Given how spending by state governments is actually higher than that by the central government, increased efficiency in this is critical; indeed, one of the problems noticed over the last few years has been that while the Centre has got stricter with its deficit, the states have got more profligate.
Given how spending by state governments is actually higher than that by the central government, increased efficiency in this is critical; indeed, one of the problems noticed over the last few years has been that while the Centre has got stricter with its deficit, the states have got more profligate. Apart from the impact on the deficit, if there is a 40-50% leakage in central government schemes, chances are it is as bad, if not worse, in state government schemes. While the central government’s Direct Benefits Transfer (DBT) scheme is a great success—from Rs 7,368 crore in FY14, this rose to Rs 74,607 crore in FY17—not too many states are doing as well in terms of linking payments to Aadhaar numbers of citizens. The one state that really stands out is Rajasthan; indeed, it claims its Bhamasah scheme is actually a precursor to the Centre’s Aadhaar-based DBT as it started earlier. Over three years, DBT transactions over the Bhamashah platform have crossed Rs 10,000 crore. Bhamashah was conceived as a one-stop solution for the disbursement of all government benefits to the bank account of the lady of the family. Bhamashah has more than 5.41 crore members enrolled with it for getting the benefits of scholarships, pension and MGNREGA payments as well as Indira Awas Yojana among other cash and non-cash schemes in the state. Of the funds disbursed through the Bhamashah platform, the largest chunk, of `5,517 crore, is for pension payments; another Rs 768 crore was given for the Bhamashah Swasthya Bima Yojana. Madhya Pradesh’s Samagra has somewhat similar goals, though details of how much money has been disbursed through it are not available.
While reducing high levels of theft are important, it would be important for both the Centre and states like Rajasthan to use the opportunity to re-engineer the schemes. In the central government’s case, for example, if DBT was used to replace ration shops with cash transfers to banks, the inefficient FCI system itself could be shut down and that, in turn, would have larger benefits for the agriculture sector. Similarly, in the case of state governments, if the money spent on education was given to each family in cash—the government spends `1,000 per month per child at the school level—the family would be free to use this on private education, thereby giving the public sector schooling system some serious competition. And, given the country’s old-age crisis, making monthly payments into pension accounts of citizens would go a long way in promoting a pension culture.