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Direct Cash Transfer Scheme India


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Direct Cash Transfer Scheme, Aadhaar, UPA II Game Changer

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Direct Cash Transfer Scheme India

  1. 1. ITM, Vashi The Direct Cash Transfer Scheme “Aapka paisa aapke haath" Assignment of Managerial Economics Ashok Hegde, Arun Khedwal, Rutuja Dighe & Sanjeev Shrivastava 8/25/2013 The government aims to transfer Rs 4.0 trillion (one trillion is 100,000 crore) a year to beneficiaries of its subsidy schemes and welfare programmes. The new scheme aims to plug leakages in the current subsidy regime and will cover more than half of India's population, making it the world's largest cash transfer programme.
  2. 2. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 1 | P a g e Contents Sr. No. Index Page No. 1. About the Scheme 2 2. Executive Summary 3 3. Introduction 4 4. International best practices 5 5. Evolution in India 6 6. What is direct cash transfer scheme? 7 7. What is Aadhaar? 8 8. Benefits, Application & Risk model of Aadhaar 9-12 9. India Implementation plan 13-16 10. India: Statistics 17-18 11. What are the challenges? 19-22 12. SWOT Analysis 23 13. Report Card 24-26 14. Recommendations 27 15. Conclusion 28 16. References 29
  3. 3. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 2 | P a g e About the Scheme To meet the socio-developmental objectives of poverty elimination and inclusive growth, a number of Government sponsored programs and schemes have been introduced. However, efficiency and effectiveness have not been achieved by any of the programs and schemes optimally. Rampant leakages and corruption have made many schemes dysfunctional. Direct cash transfer scheme has been aimed to mitigate these malaises. Direct cash transfer scheme aims to reduce leakages, cut down corruption, eliminate middlemen, target beneficiaries better and speed up transfer of benefits to eligible individuals. The broad thrust and evolution of direct cash transfers along with its operation model in India. Also included is a critical evaluation of the problems, impact, readiness of the scheme in India followed by important inferences and suggestions. This programme is inspired by Bolsa Familia plan of Brazil reveals the key ingredients of a successful cash transfer scheme. Figure: 1.1 Direct Cash Transfer Scheme, India
  4. 4. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 3 | P a g e Executive Summary Money Transfer  BPL (below poverty line) families would get ₹ 30,000 to ₹ 40,000 per year. APL (above poverty line) will get the Cooking gas subsidy.  In all ₹ 4,00,000 Crore will be distributed in a year How When Why Challenges  Families with Aadhar card will get money directly in their bank a/c’s  New bank a/c’s will be opened; Expansion of banks in rural area.  In 51 districts the scheme was launched from January 2013 with a target to cover the entire nation by April 2014.  To check the leakages from the system & eliminate middle man from the system.  Ahead of 2014 elections, it is seen as big political thrust  Only 400 million Aadhaars issued till date, which leaves 800 million numbers to be issued before April 2014 which seems to be a tall task.  About 188,000 villages had banking connectivity in June 2012 whereas India has 700,000 villages
  5. 5. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 4 | P a g e Introduction The Government's Economic Survey for 2010-11 proposed a scheme of cash transfers, which was followed by an announcement by the finance minister to replace subsidies on goods with cash transfers. The announcement comes as a huge relief for all who believe it will solve all problems of poor delivery, mismanagement, and corruption by government agencies In a recent study by the Planning Commission, it is ascertained that the Public Distribution System (PDS) is so ineffective that 58% of the subsidized grains do not reach the targeted group and almost a third of it is trajected off the supply chain. According to the Finance Ministry, the inefficiencies of the PDS cause the government to spend ₹3.65 for transferring ₹1 to the poor. To generate budget savings and reduce corruption, the Government of India launched the Direct Benefit Transfer (DBT) scheme on January 1st, 2013. The DBT program aims that entitlements and benefits are transferred directly to the beneficiaries with the help of biometric Aadhaar-linked bank account. The programme covers schemes like education, scholarship for the Scheduled Castes and Scheduled Tribes and pension to the widows. Food, fertilisers, and fuel have been kept out of its purview at this time. The DBT scheme aims at cutting a subsidy bill of ₹1,64,000 crores apart from other benefits like better delivery, accurate targeting, broader choice, reducing delays and corruption. “Aap ka paisa, aapke haath” (your money in your hands) is the slogan coined by UPA II to promote the “Direct Cash Transfer” scheme which would be rolled out in phases, initially covering 43 districts (out of 51 announced earlier) from 1 January 2013 and then entire country (640 districts) by end 2013.
  6. 6. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 5 | P a g e International best practices Cash Transfer schemes originated in middle-income Latin American countries that had good infrastructure and supply systems. They were positioned as formal, publicly provided safety net programmes that essentially supplied cash to the needy and helped them tide over the period of economic crisis. The earliest of such programmes, Progresa, was initiated in 1997 in Mexico with a new approach integrating interventions in health, education and nutrition. It was based on the understanding that these important dimensions were direct correlates of human welfare. In Brazil the first CCT programme was started in 1996 with a focus on child labour. While some more programmes based on the CCT philosophy were introduced to address specific areas, these were integrated in 2004 into the now well-known programme — Bolsa Familia. Other countries that initiated CCT programmes include Chile, Colombia, Ecuador, Jamaica, South Africa and Turkey. In Asia, Bangladesh had a Female Stipend Programme as early as 1982 followed by a Food for Education Programme in 1993. Food grants were later converted to cash grants in 2002. Indonesia launched a pilot CCT programme called Programme Keluarga Harapan (PKH) in 2007. Its beneficiaries are very poor households that have pregnant women and/or zero to 15-years-old children. The PKH requires them to access education and health services to be eligible for the cash transfer Several countries including Jamaica, Philippines, Turkey, Chile, Mexico, Indonesia, South Africa, Morocco and United States have adopted this system in the form of Conditional Cash Transfer (CCT) programs. Under such Programs, direct cash is provided to the poor families on condition that it’s used for verifiable investments in human capital, such as regular school attendance or used in attaining basic nutrition and health care. The largest and the most successful conditional cash transfer program is the Bolsa Família Program (BFP) in Brazil that covered close to 100 percent of Brazil's poor in 2007. Under the programme, the government transfers cash straight to a family subject to conditions such as school attendance, nutritional monitoring, pre-natal and post-natal tests. The entire system is managed through efficient targeting, disbursement and regular monitoring of the disbursed funds.
  7. 7. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 6 | P a g e Evolution in India The government in order to leverage technology solutions and in particular the Aadhaar i.e. the Unique Identification (UID) programme for this purpose, constituted a task force on “Direct Transfer of Subsidies on Kerosene, LPG & Fertilizer” headed by Nandan Nilekani (Chairperson of UID Authority). The task force proposed the Solution Architecture (Core Subsidy Management System (CSMS)) to achieve a fully electronic back-office process for direct transfer of subsidy. The system would automate all business processes related to direct subsidy transfer and can be customized according to the business rules. At the very core of the system would be: Aadhaar Integration, ERP Integration and Integration with nodal bank and payments gateway. The money will be directly transferred into bank accounts of beneficiaries. LPG and kerosene subsidies, pension payments, scholarships and employment guarantee scheme payments as well as benefits under other government welfare programmes will be made directly to beneficiaries. The money can then be used to buy services from the market. For eg- if subsidy on LPG or kerosene is abolished and the government still wants to give the subsidy to the poor, the subsidy portion will be transferred as cash into the banks of the intended beneficiaries. For those who don’t have access to bank branches, they rely on ‘Banking Correspondents ‘or BC. It is a poverty reduction measure in which government subsidies and other benefits are given directly to the poor in cash rather than in the form of subsidies.
  8. 8. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 7 | P a g e What is direct cash transfer scheme? As the name suggests, direct cash transfer is the direct transfer of government subsidies and other benefits to the entitled people usually provided by the government. In India, the UPA government is going to introduce the scheme to reach out to poor people directly in order to plug leakages and cut delays in transfer of subsidies to the poor. The areas that would be covered by the program include scholarships, pensions and unemployment allowances and later MNREGA and Public Distribution Schemes. It is assumed that it will help to bypass corrupt middlemen, would help in cutting down wastage and duplication. It is fundamentally being established to ease the burden of subsidies and letting the genuine beneficiaries avail the advantage. It will help the government reach out to identified beneficiaries and can plug leakages. Currently, ration shop owners divert subsidised PDS grains or kerosene to open market and make fast buck. Such Leakages could stop. The scheme will also enhance efficiency of welfare schemes. Figure: 6.0 Aadhaar based Direct Cash Transfer Scheme
  9. 9. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 8 | P a g e What is Aadhaar? Aadhaar card, consisting a12 digit number issued for every individual, including infants. Each individual of a family will have separate Aadhaar UID number. While enrollment it verifies all the documents pertaining to an individual and collects biometric information - photograph, ten fingerprints and iris through scanning. The Unique Identification Authority of India (UIDAI) will issue for all residents in India (on a voluntary basis). Figure: 7.0 UIDAI (Aadhaar UIDAI new logo) Figure: 7.1 Aadhaars Prototype
  10. 10. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 9 | P a g e Benefits of Aadhaar  Easily verifiable in an online cost effective way.  It is unique and robust enough to eliminate the large number of duplicate and fake identities in government and private databases.  Aadhaar's guarantee of uniqueness and centralized, online identity verification would be the basis for building these multiple services and applications, and facilitating greater connectivity to markets.  It would give any resident the ability to access these services and resources, anytime, anywhere in the country.  Aadhaar card can be used for opening Bank account, Gas connection, Ration card, Phone connection, PAN card, Passport.  It would also be a foundation for the effective enforcement of individual rights. Problems in Banking Sector Despite emerging technologies in banking sector, rural people didn’t have access to bank services, where 40% of the rural residents did not have bank accounts. As the poor will transact in lower amounts banks will not find them attractive, as their transaction costs are high. Aadhaar authentication in banking The strong authentication that UIDAI will vastly reduce the documentation that the poor are required to produce for a bank account, and significantly bring down Know Your Customer (KYC) costs for banks. So if every rural resident has an Aadhaar card then the banks can help him or her opening an account with minimum costs than earlier. UID and its applications Aadhaar card at present is issued on a voluntary basis. If it made mandatory it can be used for various applications in different fields. Government benefits Government can transfer the benefit amount directly to the bank account of the beneficiaries to which their Aadhaar card is linked. In this way we can avoid
  11. 11. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 10 | P a g e middlemen eating away the government fund. For the rural people if the bank branches are not there in their village we can provide them the microATM facility where he need to verify his identity by making a thumb impression on the microATM. Then the person carrying the microATM will pay the benefit amount and the bank will deduct this amount from the beneficiary’s account. Figure: 8.0 Direct Fund Transfer Scheme Flow diagram Voting Using Aadhaar card as Voter’s ID and implementing a technology at election counter where voter can either type his Aadhaar number or swipe his card, we can eliminate duplicates thereby reducing rigging in elections. Criminal acts In a huge country like India it is always difficult to capture culprits. if any cc camera fortunately records video of culprit then by using that photo we can easily find out through the database of UIDIA. Also in some criminal acts if we get the fingerprints of the criminal, we can try to match them with the database and easily catch the culprit. Corruption As Aadhaar card number is linked to a bank account, instead of ATM’s we can use Aadhaar card to withdraw cash, pay bills, cash transfer etc. Corruption, a major issue in India can be solved by this approach as we use the card for every transaction that we make, so it is easy to find the persons who transact in large amounts or who transact or spend more than their income. By this, illegal transactions can be controlled and corruption can be easily controlled.
  12. 12. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 11 | P a g e Perfect authentication Aadhaar UID uses biometric scanning to ensure the authentic identity of a person, whereas a Voters ID, driving license, even a passport can be forged. LPG Distribution LPG for Domestic Cooking is heavily subsidized. So people are using fake connections and misusing the benefits. If Aadhaar card is integrated with the customer database of LPG we can eliminate illegal diversion of cylinders. Mobile connections Mobile connections are widespread and these connections can be used for anti- national activities. If we authenticate all the mobile connections of a person by linking them to his Aadhaar number we can have a control on the fake connections. E-commerce Due to cash on delivery payment system offered by various e-commerce players there is a risk of a fake customer order or a customer denying that he didn’t order it. To avoid this we can authenticate the customer by asking his Aadhaar card number and the mobile number, which is linked to the Aadhaar. Figure: 8.1 Aadhaar Card: One card for all One card for all If the Aadhaar card consists of all the information including address, photo, PAN card number, license details, Voter ID, ration card we can remove all the cards and use only Aadhaar card for all purposes thereby reduce large amount of paper. Link
  13. 13. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 12 | P a g e all vehicle registrations to Aadhaar card, all PAN card details to Aadhaar card. So Aadhaar card will be the only card providing Unique Identification. Actions to be taken To reap benefits from all this sectors, we need to make UID mandatory to all the residents of India. So that in 20 years down the line every person in the country will have UID cards. As the population in India is huge it is difficult to implement and authenticate each time in every sector when a person want to receive any benefit. It will require massive amount of supercomputer, processing power, bandwidth and IT infrastructure at local, district, state and central level. This needs more budgets to implement. There are also concerns that personal data will be revealed if back search is done and possible security threat exists as bank accounts are linked to Aadhaar card. Figure: 8.2 Risk Model of Aadhar So when we consider the risk model we see that, as it requires huge technology and expertise the ability to execute is less but if we implement it we have a great opportunity for economic growth so we might face an implementation risk. But if a proper budget is allocated and the necessary technology is made available in every sector it moves to the sustainability quadrant and thereby we accomplish sustainable economic growth.
  14. 14. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 13 | P a g e India Implementation Plan Basic Idea The money is directly transferred into bank accounts of beneficiaries. LPG and kerosene subsidies, pension payments, scholarships and employment guarantee scheme payments as well as benefits under other government welfare programmes will be made directly to beneficiaries. The money can then be used to buy services from the market. For eg- if subsidy on LPG or kerosene is abolished and the government still wants to give the subsidy to the poor, the subsidy portion will be transferred as cash into the banks of the intended beneficiaries. Figure 9.0: The figure shows the old Subsidies & Direct cash transfer Flow The twin pillars for the success of the system of Direct Cash Transfers are the Aaadhaar Platform and Financial Inclusion. If either of these pillars is weak, it would endanger the success of the initiative. For the initiative to succeed, the Finance Ministry and the Unique Identification Authority need to work in close coordination to achieve a collective goal.
  15. 15. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 14 | P a g e The immediate critical success factors are given below:- The government’s efficiency in dealing with the fundamental issues like the basis of targeting, definition of poverty line & identification of intended beneficiaries. Effectively subsidizing the poor for fertilizer or kerosene once the prices are market determined and are liable to fluctuate. Devising a methodology to transfer the cash subsidy to the poor. State government’s endeavor in taking up fundamental reforms required in Public Distribution System (PDS) Phase-I Phase-II Direct transfer of subsidy through state governments/UT Administration. States purchase commodity from manufacturers at market price Central government transfers the differential subsidy directly to the state govts./UT. Subsidy amount is proportional to commodity uplifted from the retail points in a state/UT. States reform their distribution system based on the CSMS system proposed by the Task Force. Subsidy transfer to beneficiaries. The cash equivalent of subsidy is transferred directly to beneficiaries through their bank accounts by linking transactions to Aadhaar. The commodity purchase and then transfer of cash subsidy to their account will be based on successful authentication of the beneficiary through Aadhaar at the point of sale. The following steps have been taken by the government to guarantee a successful implementation of the scheme: An efficient Electronic Benefit Transfer (EBT) system would require the benefits transfer system compatible with the banking system, transfer of funds to the beneficiaries accounts and facilities for the drawl of the amount by the beneficiaries as per their requirement. This will not only bring in greater efficiency in the transfer of benefits but will also reduce pressure on the bank branches for dealing with these transactions, reduce the requirement of multiple accounts for various schemes and facilitate the process of financial inclusion.
  16. 16. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 15 | P a g e To ensure that every beneficiary of the government scheme has a bank account, the banks must map the list of beneficiaries under every scheme, already available with the state government, with bank account details. In case the beneficiary doesn’t have a bank account, a new bank account for the family in the service area branch should be opened. Vice versa, as soon as the bank account gets opened, the beneficiary should get mapped. For those who don’t have access to bank branches, they rely on ‘Banking Correspondents ‘or BC. In May 2012, the Department of Financial Services (DFS) chalked out a plan to split the country into 20 clusters for BCs. Each cluster is to be managed by one BC company, elected by a price-based auction. The function of a BC would be to pay the person who wants to withdraw money from his account in case the person is not able to access an ATM or bank. The authentication by the person would be given by a fingerprint on a micro-ATM. The Central Plan Scheme Monitoring System (CPSMS) is a public financial management reforms initiative of the government of India which monitors programs in the social sector and tracks funds disbursed. It provides real time information exchange with the banks providing greater transparency and accountability to social sector. It provides a platform for schemes for making payments directly in the bank accounts of beneficiaries. Departments using CPSMS should map the details of the bank account of the beneficiary in the scheme database of the CPSMS. This should also be brought to the knowledge of the beneficiary so that she/he is aware that the benefits shall be electronically transferred to the bank account. Aadhaar Payments Bridge (APB) is a repository of Aadhaar number of residents and their primary bank account number used for receiving all social security and entitlement payments from various government agencies. This is the bridge/platform that will be used for the Direct Cash Transfer. APB requires using Aadhaar number as the primary key for all entitlement payments. This would weed out all fakes and ghosts from the system and ensure that the benefits reach the intended beneficiaries. The key steps in posting payments via APB are:
  17. 17. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 16 | P a g e • Service delivery agency that needs to make payments to its beneficiaries (such as MGNREGA wages, scholarships disbursement, old age pension etc.) provides APB File containing details of Aadhaar number, welfare scheme reference number and the amount to be paid to its bank (called sponsor bank) • Sponsor bank adds bank IIN (Institute Identification Number provided by National Payments Corporation of India ‘NPCI’ to participant banks) to the APB file and uploads onto NPCI server • NPCI processes uploaded files, prepares beneficiary bank files and generates settlement file. Settlement file is posted to bank accounts with RBI • Destination banks can download the incoming files for credit processing after the settlement file has been processed Figure 9.1: India Direct Cash transfer implementation plan from 1st Jan-13 to 1st April-14.
  18. 18. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 17 | P a g e Indian Statistics The Prime Minister has set up three-tier architecture for monitoring the scheme. This includes a national ministerial committee, a national executive committee and implementation committees. The seven schemes that will now employ direct cash transfers to beneficiaries’ accounts are mostly related to student scholarships and stipends, the Indira Matrutva Yojna and the Dhanalakshmi schemes. The states covered in the initial phase are Karnataka, Maharashtra, Delhi, Rajasthan, Madhya Pradesh and Punjab and UTs of Pondicherry, Chandigarh and Daman and Diu. Subsequently, four districts each of Himachal Pradesh and Gujarat were exempted from the roll-out because of the assembly elections. This will be extended to 11 more districts from February 1 in states including Kerala, Haryana, Sikkim, Goa, Andhra Pradesh and Jharkhand and 12 more districts in states including Tripura from March 1. About Rs 32 lakh has been disbursed under the Direct Benefit Transfer (DBT) scheme through the Aadhaar Payment Bridge, the Planning Commission said. Figure: 10.0 Cash transfer till July-13 – Top five states
  19. 19. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 18 | P a g e So far, over 40 crore Aadhaar enrolments have been done, and the Plan panel was hopeful of achieving the target of 60 crore by 2014. Among the States, the largest number of Aadhaar enrolments has been done in Andhra Pradesh and Maharashtra at 65,942, 390 and 62, 697,642, respectively, the Plan panel said in a release. The Government had allocated Rs 250 crore for various welfare programmes under the DBT scheme launched about seven months ago covering distribution of LPG subsidy, pensions, scholarships, Dhanalaxmi and Janani Suraksha Yojana. Till June 30, 2013, a total of about Rs 35.53 crore was disbursed under the scheme, and in July 2013 alone, about Rs 14.76 crore was disbursed. “The DBT is now being implemented in 28 schemes across 121 districts and soon a review meeting will be done to take stock of its progress and to expand it to other schemes and the remaining districts of the country”. The government will disburse Rs. 4 lakh crore every year, with each BPL (below poverty line) family getting between Rs. 3,000 and Rs. 4,000 a month in a designated bank account. Each family will get its cash transfer on the basis of its Aadhar or National Unique Identification (UIDAI) card. The scheme has already been piloted for kerosene in parts of Rajathan, as well as cooking gas in Karnataka. The scheme for cooking gas subsidies will also cover eligible APL or above povery line families. The Central cash transfer committee, that includes Ministers of finance, women and child welfare, rural development, HRD, labour, petroleum, and fertilizer departments, the Deputy Chairman of the Planning Commission, the Unique Identification Authority of India (UIDAI) chairman and the Cabinet secretary to chalk out the intricacies of the roll out.
  20. 20. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 19 | P a g e What are the challenges? Till now the cash transfer is done through post office and banks. But now it is about to undergo a significant expansion in the scope of direct cash transfer. A change of this magnitude might have challenges which the experts have analyzed and government is yet to find a justifiable solution to it. Some of these are: 1) Will everyone receive their Aadhaar number in time: In three years, the government has issued about 400 million Aadhaars, which leaves 800 million numbers to be issued before April 2014 which seems to be a tall task. 2) Issued a bank account in time: According to the deputy governor of RBI, only 40% of Indians have bank accounts. Talking about villages in particular, about 188,000 villages had banking connectivity in June 2012 whereas India has 700,000 villages. The experience with bank accounts in the 43 stage-I districts may not be an appropriate benchmark for the rest of India. 3) Will banking channel be ready in time: Currently, the banking correspondents cover only 70,000 villages which require a further 10-fold expansion. At present, BC companies are very few and even if the target is achieved it will take time to find people and train them. 4) Who actually should benefit from the Direct Cash Transfer Scheme: The last BPL census was done in 2002 and an overly optimistic estimate of the time by which the new list would be ready is mid 2013, however a realistically optimistic deadline would be Dec 2013. A major question in front of the Indian Government is that whether it should use the 2002 list or wait for the new list. If it uses the old list then money would keep going to a lot of people who should not be getting it and if it waits for the new list by leaving the BPL programs out of the scheme, then a lot of benefits for which it is originally planned will not be getting transferred. A separate issue to be tackled is how to ensure that reasonably affluent families do not make it to the BPL list as has happened in the part due to linkage of various government welfare programs to the BPL list.
  21. 21. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 20 | P a g e 5) Possible scam under its way: A September 2008 study by UK’s Overseas Development Institute had found that India has 100 million migrant workers who are mostly away from home. In some other cases, the bank transfers the subsidy to the respective accounts but fraudsters divert it to some fictitious accounts by even forging the signatures. With the entire banking system going on line, a dishonest bank employee can even access the signatures of the poor borrower. This is happening in several states. Figure: 11.0 The picture showing the complicated path of the benifeciary. Direct Cash Transfers, which are now becoming possible through the innovative use of technology and the spread of modern banking across the country, open the doors for eliminating waste, cutting down leakages and targeting beneficiaries better. It is also being looked upon as a very effective tool in combating corruption when it comes to implementing welfare programmes of the government.
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  25. 25. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 24 | P a g e Report Card The five states under DBT report that thousands of beneficiaries are left out of the DBT coverage at every step of opening the Aadhaar-paired account Jharkhand When it comes to percolation of benefits through the UPA government’s ambitious direct benefit transfer (DBT) programme, Jharkhand fares the worst among states. The programme remains a nonstarter in all the four districts in the state where it was rolled out in the first phase. And it is not difficult to figure out why. This ignorance among government officials is indicative of the state’s progress in implementing the ambitious programme of the UPA government. Seraikella-Kharsawan, the first district in the state under DBT since January, has more than 46,500 beneficiaries of different schemes. Only 500 are receiving the benefits. According to the status report of the National Payments Corporation of India, the gateway for payment under DBT, released in March this year, cash benefits have returned from the bank accounts of 10-15 per cent beneficiaries even though the accounts were integrated with Aadhaar
  26. 26. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 25 | P a g e Maharashtra Only Post-Matric scholarship beneficiaries from Scheduled Castes and Other Backward Classes On record, Wardha, Maharashtra’s pilot district for DBT, has the highest percentage of Aadhaar registrations for any district in the country. According to the Unique Identification Authority of India, 1.08 million Aadhaar cards (84.6 per cent) have been generated against a population of 1.3 million. Some 360,000 beneficiaries have linked their bank accounts with Aadhaar and the district administration has disbursed Rs 2.07 crore to these accounts. Despite high number of enrolments and generation of Aadhaar IDs, cards are yet to reach many in the district. Worse, the administration has no clue about the number of missing cards and the reason they are missing. Rajasthan Udaipur, Ajmer and Alwar of Rajasthan are among the first 20 districts in the country to roll out DBT in January. Five months on, many beneficiaries say they prefer the earlier system of payment through cash or bearer cheques. Their aversion is not unreasonable. Barely 23 per cent of the beneficiaries in these districts have received government benefits in their accounts since DBT was introduced. Of the rest, most have been left out of DBT as their accounts are not seeded with Aadhaar. As of April, 24,000 of the 33,000 beneficiaries in Udaipur were not receiving benefits due to this reason.
  27. 27. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 26 | P a g e Delhi The Delhi government claims 95 per cent success in providing an Aadhaar number to citizens. But its achievement does not seem to be trickling down to the poor of the national capital. According to Dharampal, divisional commissioner of Delhi and nodal officer of DBT for the state, Delhi has brought nine Central schemes under DBT. Though 22,000 beneficiaries have Aadhaar cards and their UID numbers seeded with bank accounts, only 9,000 are receiving benefits. Dharampal says the state-sponsored Annshree Yojana is doing well in comparison to the Central schemes under DBT. All the 45,000 identified beneficiaries of Annshree Yojana are receiving benefits. Their number would increase to 100,000 in next couple of months, he claims. Ground realities paint a different picture. Andhra Pradesh Only scholarship and pension beneficiaries Andhra Pradesh is arguably the only state that was prepared to roll out DBT. It ran a two-year campaign to enroll people under Aadhaar and also experimented with models to implement DBT. In the first phase, the state selected five districts where it had already implemented a state-initiated cash transfer programme for scholarship and pension schemes. According to M V S Rami Reddy, deputy director general of UIDAI, Andhra Pradesh, about 75 million of the 85 million population in the state have been enrolled in the programme. More than 58 million cards have been generated. The five first-phase districts have a population of 27.5 million, of which 90 per cent have been enrolled in Aadhaar. The scheme was successful in Andhra Pradesh
  28. 28. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 27 | P a g e Recommendations Identification of beneficiaries Selection criteria should be kept broad-based and inclusive. Lessons can be learnt from the successful implementation of Brazil’s Bolsa Família Program. Vulnerability to fluctuating market prices Prices can be averaged out yearly based on forecasts. Cash subsidy should allow flexibility in the choice of commodity to the beneficiary. The amount of subsidy should be calculated based on the number of individuals per household rather than assuming an average household size. Transfer of cash subsidy To expedite the implementation, bank accounts can initially be opened for one member per household. The withdrawal can be done at bank branches and ATMs through debit cards and through the business correspondent model using smart cards, PoS devices, etc. Infrastructure We believe that the infrastructure must be built before starting a scheme and not vice-versa For Women’s It would be better if it is thoroughly meant for women, as they are responsible for the household needs such as food, health, education, kerosene, LPG etc.
  29. 29. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 28 | P a g e Conclusion The programme is inspired by such successful schemes existing in countries like Brazil and Mexico and cities like New York and Washington. In India too, introducing this new way of physically-delivering subsidies may seem a brilliant technological shot to end the middlemen fraud, but the government still needs to substantiate its fool proof preparedness against the trepidation it has been confronting from the masses and quite a few experts. The new system is expected to reduce this cost and subsidy bill through better targeting. If the entire system is managed through efficient targeting, disbursement and regular monitoring of the disbursed funds this can result into transforming the rural India. The real success of the policy lies in the accuracy and efficiency in identification of worthy beneficiaries, i.e. BPL Households. We would love to hear from you what you feel about the direct cash transfer scheme.
  30. 30. The Direct Cash Transfer Scheme “Aapka paisa aapke haath" 2013 29 | P a g e References: Website Referred:      -------------XXXXXXXXXXXXX-----------------------