Cash for vote? #Aadhaar #UID




The government’s headlong rush to Aadhaar-linked payments for welfare schemes is bound to lead to their disruption and the exclusion of people who need them.


Residents of the village. The Kotkasim experiment had problems such as poor access to banks, overcrowding, and poor road connectivity. 

AT least three questions come to one’s mind on hearing the news about the government’s big move towards “direct cash transfers”. These are: What are the lessons we can learn from Brazil and Mexico, which are often invoked as examples of successful implementation of cash-transfer schemes? What is new about the government’s announcement? Can cash transfers win votes for the ruling coalition in the 2014 elections? A careful examination of the Prime Minister’s announcement of November 26, 2012, suggests that what is being planned as a big repackaging exercise will boomerang on the rulers in the elections.

The case of Brazil will give us an understanding of what cash transfers actually are. Comparisons with Bolsa Familia, Brazil’s successful conditional cash-transfer programme, are made out of context. In Brazil, cash transfers are one among many social protection measures. Cash transfers were put in place to encourage people to use existing public services. As far as food security is concerned, the Brazilian government is now putting in place systems for the supply of subsidised food that the Indian government is trying to dismantle. In fact, health, education and food are legal entitlements in Brazil. The most important lesson for India from Brazil would be to get on with the enactment of the National Food Security Act, which was tabled in Parliament last December.

Further, Brazil is a very different country—with lower poverty rates, higher rate of urbanisation, near-universal literacy rates and a better administrative capacity. Going by the poverty benchmark of $1.25 as PPP, or purchasing power parity, less than 7 per cent of Brazilians are poor. In India, one-third of the people live below the poverty line. Higher rates of urbanisation (85 per cent of Brazil’s population is urban, compared with 30 per cent in India) means greater access to banks. Given this, it is not surprising that Bolsa Familia has been a big success in Brazil.

No Clear Game Plan

The government’s announcement on cash transfer appears to have been made without a proper road map. For example, it lacked clarity on which subsidies are to be converted to cash transfers. On December 9, the Rural Development Minister said that food would not be included in the cash-transfer scheme. In a written reply in the Rajya Sabha the next day, the Food Minister stated that in fact the failed Kotkasim kerosene model (tried in Kotkasim mandal in Alwar, Rajasthan) was going to be rolled out in six Union Territories and Puducherry. Within a few days, some clarifications were issued, which included a hint that the government was backtracking. It appeared that food and fertilizers were not part of the game plan, whereas scholarships and pension schemes, which are already cash transfers, were part of the plan. When this was pointed out, the government asserted that it was putting in place a new and superior system of making these payments: a micro-ATM network, interoperable and Aadhaar-enabled. As it turns out, in many States, cash for these schemes is already routed through the bank accounts of the beneficiaries. Except for linking bank accounts to the Unique Identification Number (UID) and a different name, there was very little new in the government’s announcement.

In fact, there are three components to the government’s proposal on direct benefit transfers (DBTs): computerisation, extending banking services and linking with Aadhaar. The real potential for changing the game lies with the first two, whereas Aadhaar-enabled transfers carry the risk of excluding current beneficiaries.

The Central government has woken up somewhat belatedly to the transformational potential of computerisation in implementing welfare programmes. State governments have already developed many intelligent applications of this technology. Chhattisgarh has demonstrated that end-to-end computerisation of the public distribution system (PDS) combined with other reforms is a game changer: leakages dropped from 50 per cent to just 10 per cent between 2004-05 and 2009-10, the period during which computerisation was undertaken. Andhra Pradesh’s MIS (management information system) for the National Rural Employment Guarantee Scheme (NREGS) facilitates real-time tracking of all payments at each step. Similarly, payment through bank or post-office accounts provides protection from fraud and corruption. In 2007-08, leakages from the NREGS in Andhra Pradesh were between 1-3 per cent.

Since 2008, it has been mandatory to pay NREGS wages through bank and post-office accounts. The Reserve Bank of India allowed “zero balance” accounts for NREGS workers. This led to the largest financial inclusion drive: more than 80 per cent of job card holders have bank accounts. It is claimed that since Aadhaar is “know your customer”, or KYC, compliant, it will lead to financial inclusion. This is true, but there are two caveats: one, just about a third of the population has an Aadhaar number. Two, the requirements to open a bank account and to get Aadhaar are the same: proof of identity (ID) and proof of address. Aadhaar’s only value addition is that it has an introducer system for those without these documents.

It is claimed that Aadhaar-enabled payments are portable (cash can be withdrawn from any ATM in the country) and interoperable (it can be withdrawn from any bank’s ATM). But portability and interoperability are possible thanks to centralised online real-time environment (CORE) banking, not Aadhaar. It has also been claimed that Aadhaar’s superior “plumbing” will fix delays in payments (such as NREGS wages and pensions). However, the main reason for delays is the lack of accountability. For instance, engineers do not visit worksites for inspection without which payments cannot be sanctioned.

Ghost and duplicate beneficiaries exist in schemes such as pensions and the PDS: benefits are either used by their family or by corrupt dealers. The Andhra Pradesh government’s pension social audit suggests that 1 per cent of beneficiaries were ghosts or duplicates across six pension schemes. The figure is likely to be higher for other schemes, but we do not know the size of this problem. Biometrics (of which UID is only one variety) can weed out such beneficiaries.

Some argue that linking with Aadhaar will reduce corruption. This is possible only in very specific cases. As the Unique Identification Authority of India (UIDAI) itself has admitted, Aadhaar cannot help us identify the poor. What it can help with is to weed out “ghost” names. However, there are other efficient ways of doing this, for example, by computerising records and bringing about greater transparency (pasting printouts of the list of beneficiaries on panchayat walls).

Banking correspondents (BCs) have been used to remedy problems of poor reach of modern banking in rural areas. BCs take cash to the village, and authenticate payments using handheld biometric machines. But first-generation BCs, introduced with fanfare only recently, are now described by the Rural Development Minister as “discredited”. Aside from technical hurdles, extortion and financial viability (because of poor commissions and low volumes) have been issues. A new model (BC 2.0) is being launched with equal fanfare: a million-strong BC network, consisting primarily of front-line government workers (anganwadi and health workers, PDS dealers, cooperative societies, and so on) but also kirana (neighbourhood grocery) stores. A higher commission (3.14 per cent) is suggested. To ensure volumes, all in-kind transfers may be “cashed out”. For food, the Kotkasim kerosene cash transfer model is being tried out. Given the experience of triumphalism preceding rigorous testing, one needs to proceed with caution. In any case, it is not clear whether BC 2.0 needs Aadhaar.

The Kotkasim ‘success’

Even if there is value addition in what is being proposed, the pilot studies conducted so far suggest that there are bound to be teething problems such as poor access to banks, over-crowding and connectivity issues. For example, the government proposes to link NREGS and pensions to Aadhaar. It is now well known that biometrics of the elderly and of those who do physical labour often throw up authentication hurdles. It is unlikely that the elderly, for whom pensions are a lifeline, will take these troubles kindly. Further, these “teething” problems are likely to come up at a crucial time—just before the elections.

In the case of kerosene and liquefied petroleum gas (LPG), the government proposed that consumers buy them at the market prices instead of subsidised prices. The subsidy will be reimbursed into their bank accounts if kerosene is bought. Under the Kotkasim kerosene pilot project, consumers now pay Rs.50/litre of kerosene instead of Rs.15. The balance amount of Rs.35, is supposed to be deposited in their bank accounts. The pilot project was initiated in December 2011, and in the initial months, a crash in kerosene sales was reported. This crash was projected as a success—an indication of how the new system plugged “leakages”.


A kerosene dealer in Budhi Bawal village in Kotkasim block, Alwar district, Rajasthan, on October 15, 2012. The block was chosen for a pilot scheme in December 2011 to end the sale of subsidised kerosene. 

However, a visit to some villages in Kotkasim suggests that a large part of the crash in sales is actually because many ration card holders do not have bank accounts. This means that their subsidy cannot be reimbursed, and that they have stopped buying kerosene. Even those who have bank accounts have not received the subsidy or have received it erratically. Many of them have stopped purchasing kerosene.

There were other hassles too, such as those relating to bank accounts. Though these were supposed to be zero-balance accounts, some were forced to deposit Rs.500 to open accounts. In some cases, money was deducted if they failed to maintain a minimum balance. Many did not get subsidy at all. Banks are located far away from their houses, and there is very little public transport. At the banks they are not treated very well.

Funnily (or scarily) enough, this nightmare hit the headlines in June 2012 as “a stunning success in stopping leakages”; the business press gave the news “star status” on the basis of the District Collector’s report. The refusal to acknowledge failure is not new, but to project it as a success is certainly new. The Kotkasim experiment shows that while there is no guarantee that delivery mechanisms would be improved, it could end up leading to a collapse of the existing system by driving people out.

Another glimpse of the disruption that linking social welfare schemes with Aadhaar can cause is visible in Jharkhand where the UID-NREGS pilot project began in December 2012. Fingerprint recognition failure, software issues, connectivity and so on have caused repeated disruption. In the capital Ranchi, these problems continue in the three panchayats where it was launched last year. The lack of banking infrastructure, a questionable BC model with mixed success so far, and an administrative capacity that is already overstretched mean that no significant scaling up has been possible.

Aadhaar is being made, de facto, compulsory for welfare schemes. With two-thirds of the population not having an Aadhaar card, many are bound to be denied entitlements. Such reports have already come in from the 20 districts where the pilot study was launched. Things may fall in place eventually, but one can imagine the impact of being denied work or salary—even for a month—because of the lack of an Aadhaar number.

On preparedness, too, there is confusion: 51 districts were chosen for the pilot study reportedly because Aadhaar enrolments in them were high. As per media reports, this is not true. In Rajasthan, the three chosen districts have very low rates of enrolment: Alwar had an enrolment rate of 23 per cent, Ajmer 21 per cent and Udaipur 20 per cent. Similarly in Ramgarh (Jharkhand), two hours from Ranchi and the site of a UID-NREGS pilot project, it was 40 per cent. Low enrolment rates combined with making Aadhaar compulsory can only lead to exclusion of existing beneficiaries.

Also, possession of an Aadhaar number does not automatically guarantee access to any welfare benefits. Today, Aadhaar is neither a necessary nor a sufficient condition to get, say, your pension or scholarship. The fear is that once the programme is rolled out it will become a necessary condition without being a sufficient condition. This, if it happens, will mean that if you are entitled to Rs.200 a month as your old age pension today, you will not get the pension from January if you fail to complete the necessary paperwork by January 1.

Nobody denies that there is huge scope for improving the reach of welfare schemes, especially through computerisation and expansion of banking. However, linking benefits with Aadhaar carries the risk of disrupting schemes even where they work well currently. The poor will be left with the bathwater as the biometric industry runs away with the baby.

Media reports suggest that the government believes that the push towards direct cash transfers will be a “game changer” and even help the ruling alliance garner votes in the 2014 elections. However, on the ground, the rush to Aadhaar-linked payments is bound to lead to disruption of these welfare schemes and the exclusion of people who need them. Shankar Singh’s (of the Mazdoor Kisan Shakti Sangathan) words at Jantar Mantar, New Delhi, are more likely to come true: “You transfer cash, we’ll transfer our votes.”


Guinea pigs for technology #UID #Aaadhaar

Cash transfer would be a test for Aadhaar but the poor would pay the price
Cover photo
Sreelatha Menon / New Delhi Dec 16, 2012,, business standdar
Technology can be good. But should it be first tested on the poor, who can barely read and write? Then, leave them at the mercy of unkind banks and other agencies?
There are basically two requirements to be eligible for the cash transfer scheme. One, you should have a bank account. Two, you should have an Aadhaar number. Both are scarce and the government is in a tearing hurry.
These factors make a recipe for disaster. The only consolation for the government that hopes to ride on cash transfer in the next election is that benefits of many schemes, which will come under cash transfer, will never reach the poor. So, most people would not find out what they are missing.
For instance, half of the ration card holders never got anything. May be half of those who needed ration cards never even got the cards. Migrants in urban areas are excluded from benefits because their ration cards, issued by their states, don’t work in other states. Getting a new ration card is out of question, considering their inability to produce a local address proof.
Now, they are required to produce a new document — an Aadhaar card. In Thrissur district in Kerala, some people had to return from an Aadhaar enrolment camp because they were too old and their biometric mapping could not be captured on machines.
When technology fails, it is not the technology that gets rejected. It is the people who are rejected. So, these people – mostly old – with no income, and dependent on their children, would now be deprived of rice and gas subsidies.
As these cases multiply, they add up to even more poverty, malnutrition and hunger, and above all, anger — a fact that the ruling Congress must bear in mind.
Aadhaar and the cash transfer scheme, therefore, despite their possibilities would now act as measures to exclude a large number of people from whatever subsidies are available now, as in the case of cylinders and kerosene.
If this experiment was being conducted in a society ensured of some kind of social security such as pension – good enough to support the people in their old age – then this may not have hurt the poor. The best thing in these circumstances is to give people an option to choose between cash and kind.
This will ensure that no one will get excluded – not even Nandan Nilekeni and his project Unique Identification – or those who are staunch believers in cash transfer.
The only ray of hope is that the Centre cannot force state governments in implement the scheme. As Food Minister K V Thomas said states were free to give cash in place of food and other benefits, or just transfer the subsidy component in cash-to-bank accounts.
That would at least prevent jeopardising the existing system in many states, where genuine efforts have been made to make it work. Thomas offered another possibility that could make cash transfer less painful. He said instead of insisting on an Aadhaar card, documents like national population register card or ration card could be considered.
The pilot cash transfer project in Kotkasim in Rajasthan is a warning. The delays in cash transfer by nearly a year and the exclusion of over 5,000 ration card holders, who did not have accounts, expose callousness. Even a single case of a penurious old labour in Kotkasim having to go to a bank seven to 17 km away to inquire about the subsidy transfer to his bank, and the loss of his wages, are enough to condemn the scheme.


#Aadhar services to miss Jan 1 deadline-‘ yeh to hona hi tha ‘;-) #UID

200 px

200 px (Photo credit: Wikipedia)


TNN | Dec 10, 2012,




JAIPUR: The pilot implementation of Aadhaar enabled services in the three selected districts of Ajmer, Udaipur and Alwar is set to miss the January 1, 2013 deadline as the enrollment of UID cards remains far below the desired level of 80%. As on Friday, Aadhaar cards have been issued to only 21% of the people in Ajmer, while the penetration is 23% in Alwar and 20% in Udaipur.



A top official involved in project told TOI that given the current enrollment status, it would be difficult to implement the pilot projects from January 1.



It is not possible for us to implement the pilot projects for Aadhaar enabled services in Udaipur, Alwar and Ajmer from January next year. The level of Aadhaar cards coverage is very low. We are expediting the whole exercise, but we need more time,a said the official preferring anonymity.



The Centre has announced to roll out the project in 43 districts of the country on pilot basis from the beginning of next calendar year linking 29 government schemes to the Aadhaar. The electronic cash transfers of welfare schemes will be based on Aadhaar (Unique Identification Number) platform.



However, Rajasthan government was planning to initially link only three schemes such as social security pension, scholarships and benefits under public distribution system to Aadhaar, said the official.



Given the present status, the rollout schedule announced by chief minister Ashok Gehlot last month to implement the schemes across state may also miss the scheduled timeline.



Gehlot had set April 1 deadline for CM Rural BPL Awaas Yojana and social security pension schemes. The government has planned to link post-metric and higher education scholarships to Aadhaar from next academic year. February 1, 2013 has been set for payment of salaries to government officials through Aadhaar. But so far, people covered by Aadhaar cards in the state is only a little over 17% of the total population.



The Kotkasim pilot project in Alwar district has failed to live up to the expectations and unless the government cracks the whip, it may again not only miss the deadline but also fall far behind the finishing line.





Banking hiccups are the biggest challenge for direct transfer of subsidy #Aadhar #UID

Demanding draft , The Week
By Soumik Dey
Story Dated: Tuesday, December 4, 2012 14:30 hrs IST

Call for change: A tribal woman shows her ration card to get coupons to purchase subsidised rice. AP Photo

The villagers of Kotkasim in Alwar, Rajasthan, recently experienced something for the first time. Direct cash transfer of subsidy, they were told, would be more beneficial than the existing method. Against their purchase of kerosene at market price (unsubsidised), they received three months’ subsidy directly in their bank accounts. But it was anything but beneficial—according to a study by field researchers Bharat Bhatti and Madhulika with development economist Jean Dreze, the amount spent on travelling to banks exceeded the amount they collected as subsidy. Also, the payment of subsidies was erratic and untimely.
Despite the initial hiccups, however, many more bank accounts will be ringing with cash from deposits made by the government in lieu of subsidies from next January. Plans are afoot to provide cash doles instead of subsidising essential purchases by next year. Payouts for farm loans, scholarships and employment schemes would be directly credited to beneficiary accounts even before that.
Is direct cash transfer a better way to give subsidies? Theoretically, yes. It will surely plug the leaks in the messy public distribution system. Also, as Finance Minister P. Chidambaram said, falsification and duplication would be practically eliminated. “I believe it would also result in considerable savings for the exchequer,” he said.
The first phase of the project will be based on Aadhaar identities of citizens in 51 districts in 16 states. It would cover 29 of 42 government welfare schemes. The 12-digit Aadhaar number, which has already been issued to 21 crore people, will suffice as the identity to link it with bank accounts.
But even the very first step—that is the government depositing money in beneficiaries’ bank accounts—could falter unless a few  things are fixed. In a recent meeting with public sector bank chairmen, Chidambaram was told about some “practical problems” that need to be resolved before rolling out the project. The most important concern was about reaching the unbanked people in remote areas, whose livelihoods largely depend on government support.
“To meet the January deadline in 15 states, banks will have to do much. The finance minister has asked banks to speed up financial inclusion for the unbanked districts and blocks by setting up branches or banking 
correspondents,” said D.K. Mittal, financial service secretary at the finance ministry, after the meeting, which was also attended by chief ministers of 21 states. It was suggested that bank employees carry handheld machines and dispense cash to beneficiaries in person.
Initially, the cash transfers would be for farm loans, educational loans, and health and social justice schemes. At a later stage, the system would be used for transferring subsidy for anything from food to fuel. “Anything and everything that is a subsidy will have to be paid through this system. Making electronic transfers for retail purchases is still a big challenge, but we are working on it,” said Mittal.
Banks face another serious problem as well. They would be held responsible if any Aadhaar information leaks, an account gets hacked or a wrong beneficiary manages to get enrolled. “Enlisting correspondents can be done very quickly and at a very low expense. But the main challenge here is having a secure technological network. So far we had partnered with private players to use their networks, but having bank’s own infrastructure would be mandatory for managing subsidy distribution,” said Pratip Chaudhuri, chairman, State Bank of India.
The government has been urging banks to start new accounts even without Aadhaar, but with other relevant documents, and finish rolling out the direct cash transfer of subsidy by April next year. Banks have opened five crore accounts using Aadhaar so far, but will have to open six crore more in just over a month.
The government’s target has largely been accepted by most bank chiefs. However, some of them have said that it could be ambitious on more than one count. “There is also a possibility of enrolling too many fake IDs early on. Without the biometric Aadhaar cards, assuring real identities of beneficiaries would be a problem,” said a public sector bank chairman, who did not wish to be named.
Many states have voiced their concerns about assigning Aadhaar cards as the only recognised identification of beneficiaries. “States do much of the distribution of subsidies aimed at mothers, children and health reliefs for the physically challenged, many of whom may not have enrolled under Aadhaar. Opening zero-balance accounts using Aadhaar cards itself is a very time-consuming affair,” said Sheila Dikshit, chief minister of Delhi,  which has been identified by Chidambaram as one of the states to implement the project in the first phase.
While a lot still needs to be done, the stage is set for banks to become a crucial link between the Centre, states and subsidy beneficiaries. If they can achieve this, the rewards are promising. The government’s annual subsidy disbursal amounts to around Rs.3 lakh crore. Banks surely know that a lot of their problems could be solved with that kind of liquidity in the system.

Technical support

While reaching the unbanked rural population is the biggest challenge before the direct transfer of subsidy, many service providers have already come up with solutions. Delhi-based Starfin India uses a biometric system, with a user-friendly software developed by Tata Consultancy Services, to connect to State Bank of India’s servers. The company identifies people in villages with computer and connectivity, and trains them to use the biometric system and become customer service points.
“Currently we have about 300 villages in our network and are opening about 10,000 no-frills accounts a month in rural and urban areas of five states,” said Jitendra Singh, managing director and CEO of Starfin. “We started a year back and have done about Rs. 500 crore worth of transactions so far.” Starfin charges its users Rs.6 to Rs.12 for deposits and withdrawals.
Beam Money, another such service provider, has RBI approval for using mobile phone networks to make money transfers. “Direct cash transfers can be done through mobile or landline phone connections. Given the documentation and verifications for securing phone connections, they are as secure as using biometric cards like Aadhaar for linking beneficiary accounts,” said Anand Shrivastav, chairman and managing director, Beam Money.


Rajasthan- In Kotkasim, sarpanches want ‘ DIRECT CASH TRANSFERS “scheme scrapped

Cong hopes to fill poll bank with cash schemeParty to focus on big-ticket states, including Rajasthan

Diptosh Majumdar New Delhi, Dec2,2012, DNA


There is a game-plan within a game-plan. As meetings are held daily in the suddenly hyperactive Prime Minister’s Office in South Block, and finishing touches given to the “direct cash transfer” scheme, it is apparent that the government is leaving nothing to chance. And there is a realisation that the Congress fortunes will change dramatically if the government and the party together concentrate on the four politically significant states of Rajasthan, Maharashtra, Karnataka and Andhra Pradesh.
Yes, the government will make a definite effort to impress upon the electorate in all states that it is the real “aam admi” party, and that is why this cash transfer scheme to be launched at the beginning of 2013, has been conceived. But the party believes that if they concentrate their energies on four specific target states, they would have accomplished a great deal. After all, the number of seats up for grabs in these states adds up to 143. Maharashtra alone accounts for 48 followed by Andhra Pradesh with 42.
These states have been identified because, in each of these provinces, the Congress has a primary organisational architecture. For example, the Congress is capable of doing well in Rajasthan with its 25 parliamentary seats under
chief minister Ashok Gehlot, but there is a prevailing sense of helplessness among party workers because the party has lost ground due to anti-incumbency sentiments. A focussed political campaign along with a flawless implementation of the cash transfer scheme can renew contact with the voters. To begin with, the Rajasthan districts to benefit from the programme are Ajmer, Udaipur and Alwar.
Similarly, Karnataka politics is in a mess with former chief minister BS Yeddyurappa leaving the BJP.
In Maharashtra, the Shiv Sena would rely on a sympathy wave following the death of Balasaheb Thackeray, but the Congress believes its impact will be restricted to a few pockets, and the MNS will still be a key neutralising factor.
Finally, in Andhra Pradesh, the Congress is launching the scheme in the five districts of Hyderabad, Anantpur, Chittoor, East Godavari and Rangareddy.

Sowmya Sivakumar Jaipur
The gung-ho optimism about ‘direct cash transfers,” the UPA’s chief springboard for the next polls, may have a darker side. Sarpanches of Kotkasim block, Alwar district – where the country’s pilot project for direct cash transfers (DCT) of kerosene subsidies has run since the last 9 months – want the project to be scrapped, if it continues to be shoddily implemented.
“We have collectively written to the collector stating that we are receiving numerous complaints from people. The system will work only if advance subsidies are deposited on time. Three months’ advance subsidies were supposed to be deposited in December itself when the scheme started. But it came late, only once for 2-3 months.
Some have bought kerosene at market price, but haven’t received any subsidy amount yet,” chorus sarpanches from Kotkasim. “There are 1000 ration cards in the panchayat, but only about 200-300 have opened accounts. There are at least 100 families in the panchayat who actually need kerosene but have stopped consuming it as they have not been able to afford buying at the market price without the subsidy in hand in advance,” said Kaphtan Singh Chowdhry, sarpanchpati of Ghikaka panchayat in the block.
The much touted reduction in offtake – from 84,000 litres in Kotkasim block before the scheme was launched, to 12,000 litres now – is in fact a combination of plugging diversions and sharp drop in consumption, but the latter not all out of choice.
Bank accounts have been opened in the name of the mukhiya (household head) who, in many cases, are too old to go the bank a few kilometers away and stand in the queue for Rs33-36 (the subsidy amount per litre). In such cases, someone in the family has to accompany him. In interior villages, where there are no banks even in a 5km radius, this will mean wasting a whole day’s time and wage for availing the subsidy,” said Pooja Yadav, sarpanch of Teovas panchayat.
This has been reiterated in a recent study done by freelance researchers Bharat Bhatti and Madhulika Khanna in Kotkasim, under the guidance of right to food economists Jean Dreze and Reetika Khera. “The poorest households seem to be the worst hit under the new system. For them, going to the bank to collect the subsidy means losing a day’s wages and also transport costs. For some, these costs exceed the subsidy…many households are yet to receive any subsidy, despite shelling out Rs 500 to open a (supposedly “zero-balance”) bank account,” it noted, concluding all this has led to curtailment of consumption.
Ramcharan Meena, district supplies officer (DSO) of Alwar said, “we have conveyed these practical difficulties to the government. They are now talking of introducing mobile ATMs in rural areas which will facilitate easier cash withdrawal. This is only a pilot and we will improve based on its learnings,” he said.



Pleases e ethe video by Reetiak Khera


Glitches in cash transfer pilot project worry govt

By , TNN | Dec 3, 2012, 03.28 AM IST

Glitches in cash transfer pilot project worry govt
Jairam Ramesh, who is is a key person for the implementation of this programme which is being viewed by the political class as UPA-2’s “game changer”, has conceded that there would be operational issues in implementing the direct cash transfer scheme.

NEW DELHI: The government is alarmed by the fact that the year-long cash transfer pilot project in Alwar district‘s Kotkasim block has virtually been a non-starter as money has rarely, if ever, come into the bank accounts of intended beneficiaries.

Reacting to a report that TOI front-paged on December 2, rural development minister Jairam Ramesh said, “The Kotkasim thing is a very serious issue. There will be operational issues. That’s why this is being rolled out in the 51 districts. We will learn all these issues and then we’ll take a call.”

Ramesh is a key person for the implementation of this programme which is being viewed by the political class as UPA-2’s “game changer”. If it gets stymied by lazy implementation, the political dividends for UPA may be minimal. Possibly mindful of that, Ramesh said, “That’s why I have proposed that we must admit a system of concurrent evaluation. It should not be only officials giving you feedback that everything is very rosy and working on the ground.”

Asked whether cash transfers were being made into an electoral issue, the minister said, “What we’re saying is what’s yours should be yours. Today pensions are paid once in five months and you have to pay a bribe to get what is yours. This is also a huge anti-corruption step. I’ve seen with my own eyes how people have to pay bribes to get their measly Rs 200 pension.”

‘Cash scheme can tackle graft better than Lokpal

Ramesh felt direct cash transfers to intended beneficiaries was “far more efficient in dealing with corruption than the Lokpal model”. “The Lokpal model is needed but to think that the Lokpal is a panacea as some fellows seem to think is ridiculous,” he said.

Asked if ‘cash transfers’ is the right term, given that schemes proposed by the government entail some element of cash, but don’t replace subsidies like food, Ramesh said: ” It is not cash transfers. I have never used the word. It’s the media that’s going gung-ho and unfortunately even the Prime Minister‘s committee is called PM‘s Committee on Direct Cash Transfers.”

What would he call it then? “I would say it is direct benefits transfer. Direct entitlements transfer would be another. It is not direct cash transfer. If we were replacing the food or fertilizer subsidy with cash, that would be direct cash transfer. I react very negatively to the words ‘direct cash transfer’.”

India’s welfare system fails, poor don’t get money


Thursday, October 25, 2012

BUDHI BAWAL, India: Uddal Singh, a retired army sergeant, is part of an experiment trying out radical changes to the Indian welfare system that the government plans to adopt nation-wide. And he’s furious.


He along with the 250,000 residents of Kotkasim, a bloc of Alwar district in western Rajasthan state, were chosen to be part of a pilot scheme to end the sale of subsidised kerosene, a fuel used by the poor for lighting and cooking.


Instead of buying it at a heavily discounted rate at the local government shop, those with ration cards were each in theory paid cash by the government and required to purchase the liquid at the market price.


“Since one year, no money has come into my account, not one paisa (cent),” the mustachioed 58-year-old said bitterly in the village of Budhi Bawal, a dusty one-street settlement of a few thousand people, mostly farmers.


Instead of lighting his kerosene lamps, he says he now makes do with candles at night.


Officials “come here to the shop, see the record of our ration card numbers and say the money will come,” he explained outside the grubby Fair Price Shop run by the local government dealer.


The Kotkasim trial has been disruptive, tricky to implement, and — depending on who you listen to — either a roaring success in cutting wasteful state spending, or a disaster that has caused hardship.


The conclusions are important.


In New Delhi, where the trial is viewed as a model for the future, the government is fast-tracking plans to distribute as much of India’s $61-billion welfare budget in cash as possible.


India is home to hundreds of millions of some of the poorest people on the planet who depend on government hand-outs for survival.


“As long as the money arrives in people’s accounts, the scheme is not a bad idea at all,” village leader Rakesh Kumar told AFP in an interview.


But he estimates 70 percent of people in his area have had problems receiving the cash.


“We have had to deal with the fall-out of the government’s experiments.”


The attraction of paying cash to the poor and leaving them to spend it has been enhanced by two foreign programmes which are broadly seen as successful: Mexico’s Progresa or Oportunidades, and Brazil’s Bolsa Familia.


Under the cash model, governments can keep track of the money they spend better, cut out middlemen, and even make the money conditional on beneficial things such as sending children to school.


They also bring the poor into the banking system, obliging them to open accounts to receive welfare payments.


Nandan Nilekani, who runs the government’s scheme handing out new biometric IDs known as Aadhar, says the system has already reduced fraud.


“When Aadhar is used, in some of pilots, there has been a 20-30 percent reduction in beneficiaries by reducing duplicants,” he says, pointing to trials in the states of Tripura, Jharkhand and Andhra Pradesh.


Nation-wide 200 million people already have a new unique Aadhar ID and Nilekani’s scheme aims to cover half the population, or 600 million people, in the next 18 months.


“On the basis of Aadhaar, we can ensure that the benefit of schemes reach genuine beneficiaries and that there is no mediator,” Prime Minister Manmohan Singh said last weekend.


India subsidises everything from fertilizer and food to kerosene so cutting waste is crucial to the government’s drive to rein in its budget deficit.


But a welfare shake-up is politically risky and fraught with danger in a country where an estimated 42 percent of children under five are malnourished.


The Public Distribution System is the biggest such scheme in the world, providing subsidised kerosene, wheat and rice to up to a quarter of all households from cob-webbed shops of the sort seen in Budhi Bawal.


It is also staggeringly inefficient. An estimated 58 percent of grains purchased by the government fail to meet their intended targets, data from the national Planning Commission showed in 2005.


The results in Kotkasim are described by the top local administrator, District Collector Ashutosh Pednekar, as “remarkable”.


Figures from his office show kerosene consumption has fallen 82 percent since the cash scheme began, a saving for the government of 1.5 million rupees ($30,000) per month.


Before, crooked dealers would siphon off subsidised kerosene at 15 rupees a litre and sell it on the black market for around 30 rupees, where it was purchased as a cheap replacement for diesel to run tractors or generators.


Those entitled to discounted fuel also had an incentive to draw their full allotment — up to three litres per month — and then sell it on at a profit.


“The diversion of kerosene for purposes other than cooking and lighting has been stopped,” Pednekar told AFP.


“The moment you start selling kerosene at a market price, the business collapses for those with a business in ‘leakages’,” added the 34-year-old.


Under the next phase of his plan, the sale of subsidised cooking gas cylinders will be phased out in Kotkasim.


In five months time, the whole of Pednekar’s district of Alwar, home to 3.7 million people, will move over to the cash transfer system for kerosene.


While he conceded people were “not going gaga” over the cash system, “by now, there would have been a hue and cry” if they had not received the money. In the dusty villages of the trial area, AFP spoke to households who said the cash had indeed arrived promptly.


But there was also anger and confusion.


Some complained of surly bank officials who refused to help them; others said repeated complaints had come to naught; many said they had either stopped buying kerosene altogether or were now paying the higher price from their own pockets.


John Blomquist, an economist from the World Bank in New Delhi and expert on welfare programmes, says cash transfers can be an effective strategy to cut fuel and power subsidies.


“As countries get more developed, you tend to see fewer in-kind benefits” such as subsidised fuel, he told AFP.


“You can design a great cash transfer system, but it’s really about do you have the mechanism in place to implement well? Can you monitor well?”




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January 2022
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