The Indian government has taken a significant step toward modernizing the public ration distribution system, allowing eligible beneficiaries to receive cash transfers into their bank accounts instead of collecting rice and wheat from ration shops. Under this new approach, which is currently being tested in select regions, individuals with ration cards can opt for direct cash or digital vouchers in place of traditional grain supplies.

Key Highlights

• Government pilots cash transfers to replace ration grains, offering beneficiaries flexibility and improved delivery efficiency.
• Scheme targets eligible ration card holders, while free food distribution continues under existing food security programs.

This pilot initiative uses e-RUPI digital vouchers—developed with support from the State Bank of India—to streamline benefits and reduce dependence on physical distribution channels. The shift aims to cut down on long queues at fair price shops and tackle inefficiencies, ensuring recipients have flexibility to purchase food grains and other essentials directly from the market.

The option to receive cash is being launched in specific areas such as Chandigarh, Puducherry, Dadra and Nagar Haveli, and parts of Maharashtra, with the potential for wider rollout depending on results. Eligible beneficiaries will still have the choice between traditional grain ration and the cash alternative.

This change does not signal the end of food grain distribution under the National Food Security Act (NFSA) and longstanding schemes like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which continues to provide free food grains to millions. The cash option is being positioned as a means to make distribution more transparent and consumer-friendly while preserving core food security support.

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Beneficiaries interested in the cash transfer option will need a valid ration card, an active bank account linked to Aadhaar, and mobile access for digital voucher use. Officials emphasise that the initiative is targeted at enhancing efficiency and ensuring benefits reach the intended recipients without reducing overall support.