Government Subsidy Policies Management via Smart Card

 

By Walid Dalil **

Managing government subsidies via smart card means using a card (such as a smart ID card) to direct aid and subsidized commodities directly to beneficiaries.

This reduces waste and ensures that subsidies reach their intended recipients accurately through centralized systems that allow for the definition and tracking of policies and services. This is achieved through a digital infrastructure for defining subsidy policies, verifying beneficiary identity, and automating distribution processes via unified databases. This system is implemented in many countries to simplify procedures and improve the efficiency of subsidy spending.

The system remains essentially a general system; it refrains, at least for now, from using technology to achieve more appropriate targeting, which would make the system more gradual while maintaining social cohesion. Clear benchmarks must be in place to protect genuine consumer benefits without harming the financial situation.

There is a clear need to make the most of available smart technology, such as logistical tracking, to better monitor every step in the supply chain. This requires providing more secure smart cards that better suit individual needs, such as biometric data.

It is important to improve the nutritional component of the system by adopting a sustainable national program included in the budget to support food commodities and to instill nutritional awareness of the importance of dietary diversity within the program. Food rationing refers to providing basic goods and services, while government subsidies are a mechanism to reduce the prices of these goods for citizens (especially those with limited incomes) by the state covering the price difference.

This ensures food security, achieves social justice, and distributes income equitably. It relies on ration cards and the distribution of commodities such as sugar, oil, bread, and cooking gas, sometimes with political and economic objectives.

First: The Concept of Food Rationing:
The process of securing and providing basic goods and materials (such as food and fuel) to the population through imports or local production, and managing a strategic reserve to address crises.

Responsibility:

This typically falls on the Ministries of Trade or Supply to regulate, monitor, and determine the distribution mechanisms.

Second: The Concept of Government Subsidies for Goods

Definition:

An economic measure in which the government subsidizes part of the cost of producing or importing essential goods and sells them to citizens at a price lower than the actual market price.

Main Objective:

To enable lower-income groups to access their basic needs, such as food and energy, maintain a certain standard of living, and achieve social and political stability.

Subsidized Goods:

These include bread, sugar, oil, rice, milk, fuel, and electricity, and are often distributed through ration cards.

Third: The Relationship Between Rationing and Government Subsidies

Integration:

Rationing is the logistical aspect (what and how do we provide it?), while government subsidies are the financial aspect (at what price do we sell it?). Rationing provides the goods, and government subsidies ensure their accessibility to citizens at an affordable price.

How Smart Card Subsidies Work (General Concept):

Identifying Eligible Beneficiaries: The data of citizens eligible for subsidies is registered in a central national database.

Allocating Subsidies: Each beneficiary is allocated their share of the subsidy (financial or in-kind) via the smart card, and this information is stored on the card.

Accessing the subsidy: When needed, the beneficiary uses their smart card (such as a national ID card) to purchase or obtain subsidized goods from authorized distribution outlets.

Verification and deduction: The system verifies the beneficiary’s identity and the availability of the subsidy balance. The required amount is then deducted, and the balance is automatically updated.

Benefits of converting the ration card to cash subsidy:

– Ensures that aid reaches eligible groups directly, reducing opportunities for corruption and leakage in the in-kind subsidy system.

– Gives citizens the freedom to choose the goods they wish to purchase, and does not force them to accept products through cash subsidies.

– Reduces opportunities for corruption associated with the distribution of goods, as the financial transfer is direct, promoting fairness among citizens.

– Contributes to improving the quality of services provided to citizens and raising the standard of living.

– Cash subsidies enhance the state’s financial stability, leading to a reduction in its burdens.

– Improves citizens’ standard of living by providing them with basic necessities through cash subsidies.

– Increases the efficiency of government resource allocation, as subsidies are directed more precisely and effectively.

– Reallocating in-kind support resources to improve the quality of health and education, leading to a higher standard of living.

– Shifting to cash support allows the state to withdraw from the production, sale, and purchase of subsidized goods, thus enabling producers to increase employment, production, and growth rates.

Required Infrastructure:

A centralized system: for defining support policies and managing data.

A unified database: for storing beneficiary data and tracking distribution processes.

A secure communications network: for connecting distribution points to the system.
–Banking Expert–

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