In a move aimed at a focussed targeting of subsidies for the country's poor, the government on Monday announced the setting up of an inter-ministerial task force under Unique Identification Authority of India (UIDAI) chairman Nandan Nilekani.

It will work out a suitable mechanism to provide direct subsidies on kerosene, cooking gas (LPG) and fertilizers for the intended beneficiaries.

In a statement here, the Finance Ministry said the task force was set up “in order to evolve a suitable mechanism for direct subsidies to individuals/families who are entitled to kerosene, LPG and fertilizer and to evolve a model of direct transfer of subsidies on these items by re-engineering existing systems, processes and procedures in the implementation process…”

The task force, the statement said, would also undertake designing of appropriate IT systems and their alignment with the issuance of UID numbers, and bringing about changes in the administration and supply chain management.

The statement said the task force was constituted in the light of the “overwhelming evidence” that the current policy of providing subsidy on kerosene was resulting in “waste, leakage, adulteration and inefficiency… Therefore, it is imperative that the system of delivering the subsidised kerosene be reformed urgently.”

Kerosene was provided at highly subsidised prices to BPL (below the poverty line) families under the Public Distribution System. However, apart from finding its way to the open market, the poor man's cooking fuel was adulterated with diesel.

Likewise, the system of delivering subsidised LPG to the intended beneficiaries needed to be reformed. The same was the case with fertilizers. It was not possible to make a distinction among segments for which the subsidy should be given in the fertilizer sector. “There is a need to evolve a suitable mechanism for direct subsidies to individuals who are entitled to them,” it said.

The Task Force is to submit its interim report within four months of its constitution. The recommendations of the interim report will be implemented on a pilot basis by the Ministries concerned under the supervision of the task force in the six months following the date of submission of the interim report. “The final report would be submitted thereafter which would include the results of the implementation of the solution on the field,” the statement said.

Besides Mr. Nilekani, the task force will comprise secretaries from the Ministries of Finance, Chemicals & Fertilizers, Agriculture, Food & Public Distribution, Petroleum & Natural Gas and Rural Development along with the Director General of UIDAI.

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