#India – Even LPG cash transfer faces #Aadhaar problem #UID


Pranav Nambiar P Thursday, May 30, 2013 , FE
New Delhi : In the 20 districts selected for the first phase of the direct benefit transfer (DBT) scheme roll-out starting June 1, not even one out of five households is in a position to benefit from the scheme right now, an FE investigation shows. In these 20 districts — deemed to be the most Aadhaar-ready — with an estimated 76 lakh households, only 56% have their LPG connections linked to an Aadhaar number. And hardly a third of these households with Aadhaar-linked LPG accounts have bank accounts seeded with Aadhaar cards. Considering that such a dismal situation persists even in these districts selected for the initial phase of DBT roll-out primarily on the basis of their high Aadhaar penetration (80%), it is clear that the scheme’s expansion to the more unprepared and less accessible parts of the country is easier said than done.
The country has a total of 14 crore households with LPG connections, going by the records of oil marketing companies. The government’s hope is that pan-India roll-out of DBT for LPG subsidy disbursal would help trim its subsidy burden on this fuel by an annual R10,000 crore. The DBT scheme, meant to to cover the government’s annual bills on subsidy and entitlements like pension and scholarships by cutting leakages, is expected to come handy for the fiscal consolidation drive.
Government officials in the know told FE for every 100 households on an average in these 20 districts, some 80 have an Aadhaar card, of which around 56 have LPG connections seeded to their Aadhaar card and just 19 bank accounts seeded with Aadhaar cards. Owing to these low levels of linkage, a grace period of three months has been given to people in these districts to link Aadhaar cards with both LPG and bank accounts. During this period, they would continue to get the entitled number of LPG cylinders at subsidised prices.
This effectively means a deferment of the DBT roll-out. After this grace period, all customers who have not completed the necessary formalities will have to buy LPG cylinders at market price (that is, sans any subsidy), till they complete the same and be able to access DBT benefit.
Among the 20 districts covered under the first phase of DBT, two – Mysore in Karnataka and Mandi in Himachal – will start the scheme out from July 1, due to bye-elections. Of the remaining 18, those with the lowest bank linkages include SBS Nagar in Punjab, Diu in Daman and Diu as well as Una in Himachal Pradesh, which has less than 10% Aadhaar linkages to bank accounts. LPG linkages in these regions are higher at around 40-50%.
On the other hand, some districts like Mysore in Karnataka, Pathanamthitta in Kerala, and East Goa in Goa have about 30-40% of bank accounts linked to Aadhaar. LPG linkages to Aadhaar cards are also relatively higher in these districts ranging between 50-75%.
Under the DBT scheme, LPG consumers will get about Rs 4,500 per annum in cash from the government in their bank accounts as subsidy. They will have to buy LPG cylinders at the market price of Rs 901.50 (per 14.2-kg). The supply of subsidised LPG cylinder has been capped at nine cylinders per year for a consumer.
Banks have also been somewhat tardy in reaching out to the intended beneficiaries as they expect individuals to take up the onus in getting bank accounts and LPG connections seeded with Aadhaar, an official added. “Nevertheless,we have now launched extensive awareness campaigns across different formats like print, television and radio. We are also distributing pamphlets about the benefits of the programme and have kept drop boxes at LPG distributors for submitting bank account details,” the official said. He added that some people, particularly sections of the upper middle class and high net worth individuals might even be showing lack of interest in availing themselves of the DBT benefit.
A government official from Tumkur district in Karnataka said the reason for the low bank account linkages is that some people are worried about sharing bank account details in case it might be misused. In Tumkur, out of a targeted 3.20 lakh households, only about 18% bank accounts and 55% LPG connections are linked to Aadhaar.
An official in Maharashtra’s Wardha district said in many cases, people do not have bank accounts. This has slowed down the process of linking bank accounts with Aadhaar cards. Out of 2.01 lakh households, 66% have LPG and 38% bank accounts seeded to Aadhaar.
An official in Kerala’s Wayanad district said there has been a slight improvement in the seeding levels as the June 1 kick-off date approaches. They are hoping the three-month moratorium along with enhanced SMS and call centre campaigns will push a much larger number of people to join the scheme. Out of the 1.4 lakh households in Wayanad, around 95,000 have LPG linkages to Aadhaar and 35,000 bank linkages with Aadhaar.
The government has not finalised the dates for the subsequent phases of rolling out the LPG DBT scheme to other districts. “We will watch and learn from these 20 districts before finalisng our next phase,” said a government official close to the development. At present, there are about 145 million LPG connections in the country.
To avail of the subsidy, customers without a bank account must open an account by submitting Aadhaar details to the bank branch or LPG distributors. Similarly, customers can link their LPG connections to Aadhaar cards by submitting details to the LPG distributors. As per the DBT scheme, Aadhaar-linked domestic LPG consumers will get an advance in their bank accounts as soon as they book the first subsidised cylinder even before delivery.

 

 

Memo to Sonia Gandhi : Cash transfer may not get you a win in 2014


English: Sonia Gandhi, Indian politician, pres...

 

by R Jagannathan May 30, 2013, First Post
#Cash transfers #DCT #Espirito Santo #HowThisWorks #Politics #Sonia Gandhi #Subsidies
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The Congress party has set great store by the direct cash transfers (DCT) scheme, which it has relabelled as direct benefits transfer (DBT), and which it further hopes will result in a direct votes transfer (DVT) scheme and a game-changer in the next elections.
The Rs 64,000-thousand-crore question is: Will it work? Will it deliver the benefits as envisaged? And, more importantly from the Congress party’s point of view, will it deliver the votes?
The short answers are: maybe not, maybe not, and a definite no to the above three questions, in that order.
Memo to Sonia: get reforms going, get growth going.
DCT’s rollout has been patchy so far and the linkage between bank accounts and Aadhaar number seeding is still not 100 percent even in the 43 districts that were the initial targets for small schemes such as scholarships, pensions, et al.
The chances of high success in the big-ticket game-changer schemes like MGNREGA, LPG subsidies and ultimately food and fertiliser subsidies are very limited till 2014. Voters may at best get a glimpse of the promise of the scheme, but any glitches may also get magnified. One could neutralise the other.
The chances of garnering votes is thus limited, since DCT needs at least three to four years to implement properly on a national scale – but this is precisely where the Congress seems to be in too much of a hurry, and hence not paying enough attention to detail.
These are the broad conclusions of a detailed research report on DCT by Espirito Santo Securities (ESS) which discussed the issue with policy-makers, economists, and did some pilot studies where the scheme is being implemented (especially East Godavari district in Andhra).
This is ESS’s conclusion based on early results for DCT even in the first 43 districts where bank penetration and Aadhaar enrolments were supposed to have been very good. The report says only Rs 22 crore has been disbursed using the Aadhaar payments bridge, while more than twice that amount (Rs 57 crore) was paid out using traditional methods. DCT was less than a third of the total amounts disbursed.
If this is the outcome in districts with the best bank-Aadhaar penetration and that too for schemes that anyway involve only cash – scholarships and pensions – and where there is little fraud, one wonders how it will work for the more massive MGNREGA and LPG subsidy schemes that are being targeted for rollout in 121 districts by 1 July and 1 October this year, respectively. The complete national rollout is scheduled for 1 April 2014 – a tell-tale indication of where the election time-table could lie as far as the Congress leadership is concerned.
The Espirito Santo research is certainly not negative on DCT – and nobody beyond Sonia Gandhi’s National Advisory Council (NAC) has serious doubts that it can only be an improvement over the way welfare schemes are implemented right now, with lots of leakages, ghost beneficiaries, and excessive corruption. Estimates of savings for the exchequer range from a minimum of Rs 33,000 crore (according to the PMO) to a wildly optimistic Rs 1,10,000 crore of savings, according to a study by the National Institute of Public Finance and Policy.
The upper-end expectations are clearly pie-in-the-sky given our record of poor implementation of almost any scheme.
In the case of DCT, in particular, the problems lie in the short-term political expectations embedded in the scheme, which raise concerns about whether they will be implemented well enough and with long-term benefits in mind. Just as MGNREGA and farm loan waivers were implemented without great thought being given to scheme design and reviews, DCT too falls into the same basic cracks.
MGNREGA is facing hurdles in its seventh year of implementation, and the outlays on the scheme have been cut from peak levels just before the 2009 elections due to supply side problems (supply side means providing work for those who demand it). The farm loan waivers scheme has been negatively commented upon by the Comptroller and Auditor General (CAG).
Will it be the same story with DCT in 2014? These are Espirito Santo’s conclusions:
#1: Full rollout before 2014 is “extremely unlikely.” The best guess is that “the bulk of the savings will come only after the complete roll-out which may take two to three years.”
#2: Most experts are cautiously positive on DCT, but they dispute the quantum of benefits the government is expecting from it, since few believe that corruption will be eliminated.
#3: ESS does not see “DCT as addressing the near-term fiscal problem. It has to be accompanied by further cuts to subsidies, among other things.”
Conclusion: DCT will not be a game-changer by 2014. ESS says: “We estimate that the impact of DCT will be substantial only post 2015-16, unless the scheme dies down due to lack of political will post the 2014 elections.”
The larger point is this, as Firstpost pointed out earlier. Even in 2009, the Congress party only fooled itself when it thought MGNREGA was a game-changer, when the real thing that delivered it a convincing victory was fast-paced growth from 2003-2008. That, unfortunately, is not the case now.
Memo to Sonia: get reforms going, get growth going. DCT is a direct transfer of benefits to the next government in any case.

 

 

 

 

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