Will the magic work?

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SummaryEstimated cash transfers worth Rs.3.2 trillion a year and estimated government savings of Rs.20,000 crore a year.

Hiccuped, slow, scaled down, unrealistic—amid 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 Centre’s direct cash transfer scheme, now called direct benefits transfer (DBT)—that uses Aadhaar-linked bank accounts to transfer cash subsidies and benefits directly to beneficiaries—was 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 can’t 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 India’s population having bank accounts, it’s not difficult to fathom the kind of bottlenecks that the scheme can get tied down with.

“Broadly, there are two issues—lack 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. It’s a challenging programme and soon enough things will run smoothly,” says a senior government official directly associated with the programme,

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