Prime Minister, Manmohan Singh gave the green light for aradical overhaul of the country's $61-billion welfare system that would see thegovernment make cash payments direct to the needy.
After several trials of cash transfers in different areas ofIndia, Premier Manmohan Singh approved the idea of implementing the policynation-wide that would change the way hundreds of millions of poor accessentitlement programmes.
No date has been set for implementation -- it could takeyears -- but committees will be tasked with turning a system already in use incountries such as Brazil and Mexico into a reality for India and its3.25-trillion-rupee ($61-billion) annual welfare budget.
"This is to be done in a fast-track, accelerated modeto be achieved in a time-bound manner," a statement from the primeminister's office said.
"The idea is to move to a completely electroniccash-transfer system for the entire population."
Welfare schemes such as scholarships for education, old-agepensions or unemployment benefits have been identified as the first to beswitched over to the new system, an official in the PM's office told reporters.
Scholarship fees, for example, are currently paid by thegovernment to a university and are then accessed by the student.
The main advantages in paying cash directly are thatcorruption can be reduced by removing government middlemen who often demandbribes to dispense subsidised products or services, while the poor can bebetter targeted, the official said.
The government also sees cash transfers as making welfareschemes easier to monitor and reform if necessary.
"All the pilots were found to be quite encouraging andthat is why this decision has been taken to go ahead," said the official,who asked not to be named.
The move towards cash transfers is linked to another ambitiousgovernment programme aimed at giving every citizen a unique biometric identitynumber which has made steady progress since it started dispensing numbers in2010.
About 200 million Indians have so far received a Unique ID(UID) number and the organisation in charge of implementation is aiming tocover 600 million in the next 18 months.
Only those with a UID and a bank account will be able toreceive direct cash transfers from the government for their entitlements, theofficial in the PM's office explained.
The latest announcement by Singh comes as the governmentpushes ahead with a string of long-stalled measures in a bid to revive its ownfortunes and the economy, which has been hit by a slump in business confidence.
Singh's cabinet unveiled a reform blitz two weeks ago whenit cut diesel subsidies, announced part-privatisations of state firms.
