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Thought for food

A sudden spike in headaches at a Delhi hospital made insurance companies and government officials suspicious. Samar Halarnkar writes.

india Updated: Jul 23, 2011 19:54 IST
Samar Halarnkar

A sudden spike in headaches at a Delhi hospital made insurance companies and government officials suspicious. It wasn’t hard to spot. Every afternoon, hospital data streamed into their computers. A physical check confirmed a fraud: the hospital, accredited to the Rashtriya Swasthya Bima Yojana (RSBY), or the National Health Insurance Scheme, was making insurance claims to treat non-existent headaches.

Seven months ago, I wrote how an innovative, hyperactive labour ministry bureaucrat had exceeded his brief to deliver cashless, paperless healthcare to poor Indians for a one-time payment of Rs 30. For that sum, five of a family listed as poor can be insured for a range of medical procedures up to Rs 30,000. With nearly 85 million enrolled (as of yesterday, thanks again to their robust data), RSBY is the largest such system in the world, spreading to 25 states within 33 months.

RSBY has many firsts. It is the first time India’s technology prowess has been used to run a national social-security programme. It’s India’s first social-security scheme with a profit motive, involving insurance companies, hospitals, state governments and the Centre. The states are enthusiastic because the Centre foots 75% of the premium, which is roughly Rs 450 per person every year. It costs about Rs 4,500 crore a year to fund RSBY; there is no cheaper national social-security scheme.

Such thrift, efficiency and innovation are sorely needed to implement the most-ambitious law of this UPA government: the Right to Food Bill. It won’t be easy or cheap to make food a constitutional right. As the National Advisory Council (NAC), which is drafting the law, and the government wrangle over the scope and cost of the seminal legislation, a senior finance ministry official tells me it could cost anywhere from Rs 14,000 crore to Rs 40,000 crore — in addition to the R55,578 crore India now spends on delivering subsidised food through the flawed 54-year-old Version 1.0 of the public distribution system (PDS).

The leaks in the PDS are documented. The latest study — by economists Shikha Jha and Bharat Ramaswami — released in December 2010 estimates 55% of subsidised food never reaches the poor. At a time of rising food prices and efforts to rein in spending, India will fence with fiscal disaster if a new flood of food passes through the leaky old PDS.

Can food delivery be plugged into a health-insurance system to create PDS Version 2.0?

I put the question to RSBY’s creator, Anil Swarup, whose official title is director general for labour welfare (a job that would have given him his next promotion, even if he never created RSBY). “There are huge problems in the [RSBY] system,” says Swarup, candid enough to acknowledge that he doesn’t have a magic wand. “But fundamentally, it’s a platform that has by and large worked nationally.” This is an important point. India has seen many governments issue smart-cards. Most have failed because — in typical Indian fashion — no one could finish what someone else started. Only RSBY works nationally, and Swarup’s aim is to make the system self-sustaining so he can become redundant (“Transfer, like death,” he says, “is inevitable”).

Let’s list RSBY’s problems. First, beneficiaries are often unsure of the benefits delivered by their smart- card. Second, it’s a struggle to find professionals (smart-card providers, hospital personnel, data analysts, field workers) and train them. Third, maintaining quality of healthcare at accredited hospitals. Fourth, an unceasing stream of frauds. But many are caught and punished: 55 hospitals were knocked off the RSBY system over the last five months.

This capacity to quickly uncover fraud and deliver cheap, basic healthcare to the poor anywhere in India can potentially transform the PDS.

RSBY and the PDS use the same basic data and benefit largely the same set of people — those who officially live below the poverty line. The difference is that the RSBY’s hybrid computer network allows the poor to use accredited hospitals nationwide. These hospitals don’t need always on, real-time connections. Every afternoon, or whenever connectivity is available, hospital data travels to a central computer.

Save for Chhattisgarh, the PDS is a no-tech mess. As this paper has often documented in its ‘Tracking Hunger’ series, the poor lose access to subsidised food once they migrate; of the million-plus fair price shops nationwide, they can only use one — where they are registered.

If the value of a beneficiary’s food entitlements (presently, wheat, rice, sugar, kerosene and coal) is transferred to a smart-card, she can use it anywhere. The PDS can also be greatly expanded to regular, retail shops. This will allow better access (only about 57% of BPL households can reach PDS shops) and pare fiscal losses from various subsidies dramatically (losses on kerosene subsidies exceed Rs 24,000 crore annually). An RSBY platform is capable of catching much more than imaginary headaches.

What happens when the unique identification (UID) number spreads? More poor can be enrolled; where available, RSBY is starting to add UID data to its chip. Swarup estimates a one-time equipment cost of Rs 15,000 for each food outlet, dropping as volumes go up. Given the thousands of crores it can save, this is small change for the government.

Powered by batteries if needed, smart-card-readers can be linked through mobile phones to district, state or national data-clearing houses tracking grain offtake. If it chooses to, Swarup suggests, the government can stop supplying grain (most corruption is in the supply chain) to shops and let them buy it from the market. The financial entitlements of beneficiaries can be electronically debited or credited as grain is withdrawn across India.

All this will need the creation of a back-end system, including a national data-clearing house for grain. How quickly could this be implemented? “Six months,” says Swarup. That’s serious thought for food.