Madhya Pradesh to blaze trail in UID project

Madhya Pradesh is all set to become the first Indian state to award a large scale UID-related project next week. In a move that is likely to be the precursor to similar deals by other states, the state government is all set to ink a Rs 250 crore contract next week with a consortium of companies headed by the Noida-based HCL Infosystems, part of the HCL group.

"We are in the final stages.. We hope to ink the contract next week and finish the entire roll-out in a year," said Ajit Kesari, commissioner of Food, Civil Supplies and Consumer Protection for Madhya Pradesh.

Apart from a few smaller states and pilot projects, state governments are yet to start implementing the UID or Aadhar project. Under the project, all citizens in the country will have a unique identification number, fingerprint and iris maps in a central database. The database will then be used for identifying citizens for purposes such as security clearances, providing government services etc..

The task of populating the database will be given to various government agencies or registrars such as the election commission, the passport office, census department etc.. Kesari's department had become the first accredited UID-registrar after it entered into a formal agreement in March, after holding consultations for several months.

MP has chosen a slightly different path compared to the pilot projects implemented in places like Chandigarh, which involved the use of smartcards. Instead of handing its citizens electronic storage cards that contain their identities and entitlements, the state has decided to use a combination of hi-tech printing and the Indian postal service to prevent pilferage of subsidized food grains, sugar and fuel.

"There was a lot of debate since some of the pilot projects involved the use of smartcards.. But the argument against it was that it depended on the availability of electronic [verification] terminals at the [PDS] shop. However, going by the current experience, it was feared that the PDS dealers may turn away customers claiming that the equipment is not working," Kesari explained.

According to the scheme, HCL and its partners will not be paid for setting up the equipment, but will be paid on the basis of the number of transactions that take place on a yearly basis under the new PDS or rationing scheme. Food coupons, complete with the name and full address of the beneficiary, will be mailed to the beneficiaries directly by the state government. The beneficiaries exchange the coupons for the designated good, such as rice, wheat and sugar, at their respective 'ration shops'.

HCL, which emerged as the lowest and preferred bidder recently, will have to maintain 513 registration centres over the five-year contract period and enroll new beneficiaries upon request, after due verification. HCL will also have to re-verify, along with government officials, the fidelity of the existing database of 'below the line' and 'above the line' beneficiaries of the current rationing scheme.

According to the current list, MP has 80 lakh above-the-poverty-line families and 68 lakh below-the-line families, qualifying for subsidies of Rs 125 and Rs 300 per month each respectively. The total subsidy is around Rs 2,500 crore per year, but is expected to decline considerably after the implementation of the scheme. "Under the current scheme, all that a ration dealer has to do is to register a sale in his accounts, along with some sort of signature or thumb impression, even if the person did not claim that item that month," Kesari points out, adding that frequently ration shops turn away customers claiming that there is no stock.

The new scheme will not only eliminate bogus sales, saving state funds, but also involve a purging of duplicate accounts, thanks to the UID infrastructure. Intended beneficiaries will have to give their biometric markers such as fingerprints at the time of re-enrollment and these will be fed into the UID database where they will be checked for duplicates.

For example, HCL believes that removing duplicates of double entries will shrink the total number of below the line families from 68 lakh to 50-55 lakh, saving around Rs 550 crore per year from just the de-duplication exercise. According to calculations based on the expected number of transactions, the total pay out from the government to HCL and company will be around Rs 50-60 crore per year. The UID-compliant reconstruction of the PDS database is expected to involve around 7,000-10,000 people and take one year to complete.

Besides HCL, the consortium also includes analytics and software firm Virgo Softech and secured coupon specialist Accor Services.