Need a mechanism to verify the beneficiary’s details at the time of redemption to minimise risk of transfer
The e-RUPI is an important step towards transparency in welfare delivery, but the government must do more to ensure that the people it is meant for, essentially beneficiaries of the DBT system, are prepared to handle such a system. Given the propensity of Indians to exchange vouchers for cash, there needs to be a mechanism in place to ensure the vouchers are not transferred. The objective of this pre-paid voucher system for welfare benefits is targeted and leakage-proof delivery of welfare support to intended beneficiaries. The system will be available to the Centre and the state governments as also to corporates; to start with, the e-RUPI has been launched to transfer benefits under health ministry’s schemes and will be applied to payments for vaccination. Rather than crediting the DBT amount directly to the beneficiary bank account, through the e-RUPI, a voucher for an equivalent amount will be sent directly to the beneficiary’s mobile phone in the form of an SMS string, or a QR code. Since the beneficiary does not need a smartphone for receiving the voucher, the e-RUPI will be an inclusive system catering to a majority of India’s population, it has been argued.
The idea behind the system is not just to ensure that funds reach the individuals they are meant for, but also that they are used for the very purpose that the payee intends. The voucher is non-transferable and therefore cannot be used by anyone else other than its recipient. However, the risk of identity fraud remains in this scenario, especially because Indians are used to exchanging benefits for cash.
As risk experts have pointed out, if real beneficiaries begin to exchange their e-vouchers for cash, it will be difficult to track the vouchers as they move from one hand to another. To guard against such a risk, we might need a mechanism to verify the beneficiary’s details at the time of redemption to minimise the risk of transfer.
This may not be an adequate safeguard against exclusion of beneficiaries. While the RBI has developed an index to gauge the levels of financial inclusion in the country, there is no comparable gauge for the level of digital inclusion. A July 29 paper by Washington-based Center for Global Development revealed that the proportion of Indian adults who have ever made or received a digital payment to be just 35%, as of end 2018, the most recently available data. The analysis suggested that many bank accounts in India remain dormant. The exponential growth of Unified Payments Interface (UPI) transactions after the outbreak of Covid-19 may have been driven by increased usage by current users, rather than adoption by new users, the paper said.
Exclusion risk has proved to be a potent one in India’s past experiences with digital delivery of benefits. Since 2017, many starvation deaths have been reported from across the country after the government mandated linking of all ration cards to Aadhaar cards. In the Koili Devi vs Union of India case, currently being heard in the Supreme Court, the court has taken note of the fact that three crore ration cards were cancelled at the central level and has sought a response from the Union government. At the heart of the problem here is the lack of an updated grievance redressal mechanism linked to systems of digital delivery of benefits. Therefore, while establishing systems to eliminate pilferage in welfare delivery, the government must be alive to the need for adequate safeguards for the most vulnerable.