Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Applying the lessons learned from GST to One Nation One Ration Card (ON-ORC)


From UPSC perspective, the following things are important :

Prelims level: GSTN

Mains level: Paper 3- Challenges ON-ORC could face and how the GST could offer valuable lesson for ON-ORC

Never before we felt the necessity of portable benefit schemes as we did in the wake of the pandemic. Portable ration card could have mitigated the suffering of migrant workers to some extent. But it was not to be. This article examines the challenges in implementing the idea of ON-ORC and offers the solution to these challenges by drawing on the lessons learned from GST. At the same time, the shortcoming of GST can also be avoided in the ON-ORC.

What is One Ration Card (ON-ORC)?

  • In the present system, a ration cardholder can buy foodgrains only from an Fair   Price Shop that has been assigned to her in the locality in which she lives.
  • However, this will change once the ONORC system becomes operational nationally.
  • Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
  • The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
  • This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.

Portable welfare benefit and attempts so far to achieve it

  •  The idea of portable welfare benefits means a citizen should be able to access welfare benefits irrespective of where she is in the country.
  • In the case of food rations, the idea was first mooted under the UPA government by a Nandan Nilekani-led task force in 2011.
  • The current government had committed to a national rollout of One Nation, One Ration Card (ON-ORC) by June 2020, and had initiated pilots in 12 states.

Progress on intra-state and inter-state portability

  • While intra-state portability of benefits has seen good initial uptake, inter-state portability has lagged.
  • The finance minister has now announced the deadline of March 2021 to roll out ON-ORC.

So, to ensure a smooth rollout, let’s review the challenges thus far

1) The fiscal implications:

  • ON-ORC will affect how the financial burden is shared between states.

2) The larger issues of federalism and inter-state coordination:

  • Many states are not convinced about a “one size fits all” regime because i) they have customised the PDS through higher subsidies, ii) higher entitlement limits, and iii) supply of additional items.

3) The technology aspect:

  • ON-ORC requires a complex technology backbone that brings over 750 million beneficiaries, 5,33,000 ration shops and 54 million tonnes of food-grain annually on a single platform.

How the lessons learned from GST can be applied to deal with the above 3 challenges?

1. Fiscal challenge

  • Just like with ON-ORC, fiscal concerns had troubled GST from the start.
  • States like Tamil Nadu and Gujarat that are “net exporters” were concerned they would lose out on tax revenues to “net consumer” states like UP and Bihar.
  • Finally, the Centre had to step in and provide guaranteed compensation for lost tax revenues for the first five years.
  • The Centre could provide a similar assurance to “net inbound migration” states such as Maharashtra and Kerala that any additional costs on account of migrants will be covered by it for the five years.

2. We could have a National council for ON-ORC

  • GST also saw similar challenges with broader issues of inter-state coordination.
  • In a noteworthy example of cooperative federalism, the central government created a GST council consisting of the finance ministers of the central and state governments to address these issues.
  • The government could consider a similar national council for ON-ORC.
  • To be effective, this council should meet regularly, have specific decision-making authority, and should operate in a problem-solving mode based on consensus building.

3. Technological aspect: PDS Network

  • GST is supported by a sophisticated tech backbone, housed by the GST Network (GSTN), an entity jointly owned by the Centre and states.
  • A similar system would be needed for ON-ORC.
  • The Nilekani-led task force recommended setting up of a PDS network (PDSN).
  • PDSN would track the movement of rations, register beneficiaries, issue ration cards, handle grievances and generate analytics.
  • Since food rations are a crucial lifeline for millions, such a platform should incorporate principles such as inclusion, privacy, security, transparency, and accountability.
  • The IM-PDS portal provides a good starting point.

Also, there are certain shortcomings in GST which we could avoid in ON-ORC

We should learn from the shortcomings and challenges of the GST rollout. For example:

1) Delay in GST refunds led to cash-flow issues.

  • Similar delays in receiving food rations could be catastrophic.
  • Therefore, ON-ORC should create, publish and adhere to time-bound processes.
  • The time-bound processes could be in the form of right to public services legislation that have been adopted by 15 states, and rapid grievance redress mechanisms.

2)  Increase in compliance burden for MSMEs, especially for those who had to digitise overnight.

  • Similar challenges could arise in ON-ORC.
  • PDS dealers will need to be brought on board, and not assumed to be compliant.
  • Citizens will need to be shielded from the inevitable teething issues by keeping the system lenient at first.
  • This can be done by providing different ways of authenticating oneself and publicising a helpline widely.

Consider the question “One Nation-One Ration Card(ON-ORC) could solve many problems faced by the beneficiaries when they move across the country. Examine the challenges the ON-ORC could face. Suggest ways to deal with these challenges.”


If done well, ON-ORC could lay the foundation of a truly national and portable benefits system that includes other welfare programmes like LPG subsidy and social pensions. It is an opportunity to provide a reliable social protection backbone to migrants, who are the backbone of our economy.

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