Equipped with a robust database of unique identity numbers (Aadhar), the government will formally launch direct transfer of a clutch of doles ? student scholarships, pensions and rural job guarantee scheme payments ? to the beneficiaries? bank accounts later this month. At least a beginning will be made on disbursal of LPG subsidy through this pilferage-free method.
According to sources, Prime Minister Manmohan Singh will launch the direct cash transfer programme on October 20. The government reckons that improving efficacy of subsidy by cutting wastage is a key element of the plan to reduce the expenditure on subsidies. To ensure that disbursal of these doles through electronic cash transfer is rolled out rapidly, the Prime Minister last week set up the architecture for these transfers.
The three public sector oil marketing companies together have an LPG consumer base of 1.4 crore at present. Every fifth consumer is believed to have more than one LPG connection and the OMCs have been trying in unison to block these multiple connections since 2010, using a joint web-cracking facility. So, the target population for direct cash transfer is right now around 1 crore.
The number of LPG connections grew at 6% last year. LPG subsidy for 2011-12 fiscal was R27,000 crore.
The Centre doled out some 6,000 student scholarships under CBSE and ICSE last year and another 76,000 scholarships were given under various schemes to universities and colleges. Besides, various Central ministries have other schemes for the disabled, SCs, STs, OBCs and girls, among others.
In a move aimed to rein in the runaway fiscal deficit, the Centre recently capped the number of subsidised LPG cylinders to each household at six. Later, Congress-ruled states were asked to give three additional cylinders at the subsidised rate to ease the burden on consumers.
The Prime Minister’s office in a statement on Friday had said the government will be facilitating electronic transfer through Aadhaar programme. The policy will initially cover scholarships, pensions and the job guarantee scheme, MNREGA. Later, it will be used for public distribution schemes for subsidised grain, sugar, diesel, LPG and kerosene.
Based on the differential between the cost price and the selling price of LPG cylinders, users will get annualised payments on subsidy. The market price of one LPG cylinder is close R800 at present in the Capital, while government provides the subsidised cylinder at R399.
The money will be transferred in the bank accounts using the Aadhaar Payment Bridge System (APBS), which is a centralised electronic benefit transfer facilitating disbursement of benefits to the bank accounts of the beneficiaries linked to their Aadhaar numbers.
The finance ministry had announced its commitment to cap its subsidy burden at 1.9% to the GDP in the Budget for the current fiscal, however, on account of higher crude oil prices, the government’s share of the subsidy is likely to exceed 2.4% to the GDP in the current year.
The recently submitted report by Vijay Kelkar has strongly recommended withdrawal of the subsidy on fuel in next two years. The committee recommends measures for reducing subsidies to 1.7% in 2013-14 and 1.5% in 2014-15.
A senior official said public sector banks have been protesting the proposal to link the direct transfer through APBS system as the Aadhaar authority will earn a commission on it, the matter has remained a bone of contention between UIDAI and various ministries. The first pilot was started in Mysore and while it has seen vast enrollments, the actual cash transfer has been very limited.