Aadhaar-bank account seeding soars but benefit transfer rate lags

Even as the government is speeding up issue of Aadhaar numbers to all residents of India to achieve universal coverage and linking their bank accounts to this unique identification document, transfers of benefits using Aadhaar-linked payment gateway continues to lag.

Less than 50 per cent of cash benefits are usually transferred using Aadhaar Payment Bridge System (APBS) by government departments administering various welfare and assistance schemes including scholarships, reports prepared for the prime minister’s office available in public domain show.

Departments managed to transfer a little more than 50 per cent of the intended cash benefit using APBS only on two occasions, these monthly reports show. The first time was in February 2017, when about 51.6 per cent of the benefits were transferred using this medium, and the second time in May 2017, when about 52 per cent of the benefits. For the last fiscal year 2016-17, just about 34 per cent of the amount due under direct benefit transfer was moved using APBS, State of Aadhaar Report published by IDinsight India notes. The rest was transferred to beneficiaries’ accounts using traditional methods such as National Electronic Funds Transfer (NEFT).

APBS is a gateway created by National Payments Corporation of India to enable departments and agencies administering government schemes to transfer funds to Aadhaar-enabled bank accounts of beneficiaries. But transfers using this payments gateway cannot happen unless the beneficiaries’ Aadhaar numbers and Aadhaar-linked accounts are mapped to the beneficiaries’ identity record in each scheme or programme database. APBS transfers are seen to be effective in removing fake beneficiaries and duplicates and thus minimise leakage of funds to unintended beneficiaries.

Official data show that of the ₹6,587.43 crore transferred in May 2017 to 31.44 crore beneficiaries of 238 central schemes, only ₹3,424.15 crore was transferred using APBS. This, even though 89 per cent of the beneficiaries reported to have Aadhaar numbers.

Two schemes stood out for very high transfers of funds using APBS – direct cash transfer for foodgrains or food subsidy and Pahal, the subsidy scheme for LPG users.

Over 95 per cent of direct benefits for foodgrain was transferred using APBS in May 2017 and so was over 82 per cent of benefits for Pahal.

The number of beneficiaries under food subsidy scheme is small – just 2.33 lakh according to the report for May 2017 – and over 95 per cent reported to have Aadhaar. The number of liquefied petroleum gas consumers, including Pahal beneficiaries, stood at 17.67 crore in May and almost all users and beneficiary accounts were seeded with Aadhaar.

Aadhaar seeding of accounts of beneficiaries of Mahatama Gandhi National Rural Employment Guarantee Programme, which covered 10.35 crore individuals in May, stood at about 85 per cent. However, unlike other schemes, just a little over 40 per cent of the money were transferred into beneficiaries’ accounts using APBS.

Schemes such as Indira Gandhi National Old Age Pension Scheme saw just about six per cent of the funds getting transferred to beneficiaries using APBS and in others such as Credit linked subsidy scheme of the Ministry of Housing and Urban Poverty Alleviation no amount was transferred using this gateway.

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