New Study Backs Reports That Aadhaar-PDS Link in Jharkhand Led to Exclusions

Economists at J-PAL have found that about 88% of the ration cards cancelled in the state belonged to real households.

New Delhi: A new study has backed the claim by activists and media reports that Jharkhand’s decision to link welfare schemes, particularly the public distribution system, with Aadhaar led to genuine beneficiaries being excluded. A sample survey by the Abdul Latif Jameel Poverty Action Lab – which counts Nobel laureates Abhijit Banerjee and Esther Duflo among its founders – has found that close to 88% of deleted ration cards belonged to genuine households.

Between 2016 and 2018, the state government had been cancelling ration cards of what it calls “ghost beneficiaries” in an attempt to stop “leakages” from the PDS system. According to the J-PAL study by economists Karthik Muralidharan, Paul Niehaus and Sandip Sukhtankar, the entire process did reduce some amount of leakage “but also led to non-trivial increase in exclusion error and transaction costs for beneficiaries”.

The study found that the first phase of the Jharkhand government’s exercise, which mandated beneficiaries to authenticate their Aadhaar-linked biometrics on a machine that requires internet connectivity in order to buy ration, had no impact on leakages but made life a lot harder for those dependent on the PDS. The second phase, under which the government used electronic records to determine how much grain should go the different ration shops, had some success in plugging leakages.

However, the economists have found that this entire exercise led to significant exclusions as well as added transaction costs. Given that the PDS is meant for the economically weakest sections of society that depend on subsidised grain for survival, this result is crucial. In addition to those who were left out of the system altogether thanks to the changes, those who were still signed up had to make extra trips to collect their rations and thus lost out on daily wages in several cases.

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The study was conducted in 10 randomly selected districts across Jharkhand. About 6% of all ration cards in these districts had been cancelled in the 2016-2018 period, and ration cards not linked to Aadhaar had a higher probability of being cancelled. Only 26 of the 213 cards that were cancelled (of the 3,901 sampled) were fake. This means that about 88% of those households were very much real, and qualified to receive subsidised rations.

For the authors of the study, while the first phase of the government’s exercise was useless, and the second phase – which they call ‘reconciliation’ – had some success. In the second phase, the government began “sending less grain to dealers it believed – based on the data – should have had more stock remaining from their previous months’ allotment”. This policy, however, was rescinded in just three months.

To make it more successful, the authors say, the government could have “given all dealers a ‘clean slate’ when introducing reconciliation”. But despite this, the authors have said that there was “considerable reduction in leakage”. Given the policy lasted only three months, however, it is unclear whether it would be fair to label it a ‘success’.

This is far from the first time Jharkhand’s exercise of cancelling ration cards has been questioned and criticised. In July 2017, The Wire reported from Latehar district that the Aadhaar seeding process was disproportionately affecting marginalised groups – the poorest, those with disabilities, the elderly, etc.

Deleted ration cards also made headlines because of a series of alleged starvation deaths in the state, beginning with 11-year-old Santoshi Kumari in Simdega district in October 2017. While the government blamed her death on malaria, activists and neighbours pointed out that her family had been denied ration for not linking their Aadhaar card and that the girl had been asking for rice (which her family did not have) before she died. The state food minister himself confirmed that the family’s ration card was cancelled because it was not linked to Aadhaar.

In March 2017, the Jharkhand chief secretary said that all ration cards not linked to Aadhaar numbers in the state would be cancelled. This was reiterated in February 2019, with the government making it mandatory for Aadhaar to be linked to ration cards, despite the several questions that had been raised and evidence of exclusion provided. This move was made possible by the Supreme Court, which had in September 2018 allowed the mandatory use of Aadhaar for the disbursal of welfare benefits.

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Activists and researchers have also raised the point that while the government focuses on identity fraud, it is quantity fraud that leads to most leakages in the system. “The most common and rampant form of irregularity in PDS is katauti – fraudulence by a dealer, wherein beneficiaries receive less than their sanctioned allowance. The state’s ignorance of this larger malaise and imposition of Aadhaar does little or nothing to help, and instead becomes a massive hassle,” researcher Abinash Dash Choudhary wrote in The Wire.

“It is useful to have further confirmation, from different methods, of what earlier work has shown,” Jean Drèze, an economist at Ranchi University who has been a part of several studies on the issue, told The Wire on the J-PAL study. “What they’ve found in terms of the cancellation excluding real beneficiaries is very much in line with what we have been seeing. So are the findings on exclusion and inconvenience due to compulsory Aadhaar-based biometric authentication in the PDS in Jharkhand.”

Where there is a difference, Drèze said, is in the interpretation of the short-lived phase of attempted ‘reconciliation’. “The attempt basically failed. It caused havoc, including further denial of entitlements and fudging of electronic records, and then it was discontinued. To claim that it was successful in reducing corruption is like shooting at the tyres of a car and counting the reduced traffic as a bonus.”

“In short, we see three disasters in this whole process: arbitrary cancellation of ration cards, exclusion through compulsory biometric authentication, and the ‘reconciliation’ too. An unsuspecting reader of the [J-PAL] paper, however, would get the impression that the glass is half-full, when it is actually empty.”