The idea is to solve exactly what you are describing (whether the execution actually matches it or not is a separate matter).

The 'ration card' provides both, a way to check identity and a way to keep track of rations disbursed.

By separating out identity part and attaching it to your biometric data, at least theoretically, if someone holds your ID card hostage, you can go to the issuing authority, and get another one issued, because you can prove your identity without any form of paper.

There will be huge problems with implementing this, as any large system tends to have. But once the dust settles, it should make life much more convenient for the poor and everyone else.