By Dr. Amrit Patel Dr. Amrit R. Patel is the Retired Deputy General Manager, Bank of Baroda, Mumbai, he can be contacted by email at dramritpatel@yahoo.com The Government from time to time has introduced a plethora of welfare schemes involving, inter alia, provision of subsidy, or subsidized goods for the socio-economic upliftment of poor in the country. However, numerous surveys and studies reveal that subsidized goods and welfare benefits have not been reaching to intended beneficiaries. The system of providing subsidies under various schemes of the Government has proved to be inefficient. The Central Government spent Rs.2.16 lakh crore on subsidies during 2011-12 accounting for 2.41%of the country’s GDP. The budget for the year 2012-13 proposed disbursal of subsidies amounting to Rs.1.9 lakh crore. ] Government expects to reduce the cost and subsidy bill through better targeting. Union budget 2012-13, targets subsidies below 2% of GDP and below 1.75% of GDP in the next three years. It is in this context, this article briefly highlights the scheme, its benefits, Government’s initiatives and strategic action plan to complete the task in three years focusing on productively utilizing existing institutional infrastructure, creating awareness, resolving pressing issues, among others.
Scheme: The Direct Cash / Benefit Transfer scheme provides for direct transfer of money into the bank accounts of eligible persons for pension, scholarship, payments under the Employment Guarantee Scheme and benefits/subsidies under other Government welfare programs. This can facilitate beneficiaries to use this money to buy goods and services in quantity and of quality from the market at competitive prices. Under the scheme, the difference between the market price and the subsidized price is directly transferred to the beneficiary in cash in proportion to the quantity uplifted from the market. The scheme depends upon the basic two requirements viz. Aadhaar, the Unique Identification (UID) Number and Bank Account. Aadhaar is a 12-digit individual identification number issued by the Unique Identification Authority of India [UDAI]to serve as proof of identity and address. The cash transfer will be enabled through ‘Aadhaar,’ a numerical biometric identification that is currently being given to all citizens of the country. The bank account is the most important criterion for the scheme. On 1 January 2013, the Government commenced implementing the DBT scheme in 20 districts covering seven programs by crediting cash directly to the bank account of eligible beneficiaries involving old-age pensions, widow pensions, maternity entitlements and educational scholarships for SC/STs, OBCs, and minorities. Under the scheme, money meant for recipients of welfare programs transferred to bank accounts linked to their UID Numbers. The scheme will be extended to 11and 12 more districts in February and March 2013. The scheme would benefit more than 200,000 people initially and would cover the entire country in December 2013. Cash handouts will replace the money the Government currently spends on subsidies on food, fertilizers and fuel, among others, under 42 Government programs and is expected to improve the standard of living of 720 million people in the course of time. Benefits: The scheme aims at minimizing the incidence of corruption, eliminating falsification and duplication with regard to payments of subsidies. Incidentally, other benefits include Initiatives: The government has directed banks to reach half a million unbanked villages through bank branches, BCs and Common Service Center [CSC]. Banks would add this year 45,000 BCs to already 65,000 at present. CSCs would be ready in terms of equipment, connectivity, biometric device, card reader and printer within three months. The government will incentivize banks by paying a transaction fee and developing a business model to help banks recoup transaction costs. With the efforts put in by the UDAI to invite applications from approved commercial banks deploying micro-ATMs to enable Aadhaar-based payments, it is possible that these ATMs will be operational in due course. By the end of August 2013, every gram panchayat, Mandal and district will be on the micro ATM network. Beneficiaries need not to run to banks or post-offices to get money but will receive at their doorsteps. Today, it is one bank, one business correspondent, one beneficiary. The new model would be one bank, multiple BCs and one beneficiary. The beneficiary will have the choice of BC. In 43 districts camps are organized to enroll every beneficiary of 34 welfare schemes and 3500 machines are deployed each with a capacity of about 50 enrolments per day and put in place an accelerated process of generating Aadhaar for these beneficiaries. Strategic Action Plan: The success of the DBT scheme depends upon the Government’s commitment to addressing fundamental issues viz. However, currently, there are serious constraints viz. Institutional infrastructure: Existing institutional infrastructure to speed up the implementation of the scheme should be productively utilized, viz. District Rural Development Agencies, District Industries Centers, Block Development Offices, Gram Sabhas, Gram Panchayats, PanchayatSamitis, ZillaParishads, State Level Bankers Committees, District Level Coordination Committees, Block Level Bankers’ Committees, Lead Bank Office, NABARD’s District Offices, Financial Literacy and Credit Counseling Centers in each district, Rural Self-Employment Training Institutes in each district, among others. Effective coordination is a sine qua non among State and Union Government, UIDAI, RBI and Banks to achieve a collective goal. Action Plan: Need is, therefore, to formulate Strategic Action Plan [SAP] for three years [2013-16] indicating month-wise and State/ district/ block-wise targets for issuance of UID Numbers and opening bank account in urban India comprising metropolitan, urban and semi-urban centers which have a significant number of branches of public and private sector banks and urban cooperative banks. Rural Areas: Monitoring: Awareness campaign: The government can consider announcing in its ensuing budget to celebrate 2013-14 “Direct Benefit Transfer “Year to create awareness among all stakeholders through a systematically designed massive result-oriented campaign. Awareness has to be created to sensitize all stakeholders for issuance of UID Number, opening a bank account, identifying eligible beneficiaries under social welfare programs of the Government, crediting benefit in the form of cash in the bank account and facilitating hassle-free withdrawal of the cash. The print, electronic and other mass communication media along with Government, banks, MFIsand SHGs can spread the details of the scheme among all citizens of the country through holding seminars, discussions, interviews, village meetings, among others. . Issues: Issues that need to be sorted out expeditiously to speed up implementation of the scheme include, among others, viz. According to UIDAI, apart from the herculean task of enrolment of eligible beneficiaries, it needs to be ensured that the authentication platform must not fail [it has to be 24×7 instantaneous and real time], operationally the system should not breakdown, no bugs or glitches in the system, to build with every delivery system that uses Aadhaar authentication for service delivery, an exception management system so that Aadhaar authentication failure does not become an excuse for denial of services to the people. Need for: Measures that are needed include Conclusion: One of the most successful cash transfer social innovation programs has been Brazil’s ‘Bolsafamilia‘ It contributed significantly to the drop in poverty during 2000. The most important lesson has been meticulous targeting the beneficiaries. The DBT scheme cannot be termed a panacea for all evils but it is certainly a significant step in the right direction to transfer benefits to intended beneficiaries and contain subsidy burden. Concern by the legislatures and commitment by bureaucracy accompanied by the accountability will surely yield better results.
