Scheme for direct cash subsidy to be launched
New Delhi: In a major initiative to check corruption and pilferage of subsidised items, the government is launching an ambitious scheme for direct electronic transfer of cash to beneficiaries that is expected to cover one quarter of households of the country.
Prime Minister Manmohan Singh has set up an architecture comprising a ministerial committee under him besides a few other panels which would ensure time-bound implementation of the project leveraging the Aadhar scheme.
Government spends a huge amount of Rs 3,25,000 crore annually on subsidies and the new scheme is intended to check corruption and pilferage of subsidised items including diesel, LPG and besides leakages in other schemes like MNREGA, pension and scholarships.
"In a move to cut down wastage, duplication and leakages and enhance efficiency, the Prime Minister has given a major push to transfer individual benefits from the government directly into the bank accounts of beneficiaries," a PMO statement said.
"This is to be done in fast-track, accelerated mode to be achieved in a time-bound manner. The idea is to move to a completely electronic cash transfer system for the entire population," it said about the scheme.
The amount of cash to be transfered electronically to the beneficiaries is to be worked out.
Against the backdrop of corruption and pilferage in various schemes, the government has been thinking about direct cash transfers to genuine beneficiaries to plug leakages as it is expected to bring down the subsidy burden.
The issue of direct cash transfers was discussed at the meeting of the Planning Commission held earlier this month to finalise the 12th Plan as pilot projects have been successful in some states like Chhattisgarh, Andhra Pradesh, Karnataka, West Bengal, Tamil Nadu and Punjab.
The National Ministerial Committee, to be headed by the Prime Minister, will include Ministers of Finance, IT, Social Justice, HRD, Minorities, Labour, Health, Food, Petroleum and Natural Gas, Fertilizers and Deputy Chairman of the Planning Commission.
Besides, there will be a National Executive Committee comprising Secretaries of ministries concerned and it will ensure adherence to timelines and sort out any hitch in the roll-out of the programme.
There will also be sub-committees like Cash Transfer Mission to work out technological, financial and banking aspects. Another sub-committee Electronic Benefit Transfer (EBT) will work out data bases, transfer rules, controls and audits etc.
The beneficiaries will include poor people. Of them, the Unique Identity (UID) Mission has already enlisted 200 million people and the number is expected to go up to 600 million in the next six months, an official in the PMO said.
The programme will initially cover scholarships, pensions and unemployment allowances and later MNREGA and Public Distribution Schemes.
The Prime Minister set up the architecture for cash transfers to speed up activity and ensure that the shift to cash transfers is rolled out rapidly, the statement said.
The committees and sub-committees will work on and finalise all operational and implementation details relating to the design and operation of the transfer system, it said.
"With the rapid rollout of Aadhar, now covering 20 crore people and rapidly growing to 60 crore, and with the National Population Register covering the other half, it is possible to move to a system of transfering cash benefits directly to the poor," the statement said.
"There is a lot of work needed to have a smooth roll-out and has to be done in a mission mode with multiple agencies acting in a coordinated manner," the statement said while explaining the reasons behind setting up various sub-committees.
"A Cash Transfer System can be used for transferring case benefits such as NREGA wages, scholarships, pensions, income support of other types and health benefits," the PMO statement said.
"Electronic Transfer of Benefits (ETB) is a simple change as the transfers are already taking place and the only modification that would be involved is a movement from a paper based, cash-driven system to an electronic direct transfer system," it said.
"Cash Transfer System would improve targeting, reduce corruption, eliminate waste, control expenditure and facilitate reforms," it said.
The cash transfer scheme is aimed at bringing about reforms in the Public Distribution Scheme.
The programme is inspired by such successful schemes existing in countries like Brazil and Mexico and cities like New York and Washington.
Such a scheme in Brazil covers 25 per cent of population, involving 11 million households and 46 million people.
In Mexico, five million households are benefitting from such a scheme.
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