There is little to doubt that direct cash transfer (DCT) ofsubsidies and other social benefits like pension and scholarships to the poor,which the UPA government is planning to roll out from January 1, is a brilliantidea. It will completely change the way our subsidy regime and social welfareprogrammes are run.
For long, there has been a strong demand for putting themoney directly in the hands of the poor in view of massive leakages andgold-plating, whereby a substantial chunk of the money went to the wrongpeople. Consider this: DCT will mean the government disbursing about Rs 300,000crore a year and every BPL family will get between Rs 3,000 and Rs 4,000 amonth credited into their bank account. But the moot point is whether the planwill work on the ground. For one, the programme is being launched in a tearinghurry. The government departments have less than five weeks to put a suitablemechanism in place. The focus is not so much on homework but the political gainit may fetch in the 2014 elections. Just how prepared the government is, isclear from the prime minister’s address to the freshly minted NationalCommittee on Direct Transfers (NCDT) on November 26. He identified two pillars” financial inclusion and Aadhaar ” and said if either of the pillars failed,success of the initiative would be jeopardised. What he meant was the successdepended on the poor having (a) bank accounts and (b) Aadhaar identity numbers,because both are necessary preconditions to get DCT. Now, it is well known thatmost of the poor don’t have bank accounts. MNREGS is a good example. Somestates like Tamil Nadu pay wages by cash. Payments are received three to sixmonths late across the country. In fact, Odisha has objected to DCT saying thata significant chunk of BPL families, especially those in remote areas, do nothave bank accounts.
Worse, we don’t even know how many BPL families and otherbeneficiaries have bank accounts in the 51 districts where DCT will start fromJanuary 1. Second, UIDAI responsible for making Aadhaar cards has said only 20of the targeted 51 districts have got their cards now and hopes to cover therest by January 1. What happens if it fails? UIDAI was to deliver Aadhaarnumbers by 2011. It is already late by two years. In fact, the PM had identifiedanother problem in his address to NCDT: digitisation of databases of thecentral government departments and state governments. That is a huge challenge.But these are not the only problems. The oil ministry has said it will need 11months to ready the mechanism to transfer subsidy for LPG and kerosene. Whatabout the other ministries and departments which will be transferring cashdirectly, like HRD, health, women and child development, labour and employment,minority affairs, social justice and so on? There are no words from themyet.The PM is right in saying, “Direct cash transfers, which are now becomingpossible through the innovative use of technology and the spread of modernbanking across the country, open the doors for eliminating waste, cutting downleakages and targeting beneficiaries better”. But will it? Highly unlikely, itwould seem.
