9 JUL, 2011, 02.25AM IST, SANDIP SEN,
Prime Minister Manmohan Singh's lament that the media has dubbed his government as the 'most corrupt' may not be the only blot in his stint as a career economist and politician. A bigger crisis may haunt the nation during years to come due to short-sighted execution of policy initiatives of the UPA government led by the noted economist.
It is true that the UPA today is under intense pressure to roll back the momentum of the public opinion against it following the multiple scams that have been unearthed during the past few months. So, it has to think how to effectively counter the same on its feet, and win back popular mass support before the next elections.
The biggest and the most powerful strategic initiative of the UPA government to counter the popular backlash is likely to be the cash subsidy scheme powered by Nandan Nilekani's unique identity number (UID). This will allow the government to transfer cash directly to the bank account of the urban and rural poor and the farming community, both rich and poor. The subsidy on kerosene, diesel and LPG has been well over .`40,000 crore in 2010, while that on fertiliser worth around .`50,000 crore. This means a disbursement of nearly a trillion rupees annually across a subprime population segment of nearly half a billion people spread across the country is envisaged through the UID.
This is no mean task for even the most diligent and efficient task force considering that 90% of this subprime segment today has no bank account, zero literacy and no income source. The finance minister has said that the UID authority has given a plan to implement the scheme in three phases for LPG and fertiliser and two phases for kerosene that will cover all beneficiaries by March 2012.
According to the given road map, the administrative ministries, and not the UID task force, would launch pilot projects for the transfer of direct cash subsidy from October in the seven states of Tamil Nadu, Maharashtra, Assam, Delhi, Haryana, Rajasthan and Orissa. Does this mean that consumers of these seven states will see higher prices of LPG, kerosene and fertiliser during the festival season of 2011 or will both the subsidies continue simultaneously?
According to Mr Nilekani, beneficiaries would receive subsidy transfers to their Aadhaar-linked bank accounts that could be accessed through various banking channels such as bank counters, ATMs, Internet and mobile banking. It will also have a transparency portal that would allow customers to check real-time stock movement of LPG and kerosene and see distributor-wise details. The system would have in-built checks and audits.
The key question will, however, be whether a foolproof transfer of funds can be effected to nearly half a billion poor and illiterate widely-dispersed individuals every month without an assortment of enabling or educated brokers as a bridge between the hi-tech system and an ignorant and desperately poor user.
Will they pawn their UID cards to the local retailer, distributor or a bank agent just for the sake of convenience? This is not to say that the poor must not be compensated for the fuel and fertiliser price rise. However, since these subsidies will be ultimately doled out by the concerned administrative ministries and not the UID authority, how shall one check if the system has not been rigged by the same men, who today are profiting from the black market of subsidised kerosene and diesel? After all, it is much easier to fix a computer coding system than burn a Yashwant Sonawane or shoot a Jyotirmoy Dey.
Unless Nilekani's UID authority operates the Aadhaar scheme on a buildoperate-transfer (BOT) basis for at least a decade, the transparency of such a disbursement mechanism can never be guaranteed. The petroleum ministry and the agriculture and fertiliser ministries that have done a poor job of subsidy disbursement till date will ensure that the cash gets siphoned out of the system and the country bears a permanent subprime payout that is hijacked by the officials and the brokers and keeps on spiralling in the years to come.
A trillion-rupee booty each year would be too lucrative for the politicians, the administrators and the mafia to ignore, and auditors can hardly be expected to keep count of checking with the half-a-billion uneducated poor spread across 3.28 lakh sq km of land mass. The Prime Minister will perhaps enhance his claim of bringing transparency in governance if he can actually convince the GoM and the Congress high command to let the UID authority operate Aadhaar on a BOT basis, and save the nation from a subprime crisis in the making.
(The author is an analyst and writes for print and online media in the US, Europe and Asia)
It is true that the UPA today is under intense pressure to roll back the momentum of the public opinion against it following the multiple scams that have been unearthed during the past few months. So, it has to think how to effectively counter the same on its feet, and win back popular mass support before the next elections.
The biggest and the most powerful strategic initiative of the UPA government to counter the popular backlash is likely to be the cash subsidy scheme powered by Nandan Nilekani's unique identity number (UID). This will allow the government to transfer cash directly to the bank account of the urban and rural poor and the farming community, both rich and poor. The subsidy on kerosene, diesel and LPG has been well over .`40,000 crore in 2010, while that on fertiliser worth around .`50,000 crore. This means a disbursement of nearly a trillion rupees annually across a subprime population segment of nearly half a billion people spread across the country is envisaged through the UID.
This is no mean task for even the most diligent and efficient task force considering that 90% of this subprime segment today has no bank account, zero literacy and no income source. The finance minister has said that the UID authority has given a plan to implement the scheme in three phases for LPG and fertiliser and two phases for kerosene that will cover all beneficiaries by March 2012.
According to the given road map, the administrative ministries, and not the UID task force, would launch pilot projects for the transfer of direct cash subsidy from October in the seven states of Tamil Nadu, Maharashtra, Assam, Delhi, Haryana, Rajasthan and Orissa. Does this mean that consumers of these seven states will see higher prices of LPG, kerosene and fertiliser during the festival season of 2011 or will both the subsidies continue simultaneously?
According to Mr Nilekani, beneficiaries would receive subsidy transfers to their Aadhaar-linked bank accounts that could be accessed through various banking channels such as bank counters, ATMs, Internet and mobile banking. It will also have a transparency portal that would allow customers to check real-time stock movement of LPG and kerosene and see distributor-wise details. The system would have in-built checks and audits.
The key question will, however, be whether a foolproof transfer of funds can be effected to nearly half a billion poor and illiterate widely-dispersed individuals every month without an assortment of enabling or educated brokers as a bridge between the hi-tech system and an ignorant and desperately poor user.
Will they pawn their UID cards to the local retailer, distributor or a bank agent just for the sake of convenience? This is not to say that the poor must not be compensated for the fuel and fertiliser price rise. However, since these subsidies will be ultimately doled out by the concerned administrative ministries and not the UID authority, how shall one check if the system has not been rigged by the same men, who today are profiting from the black market of subsidised kerosene and diesel? After all, it is much easier to fix a computer coding system than burn a Yashwant Sonawane or shoot a Jyotirmoy Dey.
Unless Nilekani's UID authority operates the Aadhaar scheme on a buildoperate-transfer (BOT) basis for at least a decade, the transparency of such a disbursement mechanism can never be guaranteed. The petroleum ministry and the agriculture and fertiliser ministries that have done a poor job of subsidy disbursement till date will ensure that the cash gets siphoned out of the system and the country bears a permanent subprime payout that is hijacked by the officials and the brokers and keeps on spiralling in the years to come.
A trillion-rupee booty each year would be too lucrative for the politicians, the administrators and the mafia to ignore, and auditors can hardly be expected to keep count of checking with the half-a-billion uneducated poor spread across 3.28 lakh sq km of land mass. The Prime Minister will perhaps enhance his claim of bringing transparency in governance if he can actually convince the GoM and the Congress high command to let the UID authority operate Aadhaar on a BOT basis, and save the nation from a subprime crisis in the making.
(The author is an analyst and writes for print and online media in the US, Europe and Asia)
