Half-baked scheme

The direct cash transfer (DCT) scheme has been set in motion in 20 districts in six states and three Union Territories in the country.  Touted by the United Progressive Alliance (UPA) government as a ‘game-changer’ the DCT scheme involves depositing cash subsidies directly in the bank account of an intended beneficiary. On the face of it this is a great scheme. Hitherto, programmes aimed at providing benefits to the poor tripped up in their implementation because the cash subsidies ‘leaked’ enroute their delivery and thus failed to reach the intended persons. The DCT scheme seeks to change this by bypassing middlemen and depositing cash directly in the bank account of the beneficiary.  Migrant labourers, who hitherto were unable to receive cash subsidies as they are always on the move, will benefit from the scheme. Administrative costs which in the past ate into the bulk of the funds earmarked for a programme will be limited under the DCT scheme.

 It is evident that the DCT scheme has been launched without putting in place the infrastructure necessary for its successful implementation. Only those who have bank accounts and Aadhar cards will gain from it. But many of India’s poor do not have bank accounts – the last census revealed that less than 55 per cent of rural Indians have bank accounts -- and many are still to get their Universal Identity cards.  One study shows that just around 4 per cent of the aged i.e. people above 66 years have UID cards.  It does seem that a large number of people who need support from the government will be left out simply because they do not have accounts or UIDs. What is more, the number of banks in rural India is few and far between. Shouldn’t the government have set up more bank branches before launching the DCT scheme? Clearly the hurry to impress the voter has determined the UPA’s decision to initiate the scheme now.

In the coming months, the UPA government will expand the geographic coverage of the DCT scheme and also increase the subsidy schemes that will come under it.  With an eye on impressing voters ahead of the upcoming general elections, it could accelerate implementation. It needs to move carefully, first watching how the scheme works and removing its  flaws before implementing it elsewhere.  A poorly implemented DCT scheme could prove disastrous both for India’s poor as well as the UPA’s re-election prospects.

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