In rural Rayagada, India's digital graft-busting plan is put to the test

RAYAGADA, INDIA // The dreams of modern India rarely make it to Rayagada. The Indians of these eastern forests forage for sago leaves and wild mango to survive. Barely a third can sign their names. Most live without electricity. many have joined a Maoist insurgency fighting to overthrow the system.

Now, modernity is creeping in. Smart cards, fingerprint scanners and biometric identity software are transforming Rayagada into a laboratory to test a thesis with deep implications for the future of India: Can technology fix a nation?

The target here is the disastrously corrupt Public Distribution System, a US$15 billion (Dh55bn) food subsidy programme frozen in a pre-digital world, where bound journals hold falsified records scrawled in handwriting so illegible one reformer lamented "even God could not read it".

In just the initial stages of the pilot programme in the state of Orissa, 1,200 kilometres from New Delhi, officials have already saved millions of dollars and appear to be getting food to villagers barely clinging to this side of starvation. The once rare sight of women walking home with sacks of rice on their head on ration days is now routine. The once routine sight of children with bellies distended from hunger is now rare.

The early success has inspired a cascade of new ideas for using technology to seal yet more of the programme's enormous leaks - "an attempt to make the system foolproof", said Nitin Jawale, the chief administrator of the Rayagada district.

Indian officials are hoping new technologies - some yet to be invented - will tackle some of the country's most intractable problems: corruption, collapsing health and education systems, a dearth of opportunity for the poor.

"We see innovation as truly a game-changer, to move from incremental change to radical change," prime minister Manmohan Singh said last year in announcing plans for a $1bn venture capital fund to seed revolutionary new technologies.

The government is setting up innovation bodies in every state and has approved plans to bring broadband internet to India's 250,000 villages.

It is also recording retina scans, fingerprints and photographs of all 1.2 billion Indians. The monumental endeavour to give everyone an identity record and number for the first time worries privacy experts but has sent reformers into a brainstorming frenzy over ideas for using the new database.

"There is great opportunity over the next decade to redesign the nation," said Sam Pitroda, head of the government's National Innovation Council.

For a country repeatedly jolted by screaming corruption scandals, the fraud and theft tainting the Public Distribution System is the ever-present white noise in the background, losing an estimated 58 per cent of its subsidised grain, sugar and kerosene to so-called "leakages" - the scams that infest every part of the system.

Ration shop workers will claim the month's shipment never arrived, then sell it on the open market at as much as 10 times the subsidised price. They'll give confused and poorly educated recipients less than their full entitlement or substitute lower quality grain.

Since beneficiaries are registered at specific shops, they are subservient to the shopkeeper. Even the more honest workers sell off whatever rations are left at the end of the month. Or the grain may be diverted to the markets by the truckload before even reaching the shops.

Then, there are ghost ration cards given out under fake names, shadow cards in the hands of people other than the intended beneficiaries, and duplicate cards held by families registered at more than one shop. Sometimes, village thugs hold the cards as collateral for loan sharks, or collect the food themselves, distributing aid to the rightful recipients at their whim.

The system is meant to serve 400 million people, yet more than 250 million Indians are undernourished and 43 per cent of children under five are stunted.

The programme's failure is a symptom of the government dysfunction that has disillusioned many who were left out of India's economic growth and driven some to join the Maoists, branded the country's top internal security threat.

At a store in Rayagada, under a creaking fan, a woman named Chandramma in a ragged pink sari and a necklace adorned with safety pins slid her microchip-embedded card into a device and put her thumb on its glass fingerprint scanner. The shopkeeper used a stylus on the touch-screen to register her rice order.

She paid 2 rupees a kilogram as two barefoot men dumped rice on a digital scale with a tall display, easily visible to a customer.

Periodically, the machine uploads the day's data to a central server, ensuring that only the honestly distributed grain would be replenished the next month.

Chandramma had at first been wary of the technology. "I am an illiterate lady, I didn't trust whether this would work or not," she said. But officials patiently explained it, and, more important, she is getting her rice every month.

"At least we now know whoever should be getting [food] is getting it," said Orissa Food Secretary Madhu Sudan Padhy. "Without technology, how do we really keep track."

Other subsidies also need reform, such as those on kerosene, so cheap that many run their motorbikes on it, according to Jawale. Its smell pervades the streets of Rayagada.

Nandan Nilekani, the former head of outsourcing giant Infosys, heads the giant identification project as well as a panel tasked with fixing the ration system. He believes the reforms can go further.

Once everyone has an ID number, they won't need ration cards. Their information, stored on secure servers, can be verified by a cell phone hooked up to a retina- or fingerprint-scanner, he said. People could then get their rice at any ration shop, rewarding honest ones with more customers and driving the crooks out of business.

"The moment I can make my entitlement portable ... the bargaining power shifts to the beneficiary," Mr Nilekani said.

That plan would face the same major hurdle that the pilot project does: the lack of electricity in rural areas makes the card readers unusable.