Direct Cash Transfer to Beneficiaries on Subsidies

By Hemanta Pande: More than two decades ago, Rajiv Gandhi had said that only 15 paise of a rupee that is allocated for the rural areas, reaches the true beneficiary.  Those who share the rest 75 paise in the process surely have prospered with corruption and malpractice. That holds true even in today’s scenario where the media is playing an important role in exposing scams, irregularities and harassment.

To overcome such problems, UPA Government’s ambitious electronic Direct Cash Transfer scheme promises a lot to the beneficiaries of subsidized item and welfare schemes. As per the road map, the scheme will allow cash to be transferred directly to the bank accounts of those who qualify for government subsidies and welfare schemes. The scheme will be rolled out in 51 districts on a pilot project from 1st January 2013. However, no district of poverty-stricken Odisha has been included in the pilot project. The scheme would be rolled in Odisha, Uttar Pradesh, West Bengal and Bihar in July 2013. The facility will be available in all states across the country by December 2013.

The scheme on direct cash transfer is being introduced with an aim to curb corruption, cut down on administrative cost and eliminate fraud, black-marketing, bribery and pilferage in distribution of subsidised items. Its objective will be to enhance efficiency, transparency and accountability in service delivery of government welfare schemes.

The programme will initially cover scholarships, pensions and unemployment allowances. Later, it will be used for Public Distribution Schemes, which offer subsidized grain, sugar and kerosene to poor families. Another big focus will be on using the electronic transfer system for the government’s rural employment scheme or MGNREGA – wages would be deposited in the bank account of the labourer.

The government intends to cover 1.4 crore scholarship holders, 2.1 crore pensioners, 87 lakh BPL families who get free electricity and about eight crore NREGA workers in the cash transfer scheme within the next year and a half. Bank accounts will eventually be linked to Aadhar cards, making it possible for the government to pay pensions or health benefits directly to beneficiaries.

Though the Centre is pushing the cash transfer under the welfare schemes to curtail corruption and pilferage of subsidised items, some of the states have opposed for including the PDS under this scheme.

Admittedly, people in backward regions are ignorant about how to utilize the money.  They may spend all their money in taking alcohol and unproductive expenses.They may not search work for their livelihood. It can trigger labour problems in agricultural sector and more importantly, the inflation rate will go up in rural areas.

Certainly, it is unwise to give them money instead of subsidized items such as rice, sugar, kerosene etc. rather the government should put a strong mechanism in place by which food items could reach the doorsteps of the poor living in remote areas.

On the whole, it would be very difficult to say whether this ambitious scheme would give the desired results or end up as another big controversial project.