Confusion clouds govt plan for direct cash transfer

As the government gears up to implement the direct cash transfer to beneficiaries through the Aadhaar linked system from January 1, 2013, in 51 districts, confusion still persists whether cash subsidy should be transferred prior or after the purchase of commodities under the scheme.

Direct cash transfers for pensions or scholarships may not be a problem as the government is already giving money to intended segments of the population, but cash transfer under public distribution scheme, fertilizer and LPG will be a big challenge due to stiff resistance from several states.

 The states are puzzled over gaping holes in the delivery mechanism. Their doubts are over non-availability of banks in most of the remote areas and also under who’s name the no frill bank accounts would be opened, whether in husband’s name or wife’s or a joint account.

Other than that, food grain or kerosene or LPG is being given to a family as a unit. On the contrary, under Aadhaar, which provides a unique identification number, bank account is opened in the name of a family member and not the family as a whole.

“What is the guarantee that all family members will not open different no frill bank accounts and demand subsidy”, an official from a state government said, hinting at a possibility of duplication of accounts. 

Prime Minister Manmohan Singh has convened a high level meeting of his ministerial colleagues for Monday in the capital to discuss the roll out of the scheme.

Despite the UPA government hoping to reap political benefit in the 2014 general elections, several organisations have cautioned the government saying this would turn out to be another disaster. The NGOs’ main concerns are that the beneficiary may misuse the money.

When the government conducted a pilot project on direct cash transfer in Alwar district of Rajasthan in December, beneficiaries were asked to purchase kerosene in open markets. Later the government reimbursed the difference subsidy amount.

This means, beneficiaries will have to shell out more money to buy kerosene and wait for the government’s subsidy to reach their bank accounts at a later date.  According to a senior official from the finance ministry, the same method will be adopted in distribution of other commodities.