Wastage in welfare and subsidy schemes: Centre cracks the whip

The finance ministry has asked various line ministries and entities responsible for implementing subsidy and welfare schemes to cut wasteful expenditure expeditiously, even as the Centre faces higher-than-budgeted food and fertiliser subsidy burden due to the ongoing geopolitical situation.

On the food subsidy front, Food Corporation of India and the Department of Food & Public Distribution have been asked to weed out inefficiencies in the value chain.

“While procurement and issue costs won’t be touched, relevant departments have been asked to examine if inefficiencies can be identified and removed in storage, logistics, transportation, and demurrage charges,” said a senior government official.

“We believe there can be substantial expenditure savings,” he added.

Similarly, in the PM-KISAN and the Mahatma Gandhi National Rural Employment Guarantee Scheme, ministries have asked to speed up the identification of ghost beneficiaries, fake accounts, etc. Central policymakers are concerned about the fact that the number of NREGA beneficiaries was around 50 million before the Covid-19 pandemic and it rose to around 70 million as the economy slumped, but the figure has not come down to pre-pandemic levels, yet.

“There are leakages to be plugged. Departments have been told to map aspirational districts and compare them with relatively developed ones. If a developed district in a state has more beneficiaries than an aspirational district, it means there are ghost beneficiaries of welfare schemes,” a second official said. Aspirational districts refer to the 112 most backward districts in the country

That apart, the finance ministry also plans to cross-check the income taxpayer data with the data of welfare scheme beneficiaries, such as PM-KISAN. Efforts to clear out bogus accounts and ghost beneficiaries shall involve cooperation from state governments, officials say.

The Centre has already issued a set of advisory for states to remove ineligible farmers from the PM-KISAN scheme. Most such cases involve one or more than one family member as taxpayer.

As reported earlier, the Centre’s fertiliser subsidy outlay for the year could be as high as Rs 2.10-2.30 trillion on the back of sustained high commodity and oil prices due to the war in Ukraine. This shall be the highest-ever spending on fertiliser subsidy in a year by a considerable margin; the FY23 Budget estimate was Rs 1.05 trillion.

Additionally, the Modi government’s decision to extend the PM Garib Kalyan Anna Yojana (PMGKAY) until September will increase the food subsidy outlay for FY23 to Rs 2.87 trillion from the Budget estimate of Rs 2.07 trillion. All this while officials maintain there shall be no compromise on the Centre’s Rs 7.5 trillion capital expenditure plan. Hence, there’s an urgency to cut expenditure by removing inefficiencies.

Many steps are being taken in this regard. Already, all farmer registrations for procurement in the central pool have to mandatorily be Aadhaar-linked to ensure that MSP reaches only the genuine farmers.

This, according to some experts, has led to a significant decline in the number of farmers coming forward to get themselves registered for selling wheat under the central pool in the ongoing procurement season.

The government seems to be more concerned about leakages in the paddy procurement process. To plug these, paddy procurement has been aligned with the average yield of a district to ensure only bonafide farmers sell paddy at MSP and middlemen and traders don’t game the system. This system, present in some states, has now been extended across the country.

Land records, too, need to be mandatorily uploaded on state procurement portals, and will now be integrated into a central database. That apart, the Centre has minimum threshold parameters each procurement portal designed and developed by state governments needs to have. Each state portal will be gradually integrated into a centralised system, which shall enable central monitoring of the quantity of grains procured and the transfer of money.

On the distribution side, too, continuous efforts are being made to weed out bogus ration cards by linking Aadhaar and grain distribution and digitising the process to monitor it in real-time.

A report by the Commission for Agriculture Costs and Prices (CACP) shows that in the five years ended 2020-21, while the economic cost of wheat increased at an annual growth rate of 4.9 per cent, the distribution cost grew by 7.2 per cent, followed by the pooled cost of grains (5.7 per cent), and procurement incidentals (1.2 per cent).

In the case of the MGNREGS, too, the Centre had earlier expressed concern over incidents of pilferage in the scheme. Officials point out that Revised estimates have been higher than Budget estimates significantly and it can be partly because middlemen are taking money by enrolling names of bogus beneficiaries under the scheme.

Regarding the PM-KISAN, Agriculture Minister Narendra Singh Tomar a few months ago told Parliament that since its launch, over Rs 4,350 crore has been transferred to ineligible farmers and that advisories have been issued to states for getting refunds.