‘Cash transfer’ in urban centres for foodgrains, LPG, etc., is better than picking some remote rural district only to claim that the scheme has failed.

The best way to kill a good idea is to implement it badly. One hopes that direct cash transfer of government funds under various welfare schemes to the bank accounts of their intended beneficiaries does not meet this fate. For, it is too good an idea to be discarded, notwithstanding all the vested interests that stand to lose from its success. All the more reason, then, for the Government to take extra care in demonstrating its feasibility on the ground, thereby silencing the prophets of doom – including those for whom welfare programmes are a means for lining their own pockets. It is in this context that reports of beneficiaries not receiving any money in their bank accounts, even in select blocks where direct payment of subsidy against kerosene purchases at market rates is being tried out on a pilot scale, make for disturbing reading. It is almost as though there is organised sabotage at work.

The blame for this lies no less with the Government itself. To start with, there was this unseemly spat between the Home Ministry and the Unique Identification Authority of India (UIDAI), with the former even questioning the latter’s authority to issue ‘Aadhaar’ numbers to every Indian resident linked to the biometric fingerprints-cum-iris profile specific to that individual. To add to this was the confusion over the validity of Aadhaar as an official identity document, with banks not accepting it for opening of accounts. Given that the entire success of direct cash transfer rests on the twin pillars of the Aadhaar platform and financial inclusion, it was the Government’s responsibility to clarify things, including sorting out the various inter-departmental disputes. Instead of tying up these loose ends, the Government – clearly in response to the current electorally surcharged environment – has suddenly announced that payments under 29 welfare schemes will be made directly to beneficiaries’ bank accounts, which are Aadhaar-enabled to guard against impersonation. To begin with, this would happen from January 1 in 51 districts.

While not disputing the advantages of direct transfer, more so from the standpoint of curbing ‘leakage’ of public funds to undeserving beneficiaries, there is equal need to ensure its success on the ground. To that extent, trying it out first in urban centres – where the possibility of even the poor having bank accounts is higher and the availability of LPG, foodgrains, hospitals and other services sought to be subsidised is also better – would make more sense. If the subsidies against these are transferred upfront to the targeted beneficiaries’ accounts on a monthly or a quarterly basis, they could very well procure the same at market prices. Since everyone, the poor included, would be paying the market price, the problem of diversion also gets eliminated. Once the project is seen to be successful, it can be extended to the more remote rural centres.

(This article was published on December 4, 2012)
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