Will the magic work

Written by Sukalp Sharma | Sukalp Sharma | Updated: Jan 20 2013, 06:45am hrs
Hiccuped, slow, scaled down, unrealisticamid all these criticisms, the direct benefits transfer scheme did get off to a start this month. FE brings you snapshots from four districts in Punjab, Karnataka, Rajasthan and Delhi on the hits and misses of the scheme

Estimated cash transfers worth R3.2 trillion a year and estimated government savings of R20,000 crore a year. If there is one programme that defines ambition in governance in terms of delivery of benefits and subsidies of welfare schemes, this is it. The Centres direct cash transfer scheme, now called direct benefits transfer (DBT)that uses Aadhaar-linked bank accounts to transfer cash subsidies and benefits directly to beneficiarieswas rolled out in 20 districts in 16 states on January 1. According to the finance ministry, banks have already floated tenders for 20 lakh micro-ATMs which, once operational, will help the government in directly transferring cash in the beneficiaries accounts.

But has the government rushed into rolling out the scheme and has that been done with an eye on the 2014 general elections It cant be refuted that the rollout did hit rough weather right at the onset, with the government being forced to prune the number of districts where the scheme had to roll out on January 1, from 51 to 20. The number of schemes was also brought down at the last moment from 34 to 26.

The last-minute scaling down of the rollout is primarily being attributed to infrastructure issues like lack of bank accounts, and gaps in beneficiary lists. In fact, a bank account, apart from the Aadhaar card, is the critical element for the mechanist to be effectively functional. But with only 40% of Indias population having bank accounts, its not difficult to fathom the kind of bottlenecks that the scheme can get tied down with.

Broadly, there are two issueslack of Aadhaar cards, and lack of bank accounts and their linking to the Aadhaar cards. Both these bottlenecks are temporary practical issues that are now being dealt with on priority. We have accelerated the Aadhaar enrollment process and the UIDAI is working tirelessly to that end. Banks are also in an overdrive. So by and large, it is under control; infrastructural bottlenecks take a bit of time to get sorted, so just a little patience is required. Its a challenging programme and soon enough things will run smoothly, says a senior government official directly associated with the programme, on the condition of anonymity. He adds: People called the timeline unrealistic and there is some merit in that argument. But a timeline is necessary to get the system and officials on their feet. Thats what the January 1 timeline did and subsequent timelines will do. Teething troubles will be ironed out in the process.

Apart from technical glitches and bottlenecks related to financial inclusion, there are other challenges that the government will need to deal with, with the DBT system looking to include more schemes in the time to come. When you start implementing it in programmes that involve dual pricing, like food, kerosene and fertilisers, its going to be a big challenge. Syncing the public distribution system with the DBT and Aadhaar platform will also pose challenges at the operational level. Identification of beneficiaries is another concern. Who is to be included and who is to be excluded is a manual job that needs to be done by the administrative machinery, says NC Saxena, member, National Advisory Council (NAC).

Adds a senior Planning Commission official: Ministries with welfare schemes do not have so much of a problem and Aadhaar seeding is being done for them. However, schemes in the second phaserelated to food, fertiliser and kerosenewill face a challenge.