Direct cash transfer may remain elusive for UPA-II

Dec 13 2012, 22:47 IST
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SummaryThe UPA government may have to put on hold its ambitious plan of rolling out cash transfer schemes for delivery of all major subsidies to the needy before the next general elections.

will take at least 2-3 months, making it difficult to implement the cash transfer scheme.

While banks have told the finance ministry that they will be unable to implement the scheme, the Unique Identification Authority of India (UIDAI) also accepts that direct cash transfers in districts with less than 80% Aadhaar penetration will be a tall order.

In fact, the Planning Commission in its recent report has said that the integration of Aadhaar into government programmes will increase from 2% coverage of participants in 2012-13 to 100% coverage in 2018- 2019. Sources in the fertiliser ministry say the government would be able to transfer subsidy directly to farmers only by March 2013, but this seems to be an overly optimistic projection.

The transfer in this case will be based on kisan credit cards, Aadhaar number and bank account number. As per the plan, the cash transfer of fertiliser subsidy would be done in phases, with the government tracking sales of urea up to the dealer level in first phase I, farmer level in phase II in December, while the actual transfer would not begin before March.

“The oil ministry does not have a system integrator at present to implement the scheme and their subsidies are centralised. Other ministries do not have this problem as their scale is not as much and their subsidies are disintegrated. Fertiliser subsidy is complicated and the producer subsidy goes to at least 20 companies On the other hand, food is a controversial subject and there is no clarity on the Food Bill. Also, market availability is a problem in rural areas,” said an official of the UIDAI.

In the Union Budget 2012-13, the government pegged the fertiliser subsidy bill at R60,974 crore as against R67,199 crore in 2011-12. The subsidy bill hasn't flared up this year (a major part of the subsidy meant to be disbursed under the revised estimate in the Budget last year was spent only this year). The fertiliser ministry has demanded an extra subsidy of R40,000 crore, but a good part of this is unlikely to reflect in this year's budget.

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