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Benefit or vote transfer is the moot point

Reetika Khera, Dec 16, 2012 0:54 IST

By driving people out of the system, cash transfers could be a game-changer for those interested in reducing welfare spending.

Hearing ordinary people, who experienced the cash transfer pilots, at Jantar Mantar, it did not appear that direct cash transfers could be a “game-changer”, either in terms of delivery of welfare benefits or in terms of electoral fortunes. The National Food Security Act, lying forgotten since it was tabled last year, has greater potential to improve people’s lives and win elections.

Kotkasim residents, who have already had the experience of the game-changing cash transfer scheme for kerosene, brought to light the dangers of it.

The pilot began exactly 12 months ago, and reported a decline of 80 per cent in kerosene sales in the initial months. The district administration conveniently, ascribed the entire crash in kerosene sales to a reduction in leakages.

At Jantar Mantar, the real cause of decline in kerosene sales were listed. The pilot started without opening bank accounts for many ration cardholders, so where could the subsidy be credited. Worse, where bank accounts were available, subsidy for just six out of 12 months has been credited. As a result, most stopped buying kerosene and sales crashed.

There were other hassles too – though these were zero-balance accounts, some were forced to deposit Rs 500 to open accounts. Others faced deductions if they failed to maintain a minimum balance. Many got no subsidy at all. Banks are far and there is little or no 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 leakages”; it was given “star status” by the business press on the basis of the District Collector's report. The tendency to refuse to acknowledge failure is not new, but to project it as a success is certainly new!

A glimpse of the disruption it can cause is also visible in Jharkhand where the UID-NREGA pilot began last year. Fingerprint recognition failure, software issues, connectivity and so on have caused repeated disruption.

In Ranchi, it continues in the same three panchayats where it was launched last year. Lack of banking infrastructure, a questionable banking correspondent model with mixed success so far, administrative capacity that is already overstretched, mean that no significant scaling up has been possible.

What are the lessons to learn from this?

Instead of having a clear plan, the government has been making confused and confusing statements on this issue. On December 10, the day before the Rural Development Minister said that food would not be included to begin with, the Food Minister had stated in a written reply in the Rajya Sabha that in fact, the failed Kotkasim kerosene model was going to be rolled out in six Union Territories and Pondicherry.

On preparedness too there is confusion: the initial 51 districts were reportedly chosen because Aadhaar enrolments were high. As per media reports though, this is not true.

Political will needed

In Rajasthan, the three chosen districts have very low rates of enrolment: Alwar has an enrolment rate of 23 per cent, Ajmer 21 per cent and Udaipur 20 per cent . Similarly in Ramgarh (Jharkhand), two hours from the capital Ranchi and the site of a UID-NREGA pilot, it is 40 per cent. What do these low enrolment rates mean?

Appropriate and people-friendly technology, rather than a blind faith in it, is the great enabler. Computerising the operation of all welfare programmes can do much more (at a smaller expense) than Aadhaar-linking. In the case of the Public Distribution System (PDS), we have seen that those states that have computerised operations, have experienced a huge decline in leakages. In Chhattisgarh, leakages came down from 50 per cent (2004-05) to 10 per cent (2009-10); in Orissa, from 75 per cent to 30 per cent.

The same states have also shown that technology alone cannot fix accountability issues. Political will is essential.

Another confusion that is worth clearing is that having an Aadhaar number, does not automatically guarantee access to any welfare benefits, nor is such a proposal on the table.

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 get Rs 200/month as your old age pension today, but if you fail to complete the necessary paperwork by January 1, 2013, then you will no longer get the pension from January onwards till such time that the paperwork is completed.

By driving people out of the system, cash transfers could be a game-changer for those interested in reducing welfare spending.

Rather than being a tool of social inclusion, it may lay the Aadhaar for dismantling the “welfare state” that is beginning to emerge. Shankar Singh's (Mazdoor Kisan Shakti Sangathan) words at Jantar Mantar are more likely to come true: “you transfer cash, we'll transfer our votes”.

(The writer, who teaches at IIT, Delhi, is currently on a fellowship at Institute of Economic Growth, Delhi.)

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