Food, fertiliser, fuel subsidies out of the scheme for now

A subdued, half-hearted and less than promised Direct Benefit Transfer (DBT) (Direct Cash Transfer) scheme will be rolled out on January 1, 2013. The total number of beneficiaries on Day 1 will be over two lakh.

First, the scheme will be rolled out in 20 districts, not 43 as declared earlier.

Second, cash transfer will take place only for seven schemes, mainly scholarships or women welfare-oriented ones, not in 34 schemes, as announced earlier.

Third, the Government is not giving any timeline for using this scheme for food, fertiliser or fuel, the most critical segments for subsidy management.

The scheme will be rolled out in 43 districts by March 1 – 20 districts from January 1, 11 districts from February 1 and 12 districts from March 1. By the end of 2013, the direct cash benefit transfer will be rolled out in all districts of the country.

“We are proceeding with caution. All 26 schemes are ready for roll-out. On January 1, the seven schemes in which payout is due in the (20 selected) districts, the money will be transferred through the direct benefit transfer system using the UIDAI platform,” Finance Minister P. Chidambaram said while announcing the details about the new mechanism.

Does this mean that identified beneficiaries in various schemes with non-Aadhaar-based bank accounts will not get their due from January 1?

No, said Chidambaram, adding that credit in a bank account will take place and withdrawal from the same, too, even if such an account is not Aadhaar-linked.

But the goal was to seed Aadhaar in each of them, he added.

When asked specifically about LPG to be included in DBT, the Finance Minister said, “It is not covered in the first phase. I don’t know when it will be covered.”

At the moment, there is no intention to transfer subsides on food, fertiliser, diesel and kerosene through direct benefit transfer. Here, the existing system will continue because these are complex issues, he said.

Initially, the beneficiaries will be able to withdraw from their own bank branches or ATMs or business correspondents (BCs), wherever they exist. The system of micro-ATMs and multiple BCs will roll out subsequently with full inter-operability gradually. Banks have floated a tender for 20 lakh micro-ATMs, which will be inter-operable and will have facility for biometric scanning and Aadhaar authentication.

The Finance Ministry appealed to the media not to pronounce the new mechanism a ‘success’ or ‘failure’ by 5 p.m. on Tuesday. “Let’s give it a fair trail. It is a game changer for the governance,” he added.

(This article was published on December 31, 2012)
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