Wednesday, March 30, 2016

Scaling up Aadhaar-based solutions

Business Standard chronicles the challenges with scaling up biometric validated distribution of rations from the Public Distribution System (PDS) in Andhra Pradesh. A few observations,

1. A transition to a digitally circumscribed validation-cum-distribution mechanism is a paradigm shift, likely to adversely affect several stakeholders. It needs to be done carefully, in a phased manner, slowly onboarding a critical mass of stakeholders. The success of scalability of an idea depends more on its social and political acceptability and internalization that its technological superiority. 

As an example, ten years back third party audits of engineering works were vilified for signaling a lack of trust in public engineering departments. Today, they have become business as usual, with even third party school testing becoming widespread. Ideas take some time to mature. Leadership and public policy can expedite this.  

2. Another reason for phased scale-up is that the supply side, especially in such emerging services, also needs time to develop. It is not just about procuring a few devices, recruiting people and running them. Building operational and managerial capacity is not easy and takes time. A district, leave aside a state, is a very large unit, especially when it involves covering the vast majority of the population. Poorly executed scale-up runs the risk of failures (exclusion errors, harassment of beneficiaries by having to come and go repeatedly etc) which could potentially provide grist to opponents to discredit the intervention.  

3. Public systems are entrapped in low-level equilibriums due to multiple forces interacting in mutually reinforcing and interlocking webs. For example, it is well-known that dealers have accommodated woefully inadequate commissions that make Fair Price Shops (FPS) commercially unviable only because of the ample opportunities for attractive rent-seeking by diverting stocks. This allowed fiscally squeezed governments, led by the respective Finance Ministries, skimp on commissions and condone rent-seeking. Any technological solution that unsettles this equilibrium will generate demands for adequate commissions, which run into budgetary constraints. There are no free lunches!

4. If we did not know it already, it would be useful to keep in mind that technology can only get you so far in addressing state capability problems. As the article itself highlights, several loose ends will still remain. Technology can identify duplicate and fictitious beneficiaries, but may not be able to screen based on eligibility. 
Shopkeepers can put weights in packets of rice and evade detection. They also use pre-packaged rice bags to generate bills, but later use manual weighing machines to deliver the goods to the beneficiaries... Many BPL beneficiaries claim their quota of rice for Rs 1 a kg, but sell it to middlemen for Rs 10 a kg.
5. Finally, for all the undoubted savings from these interventions, some of the numbers on savings being claimed by officials need more forensic analysis. For more, see this

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