Direct Cash Subsidy – A Game Changer?

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One of the basic objectives for which the Unique Identification Authority of India (UIDAI) was set up was to identify the genuine beneficiaries of government welfare schemes and to ensure delivery of the intended benefits to the right person.

Of course, this identity project has immense potential in various other areas of governance, education, jobs, security etc. which may or may not be used in future.

Biometric based identification was chosen as it is unique and chances of duplicates are rare. However, to avoid any such remote chances of identity confusion, after much deliberation, UIDAI chose to capture all ten finger prints and both eyes’ iris scan. There have been critics of the procedure, citing privacy concerns and misuse of biometrics leading to identity theft etc. but in the Indian context, I think this is the best solution.

The government has announced the proposed launch of Aadhaar (brand name given to the UIDAI identity no.) based delivery of identified benefits in 51 districts from January 1, 2013, through Direct Cash Subsidy, followed by nationwide rollout by April 2014. Finance Minister has dubbed it as a game changer. Doubts have been raised regarding the feasibility and success of the process. The reasons given are inadequate coverage by UIDAI, lack of financial inclusion, illiteracy, limitation of infrastructure etc.

Since inception, UIDAI has maintained that enrolment of citizens is voluntary, but it will be demand driven. The government shall identify benefits to be linked to Aadhaar progressively, and hence citizens will have to perforce enroll themselves to avail the benefits. Had it not been so, the fate of Aadhaar would have been the same as Voter ID cards. So, even if the coverage is inadequate today, with awareness and drive from the govt., enrolment is expected to cover a large population base soon. Anyway, the 51 identified districts already have high coverage.

There are villages in the country which do not have a bank branch. So, how do you link a bank account to every Aadhaar no.? The Banking Correspondent scheme has filled this gap to a large extent. If every village can have a few mobile towers, soon there will be a few Banking Correspondents or even branches in each village. It will be demand driven.

We can proudly say that illiteracy is not really a problem today. With literacy levels jumping to double in the past few decades, today, I think every adult can at least sign his name. But the Aadhaar based scheme doesn’t even need a signature; a finger print scan is enough. A signature is needed for opening a bank account, where the Banking Correspondent can again be of help.

Power and telecom infrastructure are required for the scheme to operate. Telecom infrastructure again, is not an issue today. Power is definitely an issue. But the telecom companies take all pains to keep the network running by providing generators and maintenance personnel round the clock. Power for biometric devices can similarly be provided by batteries or generators.

I think only the vested interests, which will be the losers, are opposing the implementation of Aadhaar-based scheme. The ration shop owner, the LPG dealer, the fertilizer seller, the Supply Officer, the bank clerk, the middle man, i.e., the lower level political worker and bureaucracy will lose their sources of illegal income once the points of leakages are plugged. Once all benefits are credited directly to the beneficiary’s account, the only winner will be the common man.

Here, probably the Congress is looking for an opportunity to regain the people’s mandate in the next general election. There is nothing wrong in this, I think – asking for votes for a job well done. If Nitish Kumar says that there is nothing new in the Direct Cash Subsidy scheme, I can only humbly add that the difference is in the use of Aadhaar, which can effectively deal with fake/ghost claimants.

The real challenge for the government is a nationwide rollout of the Direct Cash Subsidy scheme. All the doubts mentioned above will come into play on a larger canvas. Coverage will definitely be a major issue. UIDAI itself had planned to allot Aadhaar nos. to about 600 million residents by June 2013, which itself looks a little ambitious.

Meanwhile, the Registrar General of India (RGI), having embarked on a similar exercise for National Population Register (NPR), was on direct confrontation course with UIDAI. It took the Prime Minister’s intervention to bring both RGI and UIDAI together, and now, it is expected that RGI and UIDAI will share the work load and enroll a total of 1.2 billion residents by June 2013. Coming together of the two agencies and data sharing will definitely expedite the process. Going forward, enrolment will be an ongoing process. People will be motivated to enroll to avail the welfare schemes. However, any IT project with such a huge database of people has not been attempted anywhere in the world till date. Success of the project will be an acid test for Nilekani & Co. as well as the Congress Govt.

Universal enrolment has to be supported by financial inclusion to deliver the benefits to the targeted population. This is a challenge which the PM and FM have to meet to lead the program to success and truly make it a game changer.


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