· Benefits under 29 welfare schemes being operated by different ministries would be transferred through Aadhaar-enabled bank accounts in 51 districts spread over 16 states from January 1 next year.
· The scheme of cash transfer into bank accounts, would enable the government to extend benefits to the needy at the click of a button without any fear of misuse or duplication.
· roughly about 29 schemes are ready to start from the January 1. It is possible that one or two schemes may start a few days or a couple of weeks late. But ultimately we want to load all these schemes on the system. Out of the 42, we think about 29, give or take one or two, will be ready
· At present, government operates about 42 schemes, of which 29 would be covered by the cash transfer scheme that is to be launched from January 1, 2013 in 51 districts. The second roll-out to cover more districts would be launched in April 2013, he said.
· The schemes which would come under the purview of the cash transfer scheme would include those of ministry of social justice and empowerment, human resources development (HRD) minority welfare, women and child development, health and family and labour and employment.
· With the introduction of the direct cash transfer scheme, Chidambaram said, "falsification and duplication will be practically eliminated and I believe that (it) would result in considerable savings to the exchequer.
What’s the scheme all about?
Families with Aadhar card, entitled to subsidies, pension, scholarships etc, will get money directly in their bank accounts. Direct cash transfer of subsidies would be done through Aadhaar-enabled bank accounts. Every person is expected to hold a bank account to enable such transfers. Initially, 29 welfare programmes will be covered. According to government sources, it would consider the feasibility of cash instead of food (under the Public Distribution System) and fertilizers, at a later stage.
What is Aadhaar scheme and card?
Aadhaar card is an ID card with a 12-digit unique number issued to all the citizens of India (on voluntary basis). It will carry the demographics and biometric information of the holder. Payments of Mahatma Gandhi National Rural Employment Guarantee Act ( MGNREGA) wages are being done using this card.
Who’s Who?
A high-power National Committee on Direct Cash Transfers was constituted by Prime Minister Manmohan Singh. The members of the Committee are Prime Minister (Chairperson), the Union Ministers for Finance, Communications, Rural Development, Social Justice & Empowerment, Human Resource Development, Tribal Affairs, Minority Affairs, Health & Family Welfare, Labour & Employment, Petroleum & Natural Gas, Chemicals & Fertilizers, the Deputy Chairman, Planning Commission, MoSs for Food & Public Distribution and Women & Child Development, Chairman, UIDAI, the Cabinet Secretary and the Principal Secretary to the PM (Convenor).
Why is it being done?
This system is aimed at eliminating fraud, middle-men, black-marketing, and bribery in dispersing of the subsidies.
Which are the Welfare Schemes?
At this time, 29 schemes have been brought under the ambit of the cash transfer programme. These are mostly scholarship schemes from ministries like Social Justice, HRD and Minority Affairs.
In his budget speech last year, then-Finance Minister Pranab Mukherjee had announced that UPA2 was planning to reroute subsidies in kerosene, fertilisers and LPG as cash transfers to beneficiaries. Of these, kerosene and LPG might be rolled out before the 2014 elections. Food and fertiliser are not being touched right now.
Is India Ready?
The success of cash transfers depends on people having bank accounts, money going into the right account, and people having easy access to those accounts. Right now, it's not clear if India will be ready as per schedule, especially for villagers and the urban poor.
The Unique Identification Authority of India (UIDAI) has issued only 210 million Aadhaar numbers. Banks are on an account-opening spree, but it is not clear if they will cover all in time. The question is whether the promise of cash transfers will have people flocking to banks and enrolment centres.
What are the Other Problems?
1. The cash transfer is certainly a welcome step because it will reduce corruption and improve political gains for the government as it can then claim that money is reaching the poor. But it has also got its limitations. Cash transfers will not be able to eliminate the problem of wrong classification of the poor.
Cash-transfer schemes will work where the beneficiaries, i.e. the poor, can be identified. The Aadhaar programme cannot identify the poor, it can only eliminate ghost names. The identification of the poor is only possible by government machinery.
Money coming into a person's account is one thing. That person being able to withdraw it is another. The second question is especially relevant to rural India, where bank branches and ATMs are rare. UPA 2 is betting on banking correspondents (BCs) with handheld machines enabling cash withdrawals and deposits in every panchayat. This last mile architecture is still a bone of contention.
The UIDAI had recommended a countrywide MicroATM network. In contrast, the finance ministry's model can deliver cash transfers even to those without Aadhaar numbers. However, another part of this plan also creates last mile monopolies รข€” loosely put, one banking correspondent for every state.
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