Direct Cash Transfer – Socialism, Cash Down #UID #Aadhaar

Its ploy of Aadhar-hinged cash transfer may have won the Congress political points, but will it really be a game-changer?


  • 40% of the 22 crore Aadhar numbers are in Andhra Pradesh (4.7 crore) and Maharashtra (4 crore)
  • 20% is what the two politically sensitive, Congress-ruled states account for of the 51 districts where DCT will be rolled out
  • 55 lakh Aadhar numbers in TMC-run West Bengal. BJP-ruled Gujarat (57 lakh) and DMK-ruled Tamil Nadu (69 lakh) are other states with lowest penetration of Aadhar
  • 2.35 crore is the Aadhar number in neediest BIMARU states (Bihar: 20 lakh, Madhya Pradesh: 1.2 crore, Rajasthan: 97 lakh and UP: 98 lakh).
  • 55% of Aadhar numbers have been issued to the voter catchment-friendly age band of
    16-45 years. Those above 66 years, who are needier, account for just 4.3% of numbers issued.

Game Of The Name

  • The Rs 12,000-crore uid scheme remains outside Parliament’s ambit. Some feel Aadhar not following proper rules, procedures.
  • States divided over Aadhar, even Congress-ruled ones. P. Chidambaram’s NPR opposed to its methods, data, objectives.
  • Coverage of Aadhar not complete even in showcase states. Charges of flawed data collections; mismatch of technology.
  • Issues of privacy, security of personal data still shrouds Aadhar. Fate of those who haven’t registered for it unclear.

What Govt Pays Out

  • Rs 4,519 crore scholarships
  • Rs 5,110 crore pensions
  • Rs 1,600 crore Janani Suraksha Yojana
  • Rs 877 crore ASHA

How DCT Will Kick In

  • Only 29 out of 42 subsidy schemes included for now
  • Pensions and scholarships are existing cash subsidies
  • 51 districts from January 1. Next 18 states by April 2013.
  • PDS, health and fertilisers to come in later.


Before becoming the chairman of the UIDAI, Nandan Nilekani famously wrote about the need for a national ID system in his book Imagining India. He invoked that immortal statement by Rajiv Gandhi that only 15 paise of every rupee earmarked for the poor actually reaches them. And went on to doff his hat to his son, “In 2007; his (Rajiv’s) son, Rahul, offered his own estimate, saying that now a mere five paise of every rupee spent reaches the poor in some districts.” Well, it’s payback time. One only has to look at the grudging respect the Congress has earned from its political rivals for its Next Big Idea: the plan to ride on Nilekani’s Aadhar card to roll out Direct Cash Transfers (DCT) to the poor in 51 districts—and later nationally. And all within sniffing distance of the fast approaching 2014 polls.

“Technology will no doubt help, but then technology can also make the fair price shops better.”Harsh Mander, Social Activist

There’s no doubt in most observers’ minds that this move to give cash to India’s poor is all about power, politics and winning elections—and not (at least at the moment) about reducing subsidies, eliminating wastage and corruption. Union minister for rural development Jairam Ramesh—who coined the slogan ‘aapka paisa, aapke haath’—lost no time in announcing that Rahul Gandhi would visit the 51 districts (20 per cent of which are in the politically sensitive states of Maharashtra and Andhra Pradesh) where DCT would be rolled out initially.

Disturbed by the initial negative reaction that it was seeking to buy votes, the government was quick to replace the ‘cash’ in DCT with the more anodyne ‘benefits’. Incidentally, there was no direct mention of cash (or benefits) transfer in the Congress’s 2009 manifesto— apart from the line that, owing to fiscal responsibility, it would work to ensure that “all subsidies reach only the truly needy and poor sections of our society”. The politics is also probably why Nilekani politely declined Outlook’s request for a meeting, saying, “Thanks, but I’m not giving interviews on this.”

Aadhar is being touted as the “magic formula” to enable the “game-changing” DCT. Clubbing the two serves a key purpose—legitimising the Aadhar card, which has morphed from being a mere identity document to a service-delivery engine in a short while despite criticism from bureaucrats, policy experts, activists, even a few state governments. That Aadhar has top political backing is evident from Union finance minister P. Chidambaram making the announcement on DCT just a few days ago. Only last year he had made a scathing attack on Aadhar’s legitimacy, saying it was not following proper procedure and involved issues of security. Remember, the National Identification Authority Bill is yet to be cleared by Parliament, which is supposed to give Aadhar its powers.

“A food security act will do much more for poor people than linking their bank account with UID.”Jean Dreze, Development Economist

Despite all the hype around the move, it’s clearly a cautious one. Some 29 existing welfare schemes will continue to be made available to the existing beneficiaries, only the mode of payment will change. Scholarships and pensions have, after all, always been paid in cash and routed into bank accounts or via post offices and panchayats. Now the payment will have to be linked to Aadhar cards and bank accounts. “This experiment is bound to take many years, if it succeeds at all,” says development economist Jean Dreze. “If the UPA government thinks this is the way to get votes in 2014, it has lost the plot.”

It’s only when the government replaces the growing food, fertiliser and fuel subsidies (see chart) with cash that the “game-changing” idea will face its litmus test. It will not, of course, stop the UPA from going to the polls offering the promise of cash/benefits directly reaching the poor. Supporters of the government’s move also feel that it is time India found an alternative to the age-old public distribution system which is hobbled with leakages and corruption at all levels.

Getting NREGA wages via an Aadhar-enabled ATM in Ranchi

Officials in the PMO say that the Aadhar-enabled payment system would help weed out fake beneficiaries and ghost ration cards. Citing a study by the National Institute of Public Finance and Policy (NIPFP), which holds that integrating Aadhar with welfare schemes is likely to yield a 52 per cent return to the government on that investment, even after all costs are accounted for, the official says, “Surely it makes no sense to spend three rupees to deliver one rupee.” Another key argument in favour of cash transfers is that it empowers the poor with choice.

“The unique 12-digit number has advantages that other ID address proofs do not.”R.S. Sharma, Mission Director, UIDAI

However, there still remains the issue of bank accounts. The last census shows that only 54.4 per cent people in rural areas have bank accounts. Bank branches too are not evenly distributed, with too many of them, say, in the constituency of former finance minister and now President Pranab Mukherjee and too few of them elsewhere. At least some of the rural branches are located too far apart, forcing people to waste several hours commuting and waiting to collect cash, having to forgo daily wages in the bargain.

The government hopes to bridge the gap through “business correspondents” appointed by commercial banks. The banks seem to have taken to the idea because it is more cost-effective than opening a rural branch or maintaining a physical ATM. The correspondents will use hand-held devices to help authenticate the identity of the beneficiary and the credit balance in his bank account. Much of the success of DCT will depend on how this system will work.

Nov 29 Nilekani and Jairam Ramesh at a DCT conference. (Photograph by Sanjay Rawat)

At a broader level, not many share the government’s optimism about cash transfers as a modern way of disbursing subsidies. “Cash transfer is not a silver bullet for dealing with corruption. The identification of who will receive these transfers is still not clear. The government has been spectacularly unsuccessful in identifying the beneficiaries,” says social activist Harsh Mander. The fact that the government has announced the goal without actually defining the route is a cause for concern. Mander, for one, feels that it is erroneous to think of cash transfer as a substitute for provisioning public good—healthcare, education and food—without first putting a system in place.

The danger in not doing that is because the PDS is associated with the system of minimum support price (MSP) for farmers and price stabilisation which the government ensures. With the government procuring high amounts from farmers for PDS, an alternative use for that grain would need to be found. Likewise, the physical infrastructure of the six-decade-old PDS (thousands of stores all over the country and lakhs of employees) would have to be put to some use.

“The present subsidy system has to change. This is our opportunity, but this might not be the way.”Vijay Mahajan, Social Entrepreneur And CEO, Basix

There would be other issues too, especially regarding prices and supply. Many economists are arguing that a system of cash transfers—as opposed to goods and services—will increase inflation in the economy. Says Vijay Mahajan, social entrepreneur and CEO, Basix, “By direct cash transfers, you are placing a large part of the demand in the hands of the poor while supply is entirely in the hands of the private sector. Unregulated supply led by the private sector could be dangerous as there could be high prices, bad supply and bad services.” Similarly, in healthcare too, there is a possibility of medical services becoming out of reach.

Also, cash transfers will not guarantee that the cash given for a purpose is actually used for it. According to many social activists, experience shows that delivery of food—rather than cash—is more likely to end up as food in children’s stomachs. Too much choice may not be desirable for very poor families—a recent experiment in cash transfers in a Delhi slum met with a mixed reception, with many women (the intended beneficiaries) saying they would prefer to get rations rather than deal with the many demands. Similarly, there have been negative reactions from at least one ‘successful’ pilot project cited by the UPA to claim that it has weeded out fake beneficiaries and reduced consumption, leading to savings.

Crucially, despite all the brouhaha about Aadhar, it is yet to become sanctioned by law, and is by present definition not mandatory. Its coverage is not complete anywhere in the country, even in its own showcase states. There is still confusion over what Aadhar seeks to do. The fact that it wasn’t mandatory and had no services attached to it—like the pan card or the passport had—has discouraged many from getting into it. Nilekani, however, is clear in his thoughts on Aadhar. He had told Outlook last year, “We’re an identity authentication system. We only confirm that X is X. Other people can build applications on top of that.” Sure, conditional cash transfers have worked in other countries. Brazil is a good example. So is Mexico. Cash transfers, therefore, are not necessarily a bad thing. But in a country with so many poor (and poorer infrastructure), it’s not something that can be exclusivised and rushed through without thinking through the enormous consequences.

Establishing (at least in mindspace) a direct link between New Delhi and India’s poor is attractive, particularly when elections are fast approaching. There’s also no denying that the present system of subsidies needs to be majorly improved upon. “This is our opportunity to bring in that change, but this might not be the way,” warns Mahajan. Poll gimmicks, however expedient and catchy, are not always the answer. One has to think of the morning after.

Pro View
Aadhar Will Help Indians Obtain ‘Financial Identity’
GOVINDRAJ ETHIRAJ,Co-authoring a book on Aadhar

The government’s decision to launch cash-based transfers based on Aadhar has drawn some criticism. Some concerns are valid, but it would help to focus on the collateral benefits of both initiatives which, in some ways, could dwarf the original stated purpose.

Aadhar’s primary aim was to create a unique identity for Indian residents, so that the government could deliver benefits and subsidies directly, potentially saving thousands of crores of taxpayers’ money.

But one of UIDAI’s key efforts has been to expand financial inclusion by giving 250 million enrollees (so far) the option of opening bank accounts with data they submitted during enrolment. This would be ancillary to the process of touching the unbanked millions by opening no-frills accounts.

In the last two years, Indian banks added 70 million such accounts. Using Aadhar, identity for these no-frills banking transactions can now be authenticated in real time from anywhere, anytime—think of a Visa/Mastercard system which allows you access to your bank account from any ATM. Banks are already using Aadhar for this.

Now comes cash transfers. RBI figures show only 40 per cent Indians have bank accounts. New accounts with authentication capability will help millions of Indians own active ‘financial identity’. Both Aadhar and cash transfers can kickstart a host of transaction-led services and therefore enhance the consumer economy. I would focus on those outcomes.

Aadhar Can’t Identify Poor, Only Eliminate Ghost Entities
NAC Member

Direct cash transfer is a welcome idea as it will reduce dual pricing. But let us not be too euphoric about the scheme as it has many limitations, while bringing a political advantage for the government.

Firstly, the scheme would be used in programmes targeted at the poor where identification would be a huge issue. When you talk about kerosene and fertiliser subsidies but don’t have a methodology to identify the target people, it could become a problem. This cannot be done with Aadhar. It cannot identify the rural poor. It can only eliminate ghost entities. For cash transfer to work, you need to have a good system for identification of the poor.

Also, if cash is given instead of grain, what do you do with the large amount of grains bought from the farmers? If you abolish PDS, you will also have to abolish MSP (minimum support price) as they are two sides of the same coin. In giving cash in lieu of PDS grain, we also need to look at issues like the grain rotting in our godowns and increasing open market prices. Even in healthcare, there could be the issue of doctors and hospitals charging more through tests and services.

Direct cash transfer has worked in a few countries like Belgium and Mexico where the urban population is high. But these countries have a good coverage of bank branches. In India, many rural areas don’t have bank branches. Besides, banks also charge a commission for their services.


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.


Opposition criticizes UPA’s plan to use Aadhaar for cash transfers

200 px

200 px (Photo credit: Wikipedia)




BJP, CPM say the UID system is not ready and is yet to be approved by the Parliament
           First Published: Wed, Nov 28 2012.
New Delhi: A day after the Congress party staked claim to the United Progressive Alliance government’s direct cash transfer programme that seeks to use the Aadhaar number, opposition parties, including the Bharatiya Janata Party (BJP), the Communist Party of India (Marxist), or CPM, and activists on Wednesday criticized the move on the grounds that while such transfers will not reduce instances of corruption, the bid to use unique-identity number comes when a proposed law for it is yet to be approved by the government.
“Parliament has not yet passed the UID (unique identification) Bill, but sitting in the Congress office, they said that they will enforce UID,” Brinda Karat, politburo member of the CPM said, referring to a media briefing by finance minister P. Chidambaram and rural development minister Jairam Ramesh held on Monday. “The CPM demands that till the Bill is not debated in the Parliament, this linkage between UID and other schemes should not be made.”
Chidambaram said on Tuesday that the government would directly transfer benefits of 29 welfare schemes to the beneficiaries in 51 districts. While it would start with a pilot programme in January, the initiative will be extended to 18 states from April next year. Subsidies related to food and fertilizers are excluded from the initial list.
Speaking at the event on Tuesday, BJP spokesperson Prakash Javadekar said that while the move was “politically motivated”, the system was not yet ready for it.
“They (the government) are bringing a new word by saying cash transfer, but the framework for it is not yet ready, the scheme is not yet ready… We (the BJP) will raise this issue in Parliament,” he said.
Rights activists, too, criticized the move.
Aruna Roy, social activist and member of the Sonia Gandhi-led National Advisory Council that sets the government’s social agenda, said technology alone will not be able to reduce corruption. “Corruption is just an excuse,” she said, adding that the UID scheme should not be linked with other programmes.




#India- Tweets against Chidambaram’s son land man in jail #censorship #law


A file photo of Karti Chidambaram. Photo: K. Ananthan

The HinduA file photo of Karti Chidambaram. Photo: K. Ananthan

Ravi Srinivasan faces up to three years in jail if found guilty

Does a tweet on reports of corruption, sent out to 16 followers, deserve a possible penalty of three years of imprisonment? The answer seems to be yes, at least according to Congress leader and Union Finance Minister P. Chidambaram’s son Karti, who filed a complaint against small-time Puducherry businessman Ravi Srinivasan, and the Puducherry police which charged Mr. Srinivasan under Section 66-A of the Information Technology Act, 2008.

Section 66-A deals with messages sent via computer or communication devices which may be “grossly offensive,” have “menacing character,” or even cause “annoyance or inconvenience.” For offences under the section, a person can be fined and jailed up to three years.

Mr. Srinivasan, a 45-year-old supplier of plastic parts to telecom companies and a volunteer with India Against Corruption, had on October 20 tweeted from his Twitter account @ravi_the_indian : “got reports that karthick chidambaram has amassed more wealth than vadra.” Other such tweets reportedly made references to Mr. P. Chidambaram.

Mr. Srinivasan is however appalled by the reaction his tweet has provoked. “At 5 a.m. on Tuesday [October 30] morning, I was woken up and pulled out of my house by CBCID men and told I was under arrest because of my tweets,” he told The Hindu. “My wife and two daughters were in shock. What wrong have I done?”

The police told him he was being charged because of an e-mail complaint sent by Mr. Karti Chidambaram to the Inspector General of Police, in which he accused him of malicious intent to defame a good man. He was produced before a judicial magistrate and released on bail that evening.

Mr. Chidambaram was out of the country on Wednesday, and remained unavailable for comment. But he did post a short statement on his own Twitter account @KartiPC. “Free speech is subject to reasonable restrictions. I have a right to seek constitutional/legal remedies over defamatory/scurrilous tweets,” he said to his 3,655 followers. He did not respond to queries on Twitter.

Mr. Srinivasan — whose Twitter tagline reads: Jai- hind guy, want to see India as no 1 in every sphere, believer that india can do it — has only posted 110 tweets in his one and a half years on the microblogging site. He has a grand total of 16 followers, as of Wednesday evening.

“My tweet refers to reports I read about Karti Chidambaram and Robert Vadra in the newspapers. It is not even my own opinion. I don’t know what is defamatory about it,” he said. “When I read the kind of tweets other people have written on corruption, I do not know why I am being targeted.” He wondered if his involvement with the IAC, and participation in their activities in Puducherry, has brought this upon him. In his latest tweet, he asked the IAC for “moral support.”

Interestingly, on October 22, Mr. Chidambaram had tweeted about a story in The Hindu on the arrest of two people who had allegedly harassed singer Chinmayi Sripada on Twitter, and were charged under Section 66-A of the IT Act. Linking to The Hindu’s article, Mr. Chidambaram’s tweet added: “food for thought for you know who! :)”

Activists campaigning for online freedom of speech say this kind of charge under the IT Act was inevitable, given the ambiguous nature of Section 66-A. Pranesh Prakash, policy director of the Bangalore-based Centre for Internet and Society, says the clause is “overbroad,” “unconstitutional,” and does not satisfy Article 19 (2) of the Constitution which allows for restrictions on freedom of speech and expression.

He points out that there is no equivalent law for any offline communication, whether in verbal or printed format. “If you write a book that annoys or inconveniences me, even deliberately, I have no civil or criminal recourse. But if you send an e-mail message, or post a tweet, you could face three years in jail,” says Mr. Prakash. “That’s higher than the two-year imprisonment for causing death by negligence.”

Kelkar Committee Report Uploaded – inviting comments from People #mustshare


Kelkar Committee has recommended sharp reduction in subsidies on petroleum, food and fertiliser, which the government said was contrary to its policy of protecting the poor.

Kelkar Committee Report Uploaded on Finance Ministry Website to Invite Comments from all Sections of the People

On August 6, 2012, the Union Finance MinisterShri P.Chidambaram  had made a statement on the economic situation and on the policy measures that were under consideration of the Government. Referring to the fiscal situation, the Finance Minister had said:

“We intend to unveil, shortly, a path of fiscal consolidation. I would like to make it clear         that the burden of fiscal correction must be shared, fairly and equitably, by different    classes of stakeholders. The poor must be protected and others must bear their fair share         of the burden. Obviously, adjustments must be made both on the revenue side and on the   expenditure side. We have asked Dr. Vijay Kelkar, Dr. IndiraRajaraman and Dr. Sanjiv         Misra to assist the Government in formulating the path of fiscal consolidation and we             expect that the work will be completed in a few weeks.”

The aforesaid Kelkar Committee submitted its report on September 3, 2012.

The Committee has reached certain conclusions and has made a number of recommendations.

The main conclusion of the report is that “We cannot over-emphasize the need and the urgency of fiscal consolidation.”

The report is under consideration of the Government and the Government has not yet taken a view on the report or on any of the recommendations.


                   The Secretary, Department of Economic Affairs, ShriArvind Mayaram said that some recommendations appear contrary to the declared objective of the Government of ‘sustained and inclusive growth’. He said that the Government is of the view that in a developing country where a significant proportion of the population is poor, a certain level of subsidies is necessary and unavoidable, and measures must be taken to protect the poor and vulnerable sections of the society. It is in this view that the Government has reiterated its intention to implement the promise of food security for all, he added. The Secretary Shri Mayaram further said while taking a final view on the various recommendations of the report, the Government will bear in mind that the goal is to achieve high growth, inclusive development, and economic and social justice for all.

                             The Secretary, Department of Economic Affairs, ShriArvind  Mayaram said that the Government welcomes an informed debate on the report submitted by the Kelkar Committee. Hence, this report is being uploaded on the website of the Ministry of Finance, he informed. Shri Mayaramsaid that the Government invites all sections of the people to send their comments to the email address:



29 SEP, 2012, , ET BUREAU– The government appears to have developed cold feet over implementing Kelkar panel’s recommendations to slash subsidies drastically at a time when it is facing backlash for raising diesel prices and capping subsidised cooking cylinders.
The report, which has been put out for public comments, warns that India is on the edge of a fiscal precipice. A senior finance ministry official has said that the report has not been accepted so far and that some of the panel’s recommendations run contrary to the government’s larger objectives.

“Some recommendations appear contrary to the declared objective of the government of ‘sustained and inclusive’ growth,” Arvind Mayaram, secretary in thedepartment of economic affairs said, adding, “The government is of the view that in a developing country, where a significant proportion of population is poor, a certain level of subsidies is necessary and unavoidable, and measures must be taken to protect the poor and vulnerable section of the society.”

Mayaram said the government is yet to take a call on the report which calls for abolition of subsidy on diesel by next year and on cooking gas by 2014-15, suggestions that the government has indicated will be difficult to accept. “While taking a final view on the various recommendations of the report, the government will bear in mind that the goal is to achieve high growth, inclusive development, and economic and social justice for all,” Mayaram added.

Kelkar Panel has issued a grim warning on India's fiscal deficitKelkar Panel has issued a grim warning on India's fiscal deficit

The committee had submitted its report on September 3, before the government unleashed the recent reforms that sparked a stock market rally and led to appreciation of the rupee. “The Indian economy is presently poised on the edge of a fiscal precipice, making corrective measures aimed at speedy fiscal consolidation an imperative necessity if serious adverse consequences stemming from this situation are to be averted in an efficient and timely manner,” the committee has said.

If no corrective measures are taken, India can face a crisis worse than the one in 1991, the committee has said. It has also cautioned that the deficit for the current fiscal can widen to 6.1% of the GDP against the budgeted 5.1%, but the government does not seem to agree with the grim prognosis.

Mayaram said the government is committed to keeping itsfiscal deficit target as close to its target even as the fiscal deficit in the first five months of 2012-13 has touched 65.7% of that budgeted for the entire fiscal. The panel has suggested that the government should eliminate half of the per unit diesel subsidy by the end of this fiscal and the rest over 2013-14. The subsidy on cooking gas should be reduced by 25% this year and completely eliminated over the next two years, it has said. In the case of kerosene, it has said that the objective should be to reduce the subsidy by one-thirds by 2014-15.

India Edging Maoists From Mineral-Laden Land, Chidambaram Says

Palaniappan Chidambaram (1)

Image via Wikipedia

Indian police for years have abused civilians in the fight against the Maoists, according to New York-based Human Rights Watch. While India’s Supreme Court in October ordered an independent probe into allegations that police in Chhattisgarh tortured and sexually assaulted a schoolteacher whom they accused of links to the rebels, “authorities have not initiated any inquiry or criminal action against the police officers implicated,” Human Rights Watch said in a Jan. 31 statement.

February 01, 2012, 1:52 PM EST

By James Rupert and Bibhudatta Pradhan

Feb. 2 (Bloomberg) — India is winning command over mineral-rich areas where Maoist guerrilla attacks deter billions of dollars in potential investment, Home Minister Palaniappan Chidambaram said, one year after he declared the conflict deadlocked.

“Albeit slowly, we are gaining control of the situation,” reversing Maoist advances that began after 2004, Chidambaram said in a 40-minute interview on counter-terrorism, Pakistan and prospects for expanding foreign investment in India’s economy. “The earlier estimate that in three to four years we will be able to gain ascendancy was an optimistic estimate,” he said. “That I am willing to concede.”

Chidambaram told a conference in 2009 that reinforced police battalions in heavily forested Maoist enclaves would eliminate a rebel-run zone whose area is as big as Portugal. On Feb. 1 last year, he described “a kind of stalemate” in the insurgency, which blocks mining of bauxite, iron and other minerals. Execution Noble Ltd., a London-based financial services company, said in 2010 that the region had the potential to draw $80 billion of investment.

The minister declined to specify what period now may be needed to defeat the rebels beyond saying “it will take a few more years.” He spoke in his high-ceilinged office in the red sandstone secretariat built a century ago as the seat of Britain’s colonial government.

Chidambaram, 66, a lawyer and Harvard Business School graduate from India’s southern state of Tamil Nadu, is one of the most prominent members of Prime Minister Manmohan Singh’s cabinet.

Record Growth

As finance minister from 2004 until 2008, Chidambaram oversaw record economic growth that averaged 8.5 percent a year. Singh moved him to the Home Ministry amid public anger over the 2008 attack on Mumbai by 10 Pakistani guerrillas that killed 166 people.

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June 2021
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