Mumbai (The Hindu): In an ambitious project, the State government has decided to help 51,259 Fair Price Shops (FPSs) go cashless and provide e-wallet facilities to ration card holders in rural areas.

After completing a pilot project this month to turn 84 fair price shops across the State into Business Correspondents (BCs), the government is now ready to roll out end-to-end transaction facilities by March 2017. The shops will now conduct transactions through point-of-sale terminals. The FPSs supply subsidised goods to ration card holders and persons below the poverty line.

Senior State officials said that during the pilot project, the software for point-of-sale transcation was successfully integrated with an e-PDS (public distribution software) to test live end-to-end transactions at the shops.

The success of pilot project means that a phase-wise roll out has been planned. The first phase will target shops in seven districts and is likely to be finished by January 2017. The second phase will target covering 17 districts by February. The last phase will cover 18 districts by March.

Deliberations on the project began in September last year, with representatives of banks and FPS unions, officials said. “The formal process began as part of the government memorandum dated November 8, 2016,” said an official.

However, until the POS terminals are installed, cashless PDS will be carried out through the Unstructured Supplementary Service Data (USSD) and e-wallet facility. The State has issued a government resolution for compulsory use of USSD at FPSs.

Three-phase roll-out

The State has been divided into three phases for the roll-out. Each phase will have its own System Integrator Agency. A letter of intent was issued to the agencies on November 24 and the Master Training Agreement with the agencies will be signed on December 24.

An official said, “The training of Master Trainers has been held at most locations at the Divisional Level. Fair Price shops owners and ration card holders are also being trained in all districts and talukas.”

Once the POS terminals are installed, the Aadhaar enabled cashless PDS will begin, said officials.

However, experts have questioned the use of USSD for cashless transactions, saying it is too early implement its use on a mass scale.

“The USSD (*99#) is only an unstructured supplementary service. To set up a digital infrastructure in the rural areas, it will take nothing less than three years for the government. They should first lay the groundwork,” said Abhishant Pant, a Mumbai-based fintech professional, who started a campaign for a cashless India.