In a major boost to the Centre?s efforts to target subsidies to the neediest, 11 states have already signed up to the plan to transfer cash directly to the chosen beneficiaries to disburse kerosene subsidy.
The scheme aims to plug leakages in the public distribution system.
The 2012-13 Budget had set aside a R100-crore incentive for states joining the scheme before March 31, 2013. This allocation has obviously worked.
According to sources, Rajasthan, Madhya Pradesh, Sikkim, Maharashtra, Jharkhand, Himachal Pradesh, Kerala, Goa and Andhra Pradesh are among the states that have agreed to adopt the scheme for kerosene subsidy.
The union territories of Andaman & Nicobar Islands and Pondicherry too have come on board.
A task force headed by the Unique Identification Authority of India chairman Nandan Nilekani had recommended targeting subsidies via direct cash transfer to beneficiaries. The task force had observed that the existing system where oil marketing companies subsidise the sale price of kerosene leads to leakages as the poor man?s fuel is diverted to adulterate diesel.
The task force, which submitted its report last July, had mooted a two-phase implementation for kerosene. In the first phase, states may be made to purchase kerosene from oil companies at market price from April 1, 2012. The subsidy can, then, be transferred to the state governments, which will be linked to their actual kerosene offtake. In the second stage, the cash equivalent of subsidy will be transferred directly to the beneficiaries? bank accounts by linking the transactions to Aadhar.
States will be required to open a ?kerosene? account for beneficiaries with Aadhar. The cash subsidy will again be proportional to the actual quantity of kerosene lifted by them.
Direct cash transfer is also one of the key measures to be achieved as per the finance ministry action plan. The targeting of subsidies will soon be backed by credible targets to reduce the wasteful expenditure on subsidised commodities.
The government is of the view that the implementation of direct cash transfers will also bring down the subsidy burden as the money would directly go to ?genuine? beneficiaries including those who are below poverty line. It would also lead to drastic fall in adulteration and diversion of diesel and kerosene to the black market.
The beneficiaries would be able to get direct cash transfers through banks, ATMs and even mobile banking when the pilot projects take off.