Lessons in direct income support from Odisha

Varad Pande & Shilpa Kumar | 20 September 2021

“The recent farmer agitation has brought the issue of farmer distress front and centre in the public consciousness. The time seems ripe to find new solutions to the structural challenges facing farmers. One promising step is the shift from non-targeted agriculture subsidies towards direct income support (DIS). A key question has been on “targeting”, that is, whether one can reach the intended beneficiaries in a cost-effective manner through DIS.

Over the last few years, several DIS programmes have been launched with states leading the charge: Telangana’s Rythu Bandhu and Odisha’s KALIA schemes being two examples, followed by the Centre’s PM-KISAN.

Odisha’s KALIA scheme offers some important lessons for DIS schemes everywhere. Under its first phase, Rs 2,500 crore was given as DIS to 51 lakh farmers, in a four-month period. Odisha used a three-step framework, called “Unification-Verification-Exclusion”, to identify beneficiaries. The first step involved unifying state databases with “green forms” which were essentially applications from farmers who wanted to opt in. Together, this led to the creation of a list of 1.2 crore applicants. The second step involved verification of information through databases like the Socio-Economic Caste Census, National Food Security Act and other databases; de-duplication through Aadhaar; and bank account verification through bank databases. The third step involved excluding ineligible applicants like government employees, tax payers, large farmers, and those that voluntarily opted out.

The use of technology and non-farm databases also meant that KALIA could include sharecroppers, tenant and landless farmers as beneficiaries, which is a significant step towards inclusive agricultural policy-making.

Have these efforts borne fruit? Preliminary results from a World Bank evaluation suggest that KALIA beneficiaries are less likely to take out crop loans. Those who do take crop loans, take smaller loans than non-beneficiaries. This suggests a smoothening effect on income.

KALIA has now laid the foundation for a state-wide farmer database with 100 per cent Aadhaar, mobile number and financial address seeding. This database can be leveraged for targeted scheme delivery beyond DIS, issuing customised agri-advisories and improving financial access.

As governments build and enhance tech systems for social welfare, KALIA emphasises that governments should use an “open digital ecosystems” approach in design. Three key learnings stand out.

First, existing citizen and transaction databases can be creatively leveraged to identify intended beneficiaries (KALIA used more than 20 existing datasets). As governments build more databases and GovTech platforms, keeping them interoperable, modular, with open-source technology and open APIs, will allow these platforms to “talk to each other” and enable their rapid and cost-effective leveraging.

Second, the governance, or “rules of engagement”, of such databases must be clearly defined at the outset, so that there is no possibility of misuse, and personal data of citizens must be fully protected. In the case of KALIA, the Odisha government obtained consent for use of citizen data. The data was kept behind a secure firewall, and access to farmer data was only available to relevant officials on a need-to-know basis. Going forward, “privacy by design” principles must be woven into the architecture of such GovTech platforms.

Third, effective grievance redressal is critical if schemes like these have to work for every Indian. Odisha established an online grievance redressal mechanism (GRM) for KALIA in 2019 which was accessible to farmers “offline” at the Common Service Centres closest to them. Nearly 10 lakh grievances were received and resolved using this GRM. Going forward, it will be important to monitor GRMs to ensure timely redress and carry out design iterations based on feedback from the ground.

The potential of technology to transform social welfare delivery is exciting. An approach that leverages data to maximise citizen benefits, while ensuring privacy, security and access, must be the way forward, if we are to truly realise the power of digital to serve every Indian.

This article was originally published in the Indian Express on 15th March 2021, and can be accessed here.