes, beneficiaries who live as daily wage-seekers have to lose their earnings, waiting a whole day at fair price outlet in long queues to collect their food rations. 5. Irregularity and ambiguity in notification of actual beneficiaries of PDS services creates confusion, leading to the inclusion of ineligible and the exclusion of eligible beneficiaries. 6. Manual system of record keeping at FPS allows their dealers faking the closing balances every month, irrespective of the actual monthly withdrawals, making the government spend for the entire stock. 7. Being a food subsidy program, there is no dignity attached to the beneficiary leaving them to the mercies of illicit dealers. Thus the above-mentioned structural and implementation bottlenecks made PDS one of the least efficient programs in the country in delivering food security to the needy population.

B. Strategic Approach

 2. What was the solution?
The solution was the introduction of Aadhaar-enabled Public Distribution System (AePDS) that involved end-to-end digitization of the PDS of the entire supply chain management from all stocking points to all fair price shops until the beneficiary database. AePDS involved sale of food commodities through ePoS (Electronic Point of Sale device) at the FPS through Aadhaar-based biometric authentication by beneficiaries for withdrawal of entitlements, and includes Aadhaar-enabled Payment System which enables beneficiaries to do cashless transactions. The program resulted in a seamless, transparent and hassle-free system of distribution of food commodities to the intended beneficiaries revolutionizing the age-old PDS.

 3. How did the initiative solve the problem and improve people’s lives?
Benefits for PDS Beneficiaries include 1. Easy identification of residents, wherever they are. 2. Expanded coverage: easy verification ensures the program reaches its target group, and limit the exclusion of eligible individuals 3. Quicker registration: Aadhaar-enabled registration system for PDS applicants encourages governments to process applications more. 4. Portability and choice in accessing benefits: the universal identification number allows beneficiaries to withdraw ration from any FPS in the state. 5. Transparency: clear accountability and transparent monitoring significantly improves access and quality of entitlements to beneficiaries. 6. Quick Grievance Redressal: transparent, centralized system of grievances allows government rapidly solving beneficiaries’ problems. 7. Reduced number of trips by beneficiaries: an auto-SMS is delivered to all beneficiaries as when the stock arrives in their FPS, reducing drastically the number of trips a beneficiary has to make to a FPS. Moreover beneficiaries are able to get all the commodities at the same time, reducing the average waiting time. 8. Reduces stock leakages and diversion: record of proxy issues in the system allows controlling diversion of PDS stock at any stage (procurement, storage, movement from warehouse to FPS or at FPS). This is done through online real-time authentication, issuance of truck chits at every storage point, validation of received supply at the FPS. 9. Transaction data put in public domain enables public scrutiny and social auditing of the FPS. 10. Benefits from cashless transactions: AePDS in now upgraded to cashless payment systems, supported by Aadhaar-based biometric and iris authentication. This infrastructure can be further relied on by other public welfare schemes. Cashless methods proved their usefulness after the currency crunch. A total of 4.844.548 cashless PDS transactions representing Rs. 200,3 million have taken place so far in entire state of Andhra Pradesh. The Government of India has promoted cashless transactions through these lottery schemes. In January 2017, one PDS beneficiary won Rs. 0,1 million for a Rs. 64 worth cashless transaction in a FPS. Benefits for distributors and FPS owners include 1. Behavioural change: as the beneficiaries are not tied to any one fair price shop in this system, there is a behavioural change in FPS personnel. The portability offered in AePDS creates fear of losing customers which brings change in behaviour of FPS personnel while dealing with the beneficiary. 2. Growth based on monthly uptake: The portability enabled by Aadhaar, and choice for beneficiaries gives FPS outlets opportunities to expand the number of beneficiaries they cover, and the amount of food grain they sell. 3. Fewer delays and efficient allocations: the implementation of Aadhaar-based authentication and an Aadhaar-enabled MIS creates more efficiency within the system, and lower delays for FPS owners in receiving supplies. Benefits for government include 1. Elimination of ghosts/duplicates/fakes: Aadhaar-linked identification help addressing long-standing problems of eliminating ineligible, duplicate, ghost and fake beneficiaries. 2. Effective targeting: Aadhaar enables individual entitlement, and tailoring of benefits to actual genuine beneficiaries. 3. Lower costs in procurement and storage: use of an Aadhaar-enabled MIS in farmer registration, food grain movement, delivery and payment ease costs and complexity . 4. Effective monitoring: AePDS greatly improves the power of vigilance committees to track delays and diversions. 5. Savings in subsidies: as the government keeps record of all transactions at each FPS, it can now replenish stock on basis of sales actually made, saving huge subsidies in its exchequer, unlike in the earlier manual system, where the stock was always shown to be sold out. Andhra Pradesh state has saved an approximate Rs. 12 billion in subsidy through this program and Krishna district has achieved a savings of Rs.1,17 billion so far since the roll out of AePDS.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
AePDS is a complete business process re-engineering of age-old PDS bringing both simplicity and sophistication for millions of families to withdraw their monthly food entitlements (subsidy) in a hassle-free way. AePDS offers timely rations to most vulnerable sections of the population, allowing them improving their livelihoods. The digitization of supply chain in AePDS prevent leakages of food stock improving savings in stock and subsidy. An important innovative features of AePDS is its portability, which allows beneficiaries to withdraw ration from anywhere in the state. Significant proportion of PDS beneficiaries are wage seekers, who migrate to different places for their livelihood. Portability allows them to withdraw ration wherever they go in the state, taking care of their food security. Another innovative feature is PoS devices is linked with the electronic weighing scale, delivering exact quantity of commodities to beneficiaries increasing transparency bringing significant reduction in siphoning of stock by dealers. Cashless PDS has helped beneficiaries make cashless transactions along with keeping their bank accounts active. Secondly cashless PDS makes all FPS dealers as business correspondents, providing banking services right at the door step of beneficiaries. This shall bring great economic and social inclusivity to rural population in future through financial inclusivity.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
After pilots, the initiative of Aadhaar enabled Public Distribution System (AePDS) has been launched and implemented in the country in Krishna District since March 2015 in 2.166 FPS. Subsequent to the successful implementation of AePDS in Krishna district, it has been rolled out across Andhra Pradesh state in all the 13 districts in 28.350 FPSs, covering a population of 38,2 million. Project Team: The Project was initiated by the District Collector of Krishna,Sri.Babu.A, IAS, who spearheaded the initiative from its very conception. He played a key role in architecting technology-rich initiative, and monitoring its implementation across the state. He played a vital role in the implementation of the roadmap initially drawn up, by co-coordinating with all the stakeholders and pursuing the entire task in a parallel manner and made all the stakeholders work as a team. NIC played a key role as a Technology Solution Provider in developing the application and adhering to the timelines. Sri A Guru Prasad, Scientist along with team members Smt. C. Radha Scientist; Smt. Annapurna, Scientist and Smt. Mary Alice from NIC, provided the critical technical support in the detailed design and development of the central architecture of the application and its key components. NIC has been providing continuous and valuable support, maintaining application and IT infrastructure ensuring change management and smooth functioning of the Project. The Department of Civil Supplies, Government of Andhra Pradesh successfully geared up procuring the devices and hardware and played a key role in the implementation process. The Department re-engineered a number of processes to suit the technology, trained its staff, followed up the progress of AePDS and adhered to the timelines. AePDS being a citizen-centric and a 'demand side' project where the incipient demand always existed, there was extensive cooperation from every stakeholder by adapting new technology. Government of Andhra Pradesh has successfully implemented Aadhaar-enabled Public Distribution System in all 28.447 FPSs across the state, covering 13.425.833 cardholders covering 38.496.397 food units. The application is well stabilized with an average of 2-2,5 million transactions during the first week of every month, covering across all the 13 districts across the state. By the 10th of every month, 85 percent of the beneficiaries across the state are availing their ration in one go. Other than ration cardholders,55.604 Anganwadies (Nutrition Day Care Centres) under ICDS scheme and 44.593 schools under midday meals are distributed commodities with bio-authentification facility. AePDS is implemented in Andhra Pradesh as follows: a) Districts: 13 b) Divisions: 49 c) Mandals: 670 d) Villages: 17.751 e) Fair Price Shops: 28.942 f) Total No. of Cards: 13.530.437 (NFSA Cards: 95,71,660 + State PDS Cards: 3.959.777 ) g) Total No. of Beneficiaries: 38.291.110 h) Seeding Percentage: 99,94%
 6. How was the strategy implemented and what resources were mobilized?
Starting in January 2015, the AePDS program was first implemented in Krishna district in 511 pilot FPSs in all the mandals. It was then scaled up to all the 2.161 FPSs in the district and finally across all 13 districts in Andhra Pradesh. It was implemented in three phases. In Phase I, Aadhaar seeding was done for all the ration cards available in the state. Extensive training programmes were conducted to earn the trust of dealers by explaining the strength of Aadhaar in empowering beneficiaries. With well-defined application and robust architecture, the pilot succeeded and was extended to all 2.161 shops in the Krishna district. In Phase II, electronic weighing machines were integrated with epos for e-weighing and coupled with supply chain management for accountability of stock movement. The software was rolled out in all 13 districts, covering 28.447 FPSs across the state. Online dashboard was created with transparency of cardholders data, allotment of commodities stock movement, stock position in each shop and distribution. 20.810 IRIS readers were supplied to FPSs for authentication whenever biometric failure occurs. 24/7 helpdesk was provided at state level, plus one in each district to resolve issues rapidly. Online grievance monitoring system was made available with workflow to address the issues. Under Phase III of implementation, portability was included allowing each beneficiary to draw ration from any shop across state. 55.604 Aanganwadies (Nutrition Day Care Centres) under ICDS department and 44.593 schools for midday meals were distributed through Aadhaar. After stabilising the system, AePDS got upgraded to JanDhanPDS by integrating Jan Dhan accounts of beneficiaries with dealers’ ones for seamless transfer of money. No cost is involved in software development and hardware resources as application software is developed by NIC, Andhra Pradesh and resources are provided by Andhra Pradesh State Data Centre (SDC). The system helped the GoI and Government of Andhra Pradesh saving subsidies up to Rs.80 to 100 millions every month from each district of Andhra Pradesh, providing a substantial return on investment on the ePOS devices. The AePDS leveraged the Aadhaar platform for validation of beneficiaries. The entire ration card database was seeded with respective Aadhaar numbers, weeding out ineligible beneficiaries. The AePDS application is one of its kind, where genuine PDS beneficiaries withdraw ration by Aadhar-based biometric and iris authentication on a PoS terminal. The application is provided with bilingual voice-overs in English and Telugu languages to allow users to understand the process of collecting ration. For disabled people or old people, in case of biometric failures, IRIS and Fusion Finger authentication is provided. The AePDS application has got well streamlined, replacing the manual process with Aadhaar-enabled authentication through PoS device, providing rations to more than 30 million beneficiaries across all the FPSs for the last two years and two months without any constraints. AePDS is an open source solution. The site epos.ap.gov.in gives comprehensive details on the AePDS program where a user can drill-down to each FPS level on the PDS transactions across the state. 100% ration card database with the member details is available on http://epdsap.ap.gov.in. The Ration Card application is a workflow-based application, which runs up to the Mandal/Taluk supply office for creation and modification of cards. Supply-Chain Management (SCM) covers monitoring of food grains allocation, storage and stock movement starting from the base depots of FCI till the FPS. The information related to the supply-chain is made available in public domain through the Transparency Portal (http://scm.ap.gov.in/).

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The main stakeholders involved in the design and implementation of AePDS were: 1. District Administration of Krishna conceptualised and piloted the scheme. District Administration was main driver of the scheme. The District Collector ensured the program is implemented in all FPS of the district by providing training periodically. 24/7 helpdesk, opening of bank accounts for all beneficiaries coordinating with banks and linking them with ration card database to facilitate Cashless PDS. 2. The Department of Food and Civil Supplies was involved in digitizing the humungous 13,5 million ration cards database and seeding with Aadhaar numbers. Servers and ePoS devices (including weighment and IRIS readers) for hosting and execution of the application are provided by the department to all FPS dealers with maintenance contract for 5 years. 3. NIC enabled all software integrations for hassle-free transactions at the FPS with the following salient features:(i) 18,4million transactions are processed per month; (ii) ability to handle high transaction volume growth through high-end servers, optimized queries and applications, streaming replication with DR facility; (iii) on average 2 minutes is taken to process the transaction including retrieval of ration card details, beneficiary authentication, selection of commodities, precision weighment of ration (connected through Bluetooth), receipt generation; (iv) accurate output as per the defined standards of Civil supplies Department. 4. UIDAI provided Aadhaar-related services with <1% delay in service delivery and maintenance. 5. FPS dealers are important stakeholders who have significant role in delivering food services to beneficiaries. The portability has triggered the competition among dealers, increasing their efficiency in service delivery. 6. Banks provided cashless gateway and required training to FPS dealers addressing technical issues on settlement and reconciliation. 7. National Payments Corporation of India (NPCI) supported banks by allowing uninterrupted services in ON-US and OFF-US transactions and assisting banks in settlements and reconciliation.

 8. What were the most successful outputs and why was the initiative effective?
The following are the most important outputs making AePDS program very effective: 1. Rs. 12 billion savings in terms of subsidies since its implementation. These savings can be utilized for bringing in new reforms to PDS through infrastructure and services and also for bringing in new welfare programs for the citizens. 2. More than 30 million beneficiaries have been withdrawing their rations across all the FPS in the state without any constraints. Around 18,4 million transactions are processed per month across the 28.942 FPS in the state. 3. Introduction of Cashless PDS has enabled 1.688.548 cashless transactions at FPS successfully so far, providing ease and convenience to the consumers. Beneficiaries can now opt for cashless transactions in PDS given the currency crunch following the demonetization policy in India. 4. Cashless PDS also helps access rural poor to access all their banking services at their door step with an FPS dealer enabling their financial inclusion.

 9. What were the main obstacles encountered and how were they overcome?
• Training and Capacity enhancement: training of all the field functionaries especially the FPS dealers and civil supplies officers was one of the important challenges in AePDS. Periodical trainings were conducted by district administration to the field officials on the intricacies of the program. Trainings were provided on the operation of the PoS terminal, the utilization of scanning devices, electronic weighment, etc. Unfortunately, the mundaneness of manual PDS also had made civil supplies personnel out-dated. Therefore all the field functionaries were trained on issuing indents, GPS monitoring in supply chain, working of PoS terminals,… • Connectivity: Connectivity was the next biggest hindrance in AePDS. Connectivity was achieved with a mix of GPRS, Broadband, WiMAX and CDMA technologies, as per the applicability of the FPS location. Survey of telecom service providers for strength of their network across all FPS and SIMs of two service providers with best signal strength was provided to all shops. • Iris authentication: To facilitate easy authentication process for old age people especially those with poor biometrics, iris authentication was introduced. Integration of Iris scanners with PoS terminal was taken up enabling seamless iris authentication in PDS for the first time in the country. • Mapping Bank accounts: Seeding of UID (Aadhaar No.), Mobile No. and Bank Account of the beneficiaries was the next tedious work in implementing Cashless JanDhanAePDS. For e.g., in Krishna district, all 1,2 million cardholding families were facilitated to open a bank account with various banks which was seeded with CBS (Core banking solutions) and mapped with National Payments Corporation of India (NPCI) to enable cashless transactions at FPS. • Ensuring seamless, hassle-free and prompt service to ration card holders of PDS convinced the highest political and bureaucratic echelons who were happy with the efficiency and accountability triggered through the program.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Efficient Service Delivery: The primary purpose of AePDS is to improve service delivery at FPS in terms of quality and quantity of commodities and the timely delivery of ration. These objectives have been achieved. Quick service delivery: Due to equal distribution of beneficiaries in all nearby FPSs, the average waiting time has been expected to reduce after implementation of AePDS. In this system, beneficiaries are not tied to one FPS. If they find a long queue in one FPS, they will take commodities from nearby FPS where there is less queue. It leads to the equal distribution of beneficiaries overall FPS. Creating Transparency: The transaction data recorded at the shops would be put in public domain and hence AePDS enables public scrutiny and social auditing of the FPSs as well as the PDS. Cashless Economy: Cashless PDS offers the beneficiaries to opt for cashless means of transactions at any desired shop, bringing financial liberty to cardholders. With cashless PDS, all FPS dealers become business correspondents providing access to rural population living in remote regions to banking services like deposit, withdrawal, fund transfer, etc… Availing banking services at door step is a great boon to a greater population in rural India who otherwise travel long distances for making small transactions. Thus cashless PDS brings banking services to rural poor. This shall positively impact their economic and social inclusion. After the demonetization policy of the Government of India, Cashless PDS has helped families in Andhra Pradesh to buy their ration through bank accounts. The program is a model for other public welfare schemes to go cashless where transactions costs are involved. Eliminating non-performing FPS: In AePDS, bad or non-performing FPS shall automatically be weeded out as a result of competition. The past system of inspection of FPSs to identify bad FPSs for cancelling them has proved to be ineffective as the inspections can attract corrupt practices and the inspectors can be managed with grafts. Prevent Diversion: AePDS checks diversion of PDS commodities by checking proxy issues. Diversion in PDS Supply chain at any stage can be eliminated through “Online real time mechanical FPS authentication”, at the time of supply of stock by route officer and validated by dealer. In the previous PDS system, supply chain accounted for majority of stock leakages in PDS. With electronic indenting, GPRS truck, route officer validation this stands now completely eliminated. Empowering beneficiaries: The objective of AePDS is to empower the beneficiary with the facility to draw his/her rations from the FPS of their choice. This in turn introduces competition, among the FPSs for a larger share of beneficiaries, leading to improved service delivery at the shop. As a result, the beneficiary is not solely dependent on monitoring done by the departmental officials. In AePDS, the beneficiary becomes a main stakeholder of the government in the process of monitoring.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Yes, AePDS has been a game-changer in bringing in integrity and accountability to public service. The auto-SMS intimation to beneficiaries on arrival of PDS stocks at the FPS is first of its kind making the program demand driven. Neither a FPS dealer nor a civil supplies’ personnel can now deny due ration to the beneficiaries. Reduction in diversion: Mechanical authentication at the time of delivery completely checks the record of proxy issues and thus reduces stock siphoning. Behavioural change in FPS personnel: The portability offered in AePDS creates a fear of losing customers, bringing drastic change in behaviour of FPS personnel towards beneficiaries. Bribe stopped at root: As FPS in AePDS can’t record proxy issues, it eliminates black marketing of commodities.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Women represent 49,8% of the total PDS beneficiaries in the state of Andhra Pradesh. The majority of beneficiaries of PDS are below poverty line families who depend on food subsidy. Therefore AePDS directly impacts the household food and nutrition security of these 13,5 million ration card holder households providing them with timely ration, allowing them to focus on their educational and social needs of the family rather than on food. AePDS shall go a long way in reducing hunger bringing them out of poverty, ensuring food and nutritional security in accordance to the Sustainable Development Goals 1 and 2. AePDS ensures prompt delivery of food provisions to Antyodaya Anna Yojana and Annapurna Yojana beneficiaries, which the poorest and most vulnerable among PDS beneficiaries (poor families and old destitute women). In addition, AePDS ensures effective distribution of food commodities to 55.604 Anganwadis (Nutrition Day Care Centres) whose clientele are infants, pregnant and lactating mothers. This shall ensure effective supplementary nutrition to 0-6 years children and young mothers, enabling to reduce infant and maternal mortality rates in the state.

Contact Information

Institution Name:   Office of the District Colletor, Krishna District, Andhra Pradesh
Institution Type:   Government Department  
Contact Person:   Babu A
Title:   Mr  
Telephone/ Fax:   0866-2481555, 0866-2478090, +91 9441412121, +91 88
Institution's / Project's Website:  
E-mail:   ababu@ias.nic.in  
Address:   Office of District Collector, Collectorate, Chilakapaludi, Machilipatnam, Krishna District, Andhra Pradesh, India
Postal Code:   521002
City:   Machilipatnam, Krishna
State/Province:   Andhra Pradesh
Country:  

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