Focus on cash transfer, not target

Focus on cash transfer, not target

The Supreme Court's interim order on Aadhar is a very welcome intervention. The Aadhaar project’s stated objective was to increase “inclusivity”.

Yet, over the past few months, especially since December 2012, confusion over whether Aadhaar is compulsory or voluntary has increased, leading to the worst possible outcome - it is turning into a source of exclusion. For instance, in Delhi's rollout of the National Food Security Act (NFSA), people are being told that they must have an Aadhaar card to be included.

For others, Aadhaar has added another layer of bureaucracy to the existing maze - a Dalit friend who got admission into TISS, had to travel from Hyderabad where he works, to his village in Osmanabad, to enrol for Aadhaar, and then to Mumbai to complete his scholarship formalities.

In an Aadhaar-free world, he would have been saved a lot of time and money, and could have managed by only going to Mumbai.
On  January 1, 2013, the Delhi government made Aadhaar compulsory for all revenue department services. This department issues income certificates that are necessary to avail of the 25 per cent reservation in private schools (under the Right to Education Act) for poor children. Until an exception clause was added exempting it for income certificates, it created additional hassles for such parents.

Similarly in March 2013,  I met an elderly man in Jharkhand who could barely walk – he would squat on the spot every 100 m to take rest, before continuing. Since the Aadhaar-enabled “direct benefit transfers” (DBT) rollout, all elderly were being asked to open accounts seeded with their Aadhaar number. This man had come to the Panchayat Bhawan to complete his paperwork - the Rs. 300 of pension is what keeps him going - but was told that some papers were missing, so he would have to make another trip to complete the formalities.

The Aadhaar story goes back to 2009 when the UIDAI was set up with Nandan Nilekani as chairman. Unlike a passport that allows you to travel abroad, a voter ID that lets you vote, a ration card which entitles you subsidized rations (and so on), he was only peddling a number (later christened “Aadhaar”) with no tangible benefits. So, why would anyone queue up for it?

The government initially used a "feel good" approach to enthuse people, that Aadhaar was the magic wand that would fix all problems (read corruption) in social welfare programmes. But that false claim was successfully challenged (for example, the PDS turnaround in Chhattisgarh and Odisha happened not with Aadhaar but intelligent use of simpler technology).

Gradually, the government began to resort to subtle arm-twisting techniques. Existing cash transfers, such as pensions and scholarships were repackaged, a slogan, “aapka paisa aapke haath,” was given for DBT , a first step towards making Aadhaar de facto compulsory. An impression was created that DBT was not possible without Aadhaar. The warning, that they were climbing the ladder from the top by implementing DBT without first computerising beneficiary lists or opening accounts with core banking, was ignored.

Nine months later, the minutes of a meeting relating to Aadhar on August 5 in the PMO show that this realisation has finally sunk in. According to these minutes, out of nearly 40 lakh beneficiaries of DBT schemes, 56 per cent have bank accounts, 25 per cent have both accounts and an Aadhar number but less than 10 per cent accounts are seeded with their Aadhar number.

One shudders to think of the fate of those who do not have an account, or whose accounts are not seeded with Aadhaar. The minutes clearly list various bottlenecks to further expansion (“There are many problems and inadequacies that still need to be addressed”, “rollout of core banking is badly behind schedule” etc). Yet, the minutes betray the coercive intention of the government: “It is time to crack the whip and move faster”, the deadline for a switchover “will make people share their details and speed up seeding”.

The government double-speak on whether Aadhaar is compulsory or voluntary has been exposed repeatedly: full page ads in national dailies setting deadlines for seeding Aadhaar numbers to bank accounts for the LPG subsidy appear along with reassurances by minister Rajeev Shukla in Parliament that Aadhaar is not mandatory.

The government should pause to think which of the two objectives is more important - "aapka paisa aapke haath" (DBT) or chasing the target of giving a number to 60 crore people. DBT can proceed without Aadhaar if the government focuses its energy on computerisation and extending core banking services to transfer cash directly into people's accounts. Chasing the latter will require some coercion, thereby causing further disruption and exclusion. The Supreme Court, by preventing Aadhaar from becoming compulsory, is actually doing the government a favour.

(The author is Assistant Professor of Economics, IIT Delhi)

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