KARACHI: The food subsidy under the proposed Ehsaas Rashan Programme (ERP) is unlikely to reach the targeted sections of the population because of accessibility and connectivity problems.

A recent research report issued by the Pakistan Institute of Development Economics (PIDE) showed the intended beneficiaries of ERP — 20 million households — will not be able to receive the promised Rs1,000 per month on the purchase of flour, pulses, ghee or cooking oil.

Using the consumption patterns of the three food items reflected in the Household Integrated Economic Survey, the study concluded that the actual average monthly subsidy requirement is of Rs2,048 for the lowest income quintile, Rs2,037 for the second-income quintile and Rs1,896 for the third-income quintile. “These figures reflect that the subsidy amount covers only half of the consumption for the poorest quintiles,” it said.

The government announced in November 2021 that it would implement the programme through Ehsaas-enabled kiryana or grocery merchants to provide the poor with subsidised food. As such, a kiryana merchant will require an Andriod phone, CNIC, SIM card registered against the same CNIC and a bank account for registration to become an agent of ERP.

National Bank of Pakistan will manage the implementation and subsidy disbursal processes. The subsidy amount will be credited into merchants’ bank accounts in 24 hours along with a commission. The government will provide an eight per cent profit as an incentive to the kiryana store owner for every Rs1,000 worth of purchase.

“The implementation cost of ERP is very high compared to other similar programmes run by the federal government. The government will pay an 8pc commission to the kiryana store to disburse the subsidy while it is less than 1.5pc in the Ehsaas Kafaalat programme,” it said while referring to a separate scheme that pays ultra-poor households Rs28,000 per year per family across Pakistan.

The study also highlighted the fact that the proposed ERP overlaps with other programmes like Ehsass Kafaalat and Utility Stores Corporation that aim to help the poor meet food and fuel needs. “A small amount — very low subsidy — may not help improve food consumption and reduce poverty,” it said while arguing that the value of the transfers under the Ehsass Kafaalat programme is not sufficient. “Its contribution is just 5.3pc of the household’s total consumption based on the amount that the beneficiaries receive.”

Field interviews conducted by the PIDE team revealed more than 90pc of respondents did not know about ERP. The distance to kiryana stores is a major accessibility issue, which is linked to high transaction costs faced by the beneficiary, it added.

The rollout of ERP relies on internet connectivity using Android mobiles. The study points out that smartphone ownership in rural areas is only 39pc for individuals who are 10 years and older. Smartphone ownership is particularly low in Balochistan where only 44pc of individuals own smartphones.

Apart from the low penetration of smartphones, the use of the internet is also quite low in rural areas. Only 17pc of individuals reported using the internet for information-seeking purposes.

“In essence, the government needs to revisit these programmes for the optimal utilisation of public resources and effectively address the consumption needs of the ultra-poor,” it said.

Published in Dawn, May 6th, 2022