a technology-based solution for benefits transfer.
What does the effective implementation of electronic transfer of benefits call for To ensure that a beneficiary gets full benefits in a timely, secure manner, at the first instance, each beneficiary needs to have an unique identity recorded. This identity has to be tied to the biometrics of the person and the information has to be stored on a central digital database that can be accessed by any disbursing agent. When a beneficiary approaches the disbursement point, the agency has to have the necessary infrastructure for authentication of the beneficiarys identity and disburse the benefit amount. Further, to ensure that there are no leakages, the databases of the numerous schemes need to be cleaned and de-duplicated so that one person alone receives what is due. This forms the basics of any successful programme that aims at delivering benefits electronically. Aadhaar provides such a platform. So, what has gone wrong Why does the programme look so bereft
Electronic transfers of benefits have been under discussion since the early 2000s, even during the NDA regime. The idea of a smart card had been mooted as an effective tool to plug leakages in disbursements in 2002; the tenth Five-Year-Plan had proposed a pilot for smart cards for PDS and a working group was set up for the eleventh Five-Year-Plan to examine an integrated smart card system. This group specifically recommended using a unique national ID as the identifier necessary to avoid duplication of benefits and the beneficiaries thereby helping correct targeting. The unique national id was to be attached to a smart card that aimed to be an entitlement reform for empowering the poor, which could be used across multiple services by different departments disbursing benefits. The group envisaged the use of this multi-application smart card (MASC) by private financial service providers also, not just the government. It is only by raising the scale of use, by increasing transactions on the card that such a project becomes viable. However, this MASC never took off; over the years, while there have been many schemes where government transfers or payments were made through bank or post office accounts, the smart card project ran into the basic question of who was going to finance it. Meanwhile, the electronic payments infrastructure in the country has expanded, and rural business correspondents are now being connected to the core banking system, making for real time online authentication and transactions.
An important point to note in the debate over linking Aadhaar to DBT is that whatever the mechanism used, biometric authentication is key to ensuring that the benefits reach the intended beneficiaries. Whether it is Andhra Pradesh or Orissa, disbursements of MGNREGA wages through bank accounts, in the years before Aadhaar, called for biometrics and photo identification of the beneficiary. Aadhaar has already captured the data for more than 60% of the population and is expanding; by providing a system for e-KYC that is accessible in real time from any part of the country, it goes a long way in solving the problem of KYC that plagues so many services.
Interestingly, the working group report had noted that, Widespread application of MASCs in a country of continental dimension like India should be based on a well structured, articulated plan of action. This is a long-haul project where changing course mid-stream would be both costly, both in terms of money as well as in terms of its impact on the schemes to be administered. Here, the UPA government has definitely erred. It has not looked at the basic contradiction in mandating Aadhaar for its DBT programme when it was still defined as being voluntary. The National Identification Authority of India Bill 2010 remains to be cleared in Parliament, the Standing Committees concerns remain unaddressed. With no standardised processes and procedures across banks, lack of adequate and appropriate training of bank staff and many other implementation issues, Aadhaar-enabled DBT worked very well in some districts and has been flagging in most. Further, tying Aadhaar to LPG subsidy in a mission mode complicated the entire exercise; with impending deadlines and no clear instructions, dealers, banks and customers were thrown into confusion.
Going ahead, the answer to the question of whether Aadhaar-enabled DBT is the only way to deliver government transfers, is clear. No, it is not as Aadhaar is just a tool. But it is one with an extensive centralised database, whose payment and authentication platforms are in place through the
National Payments Corporation of
India and have been tested. Yet, it is also clear that electronic transfer of benefits is a given. So, the relevant issue should be how to fix the current glitches, rather than trash the programme completely. There is a lot to do, but using the Aadhaar database and authentication platforms can only speed up, rather than restrict the spread of electronic benefits transfers.
The author is with the Indicus Centre for Financial Inclusion