2862 - Cash subsidy for whom?

Cash subsidy for whom?

Ashwani Mahajan, Dec 12, 2012 :

The benefit of transfer of cash based on Aadhaar card may reach the foreigners too along with Indians. 

Once, a former prime minister said that when the government spends 100 rupees, only 15 rupees reaches the actual beneficiary. In order to provide cheap grains to common people, cheap fertilisers and petroleum products such as diesel etc. to farmers, less expensive kerosene and LPG cylinder to the commoners, the government makes provisions for different kinds of subsidies in its budget. For the last few years, these subsidies have been increasing continually. In 2002-03, the Central government subsidy bill was Rs 43,533 crore which reached Rs 2,16,927 crore by the beginning of 2011-12. An important part of this subsidy, i.e., Rs 72,823 crore is for food items. 

It is believed that the subsidy meant for poor people does not reach its correct destination and gets embezzled on its way itself. Not only this, the government has to spend a lot of money to make the subsidy reach its correct destination. According to an estimate by the Planning Commission, the government needs to spend nearly Rs 4 to make the subsidy of Re 1 reach the poor people through its Public Distribution System. 

Apart from this, many economists are of the opinion that though it is important to provide cheap food and fuel to poor, and cheap fertilisers to farmers, the policy of subsidy is not good. We understand that when subsidy is given, the prices of subsidised items get reduced. Due to the reduction in the prices, people start using more of these items. Generally, subsidised items are scarce too. For instance, petroleum products. Our dependence on foreign companies for petroleum products is extremely high and is rising fast. Their prices have also been increasing and in this scenario, when subsidy is given on petro products  like diesel, it would encourage misuse of these products, due to which not only government gets burdened with rising subsidy bill but our dependence on foreign countries would also increase. 

Today, a large chunk of food subsidy is spent on storage of food and the PDS. The pathetic condition of PDS in the country is no secret. Even after the heavy subsidy of more than Rs 72,000 crore, not all deserving people are able to get reasonable quantity of quality food grains and sugar through PDS. If each BPL consumer gets Rs 1,000 cash, he would be able to purchase these products from the market and if there are 40 crore BPL consumers in the country, then the total subsidy would be only Rs 40,000 crore and in the process people living below poverty line would benefit too. 

A few years back, the thought of cash subsidy was an impractical one, however now the time has changed. In this era of information technology, direct cash transfer is not at all a difficult task. At many places, it is possible to send money directly to the labour’s bank account under employment generation programme. At many places, widow and old age pensions are sent directly to beneficiaries' bank accounts. In this scenario, what we need is a strong political will.  

Right step

This way, giving cash in lieu of subsidy may be a right step. UID Authority of India also submitted a report to the finance minister in this regard. The authority says that the UID number, which is given under the ‘Aadhaar’ may be used to transfer money through bank, ATM and even mobile banking. In case of fiddling under this system, beneficiary would be able to lodge a complaint directly to the government. In order to stop corruption and leakages in the conventional subsidy policy, the government has made an ambitious plan to transfer the money directly to the beneficiary account. The prime minister has constituted a committee for timely implementation of this policy for 25 per cent households in the country. 

Heavy subsidy is still being given on diesel due to which its misuse in luxury cars is on the rise. Latest data published by Delhi government shows that in the year 2011-12, consumption of diesel in Delhi jumped by 15 per cent, while consumption of petrol decreased by 1.5 per cent.  However, government has made no plan to replace diesel subsidy with cash transfer. On the other hand, heavy subsidy is given on chemical fertilisers by the government through fertiliser companies. Though  discussions on giving direct subsidy to farmers has been going on for a long time, yet no concrete plans have been made to give subsidy directly to farmers. It seems the declaration of cash transfers is only a gimmick, devoid of sincerity to deal with inefficiencies across sectors.

The whole plan of giving cash subsidy is based on the Aadhaar Card. Aadhaar scheme was initiated a few years ago and UID Authority was formed for the same. The task of preparing Aadhaar card was given to companies. Any person residing in the country can get his card prepared and no proof for being the citizen of the country is required for the same. Many people from neighbouring Bangladesh have been residing in India after crossing the border. Due to poverty in Bangladesh, this tendency is on the increase. Therefore, the benefit of transfer of cash based on Aadhaar card may reach the foreigners too along with Indians. Thus, a large amount of taxpayers’ money may not reach the deserving poor people of the country. It is important that the proof of citizenship is made mandatory for cash transfers. 

It is unfortunate that the government is publicising proposed policy of cash transfers to poor, yet there is no generally acceptable definition of poor, and there is no mechanism to identify the poor. This way, the money targeted for the poor may not really reach them. The basic issue of identifying the poor is forgotten in the political game plan of transferring cash subsidy.

2861 - UPA whittles down cash transfer scope

UPA whittles down cash transfer scope

Chetan Chauhan, Hindustan Times

New Delhi, December 12, 2012

First Published: 00:18 IST(12/12/2012)

Last Updated: 00:45 IST(12/12/2012)

The UPA government's big poll plank, direct cash transfer, has been whittled down even before being implemented from January 1, 2013. India's old age and widow pension security scheme, National Social Assistance Programme (NSAP), does not find mention among the 34 central schemes that would move into direct cash transfer mode from January next.

Finance minister P Chidambaram had recently said that benefits under 42 Central schemes would be transferred directly into Aadhaar enabled bank accounts in 51 districts from January 1, 2013.

The Planning Commission on Tuesday said the cash transfer would be applicable only to 34 schemes in 43 districts.

The eight districts removed from the list are in election-bound Himachal and Gujarat, but the election commission's directive has come as a blessing in disguise as enrollment for Aadhaar number in four districts of Gujarat ranged from 6% to 12%.

The plan panel, mandated to coordinate government's efforts to implement cash transfer, has not put any big pension scheme in the list probably because the records of beneficiaries are not digitized and many of them live in remote areas where internet connectivity would be poor.

"Pensions are paid in different modes and integrating them is a problem," said a senior government official. Pensions are disbursed through bank or post office accounts, cheque or money order and in cash.

The selection of the schemes shows that the government wants to showcase success of direct cash transfer. In fact, 29 schemes are purely scholarships given to students from schools to colleges, where the benefit is already being in a cash transfer mode.

2860 - Aadhar roll out doubtful

Aadhar roll out doubtful

By ENS Express Bureau - NEW DELHI 12th December 2012 09:16 AM

Ahead of the roll out of direct cash subsidy transfer scheme as planned by the government, the Petroleum Ministry on Tuesday while expressing apprehensions said the plan will not be easy to implement because of the low base of people who have been issued their unique identity Aadhar cards.

The government has identified 51 districts for the rollout of the scheme in the first phase beginning January 1.

Speaking at the 11th Petro India Conference organised by India Energy Forum and Observer Research Foundation, Petroleum Secretary GC Chaturvedi said “direct cash transfer is  a very good concept as will check a lot of pilferage that is currently taking place in marketing of cooking gas  LPG.”

The scheme involves government transferring cash subsidy of Rs 520.50 in bank accounts of LPG consumers and asking them to buy their LPG at market price of `931 per cylinder.

Presently oil companies sell LPG at subsidised rates of Rs 410.50 per cylinder in Delhi and the difference between the cost and price realised is made good by subsidy dole out to them.

This has led to subsidised LPG being diverted to unintended use like commercial establishments who are otherwise supposed to buy gas at market price.

“But the cash transfer is not easy as Aadhar penetration is very low. Only 20 crore population has been enrolled for Aadhaar.”  Rolling out direct cash transfer in districts Aadhaar penetration of  less than 80-90 per cent will be difficult.

2859 - Cash evangelism R. RAMAKUMAR

Volume 29 - Issue 25 :: Dec. 15-28, 2012 INDIA'S NATIONAL MAGAZINE from the publishers of THE HINDU Cash evangelism R. RAMAKUMAR The dogmatic insistence on wholesale substitution of existing schemes by direct cash transfers will limit the state’s role in the provision of essential goods and services. NASSAR AHMAD  Outside a cooking gas refilling station in Srinagar on November 15. “AAPKA HAATH AAPKE PAAS, AAPKA PAISA SARKAR KE haath” (Your hands with you, your money in government’s hands). So goes a spoof of Union Rural Development Minister Jairam Ramesh’s marketing slogan for the direct cash transfer (DCT) scheme: “Aapka paisa, aapke haath” (Your money, in your hands). The reality is not too far from the spoof. Historically, India has had an abysmal record in reducing poverty and instituting a universal social security system. If this immense deficit is to be addressed seriously, the decisive involvement of the state is imperative. But the dogmas of neoliberalism, dressed up as sound finance and “efficient” delivery of services, will further debilitate the state’s capacity to act in favour of the poor. The design of the DCT scheme represents the embrace of one such dogma. With the announcement of the DCT scheme, the United Progressive Alliance (UPA) government has taken a decisive step in its neoliberal policy programme. Covertly and overtly, the scheme will set the pace for a series of measures aimed at, and based on, limiting the state’s role in the provision of goods and services. In its current form, the scheme could also irreversibly damage India’s efforts to put in place a comprehensive social security system. According to the Prime Minister’s Office (PMO), the DCT scheme will “improve targeting”, “control expenditure” and “facilitate reforms”. Currently, only direct benefits such as pensions and scholarships will be transferred into bank accounts. However, the full import of the scheme cannot be understood by considering the transfer of direct benefits alone. As Union Budget 2012-13 has emphasised, the intent is to expand the DCT scheme to subsidies in fertilizer, liquid petroleum gas (LPG) and kerosene. Soon after, the scheme will also cover subsidies in food, that is, the public distribution system (PDS). Thus, the entire gamut of direct and indirect benefits will be transformed into direct cash payments to the beneficiaries. The DCT scheme can be confidently characterised as part of the neoliberal policy framework on three grounds. First, in the government’s world view, cash transfers will substitute for a range of goods and services currently provided in kind. This will allow the government to withdraw from direct provision of those goods and services. Such withdrawal is the hallmark of neoliberal policy. Secondly, the DCT scheme is integrally linked to the Aadhaar project. According to the Prime Minister, the two central objectives of Aadhaar are to “target subsidies effectively” and “reduce our fiscal deficit”. Both these objectives are cornerstones of neoliberal policy. Thirdly, much of the cash transfer will take place not through bank branches but through the rather dubious banking correspondents (BC). The BC model stems from a policy-induced hesitancy of public banks to open more rural bank branches. The intent is to promote a private sector in rural banking, whose profits will be mainly determined by government commissions. Changing the game (or, withdrawing the state) A. MURALITHARAN  A Banking Correspondent of Indian Overseas Bank taking a picture of a woman account holder in Chennai. For the UPA government, the DCT scheme is an instrument to qualitatively restructure the social role of the Indian state—from a “direct” provider to an “indirect” provider of goods and services. The government will, from now on, only partially finance the open market purchase of social services by the poor. It is this policy shift that is showcased as “nothing less than magical” and a “game changer”. With the DCT scheme, the government wishes to end the public and subsidised supply of food, fertilizers, LPG cylinders and kerosene. Instead, these subsidies are to be monetised and transferred to the beneficiary’s bank account. Thus, the claim goes, corruption and leakage in the supply chains of subsidised goods can be eliminated. The theoretical ground for this strategy was laid in Chapter 2 of Economic Survey 2009-10: “A common mistake is to suppose that a subsidy scheme has to be coupled with price control. This is typically a slippery slope…. Hence, prices are best left to the market. If we want to ensure that poor consumers are not exposed to the vagaries of the market, the best way to intervene is to help the poor directly instead of trying to control prices.” To illustrate the implications, let us examine the case of the PDS. The alternative suggested by the Economic Survey is: “(i) The subsidy should be handed over directly to the households, instead of giving it to the PDS storekeeper in the form of cheap grain and then have him deliver it to the needy households and (ii) the household should be given the freedom to choose which store it buys the food from.” In other words, the DCT scheme implies a total dismantling of the PDS. There are at least five reasons why such a shift could be considered dangerous. First, the PDS in India is a product of the national food policy that emerged in the 1960s and tried to address the interests of consumers and producers. It was an integrated system of food procurement and distribution. Any dismantling of the PDS would also mean an end to foodgrain procurement, which forms an important institutional support to India’s peasantry. Secondly, cash transfers are highly prone to inflation-led devaluation. Economists have long argued that after the cash transfers, the purchasing power of the recipient increases, leading to a rise in the average market price of food. If cash transfer is made to below poverty line households, their purchasing power will go up, average food prices will rise, and the real incomes of the non-BPL population will fall. As the majority of non-BPL households are not non-poor, the outcome will be highly regressive. Even if we give cash to all households, the outcome is unlikely to be different. The average purchasing power of the population will initially go up, food prices will rise (thanks to the absence of the PDS and a DCT-induced increase in demand) and average real incomes will fall, thereby eroding initial gains for the poor. Thirdly, money is fungible. For any household, a cash transfer would by no means ensure an equivalent quantity of food purchase or calorie intake as under the PDS. P.V. SIVAKUMAR  In a fair price shop in Hyderabad, using the fingerprint authentication device. Fourthly, cash transfers are less self-selecting than transfers in kind. Self-selection implies a reduction in errors of inclusion, as richer households voluntarily withdraw from accessing the provision. However, everyone loves cash. Thus, the incentive to self-select declines significantly with cash transfers. Result: a rise in fiscal costs and no attendant rise in welfare gains. Finally, as reports on the DCT scheme’s pilot project in Rajasthan showed, only three months of transfer arrived at the bank accounts even after one year of implementation. Typically, faced with such delays, beneficiaries are left with two options: forgo purchase or borrow informally. If the latter option is made, the interest outgo constitutes an equivalent devaluation of the transfer. Even if purchases are financed by dis-saving, the opportunity costs will constitute an equivalent devaluation of the transfer. The poor could be worse off in every scenario. Most of the above arguments for food and kerosene in the PDS will hold true also for LPG cylinders and fertilizers. Everywhere, the outcomes will be regressive; the costs of access to social services will increasingly be beyond the reach of the poor. Technological platform (or, an Aadhaar-disabled platform) According to the Prime Minister, “the twin pillars for the success of [DCT]… are the Aadhaar Platform and Financial Inclusion”. Without Aadhaar, it is argued, bank accounts can neither be architecturally linked up nor can identity be accurately fixed. However, such touching faith in Aadhaar reveals blithe neglect and inattention to some basic questions on the project that remain unanswered ( Frontline, Cover Story, December 12, 2011). First, basing the DCT scheme on a project whose legitimacy has not yet been affirmed by Parliament is a travesty of democratic principles. In November 2011, the Standing Committee on Finance (SCoF) had unequivocally rejected the National Identification Authority of India Bill, 2010. The SCoF criticised the government for beginning Aadhaar enrolment without Parliament’s approval. It questioned the reliability of the enrolment process followed by the Unique Identification Authority of India (UIDAI). It insisted that a national data protection law be passed before the project was initiated. It disapproved of the hasty implementation of the project without any feasibility study. It rejected the faith placed on biometrics by the project’s proponents. According to the SCoF, the project was “full of uncertainty in technology”. Secondly, experience has shown that fingerprint authentication is fraught with problems of inaccuracy. The Reserve Bank of India (RBI) remains unconvinced of the reliability of biometric technology in banking. It has refused to accept the Aadhaar number as proof of address for opening bank accounts and repeatedly affirmed that “while opening accounts based on Aadhaar also, banks must satisfy themselves about the current address of the customer by obtaining required proof of the same”. In an August 2012 speech, Governor D. Subbarao referred to Aadhaar-based biometric authentication in online transactions and noted that “the robustness of this technology is as yet unproven”. Yet, the government has approved the use of Aadhaar biometrics for the distribution of old-age pensions. In fact, according to the proof-of-concept studies of the UIDAI, persons aged above 60 showed “highest rejection rates” during authentication. The study also noted, using a small sample of 35,000+ residents, that “single finger-first attempt” authentication was possible for only 93.5 per cent of the sample. For 6.5 per cent of the sample (7.8 crore residents, when applied to 120 crore) “single finger-first attempt” authentication was not possible. R.M. RAJARATHINAM  A QUEUE TO BUY KEROSENE outside a fair price shop at Kallagam village in Tiruchi district, Tamil Nadu. Pilot studies on Aadhaar-enabled LPG delivery also show disastrous results. The rate of success in biometric authentication in the UIDAI’s Mysore pilot study was only 67 per cent. A report in The Hindu (September 18, 2012) cited “oil company sources” in noting that “the proposal to authenticate identity at every transaction was withdrawn because there were problems with authenticating fingerprints”. Despite parliamentary rejection and proven technological uncertainties, Aadhaar has been pushed hard as the Prime Minister’s pet project. For the Prime Minister, Aadhaar is nothing but “an opportunity to target subsidies effectively” so as to “reduce our fiscal deficit”. Neoliberal austerity for the poor, it would appear, has a new ally. The BC Model (or, a bank ‘commission’ model) Opening bank accounts is not sufficient for DCT. Account holders also need to withdraw the cash transferred. In India, only about 36,000 inhabited areas, out of 600,000 in all, have a bank branch. Under the regime of financial liberalisation after 1991, the successful post-1969 model of opening new rural branches is considered passe. The preferred option is to encourage “branchless banking” by recruiting BCs in rural areas. According to the government, cash transfers can be withdrawn in rural areas through BCs, who would use Aadhaar-enabled biometric devices or mobile phones to authenticate beneficiaries. The BCs will be paid a percentage by way of commission for every transaction. To make the model attractive, the RBI in 2010 permitted the appointment of “for-profit companies” as BCs. Experience has proven that the BC model is a major failure. Jairam Ramesh recently admitted this fact. First, those who became BCs were mainly village headmen, moneylenders and fertilizer dealers. This mirrored and reaffirmed power relations and hegemonies in villages. According to an Economic Times report from Punjab, “75 per cent of BC agents are village sarpanchs or their kin”. Secondly, corruption is a hallmark of the BC model. In March 2011, an internal circular of the State Bank of India noted that the BCs were “found to indulge in malpractices, such as asking for unauthorised money, over and above the bank’s approved rates of charges from the customers”. The circular noted that “gullible customers” were being “exploited”, posing “serious risk” to the bank’s reputation. According to bank unions, BCs regularly extract Rs.100 for every account opened and Rs.150 for every gold loan advanced. In October 2012, Economic Times reported that the Finance Ministry was investigating BCs “demanding thousands of rupees in deposits” from account holders. Finally, the BC model is an expensive one. Observers have linked the model’s failure with the “low” levels of commission paid by banks. In other words, banks need to substantially raise BC commissions to keep the model viable. An Economic Times editorial says, “The [BC] model has flopped, because the BCs are too few, get paid too little and are seldom there when people need them.” Only time will tell if the new “open architecture” of the government, where anyone is allowed to become a BC, will succeed or further compound the problems. The arguments in this article are not against DCTs per se. Given India’s level of poverty, DCTs can certainly complement the state’s provision of goods and services. Rather, it is the dogmatic insistence on wholesale substitution of existing schemes in food, fertilizer and energy with direct cash transfer that is dubious and will prove counterproductive. People’s discontent is gathering momentum, and the UPA’s game changer will likely end up a spoiler. R. Ramakumar is with the Tata Institute of Social Sciences, Mumbai.

2858 - Dharna planned at Jantar Mantar against cash transfer plan

Dharna planned at Jantar Mantar against cash transfer plan

By Kim Arora, TNN | Dec 11, 2012, 11.05 PM IST

NEW DELHI: Over 1,000 people from 12 states are set to converge at Jantar Mantar in the Capital on Thursday to protest against the UID-driven cash transfer program and demand a more inclusive National Food Security Bill. The protest is being organised by The Right To Food Campaign, a grassroots organisations' network. 

The Right To Food Campaign has earlier criticized the categorization of beneficiaries under the Public Distribution System and the resultant exclusion of several sections of the BPL population. 

Those at the receiving end of the failed experiment of cash transfer for kerosene in Kotkasim, Rajasthan will also be present at the sit-in, which will also include cultural performances and debates. 

"The dharna will make hunger visible. It will bring together people who are unfairly excluded from government food security programmes such as the PDS and pensions. Testimonies of such people will be put forward," said Kavita Srivastava of the Right To Food Campaign in a press release.

2858 - Aadhar-linked norm may be relaxed

Aadhar-linked norm may be relaxed

TUESDAY, 11 DECEMBER 2012 21:34 SANTOSH NARAYAN | RANCHI

The Centre’s ‘game changer’ plan to deposit subsidy directly into beneficiaries’ accounts linked with Aadhar numbers may see subtle modification in Jharkhand, at least for the initial period.

The beneficiaries of four districts selected in the State would be able to get money in their bank accounts without having themselves necessarily enrolled with the Unique Identity Authority of India (UIDAI). As per the information coming to The Pioneer, the conditionality of UID number would be relaxed keeping in mind the absence of cent per cent enrolments made in the districts.

“The condition is there, but the Government is thinking the compulsion of having Aadhar number of a beneficiary is waived for the initial 3-4 months. The purpose is to provide a breathing space to the beneficiaries, though the unique identification number would be followed religiously thereafter,” said a senior official. The scheme is slated to kick start on January 1, 2013 in 51 selected districts of the country.

A meeting in this regard has been called at the end of this week by the State Government in which various modalities about selection of the bank receiving funds released from the Centre under the subsidy head, further movement of the money into the districts and final disbursement into beneficiaries’ account would be sorted out.

Achintan Bhattacharya, Joint Secretary at Banking (DFS), Ministry of Finance, had also visited Jharkhand in early December for final review of the preparedness going on in the State.

Ranchi, Hazaribagh, Saraikela-Kharsawan and Ramgarh are the districts selected where the direct cash subsidy scheme has to be rolled out in Jharkhand. Bank of India (BoI) is the lead bank in all the four districts and carrying the responsibility for opening bank accounts.

“We are focusing on opening bank accounts of at least head of the family of each household. The idea is transferring the subsidy money into the hands of the head so that it can be used judiciously. We have set a deadline of December 15 for opening 12.53 lakh accounts covering each household in the four districts,” said Tarlochan Singh, Deputy General Manager cum Zonal Manager of BoI in Ranchi.

As per the latest figures there are 3.01 lakh households in Hazaribag, 1.77 lakh in Ramgrah, 2.18 lakh in Saraikela-Kharsawan and 5.56 lakh in Ranchi district. Money coming for scholarship and LPG and Kerosene subsidy would be taken up in the beginning.

Nevertheless, the Government to expedite the Aadhar enrolment has appointed some non-State registration agencies apart from the UID that would pave way for the Aadhar-enabled payment system.

“We have also been donning the role of NSR and have appointed Vakrangee, Frontech, Protex and Matrix for the enrolments in four districts. We have publicised much about UID numbers and facilitating people for the enrolments,” added Singh.

The beneficiaries would be given money through banking correspondents who would be carrying handheld devices connected with V-SAT, put atop on every panchayat building. The BCs would be carrying maximum Rs20,000 with them daily.

2857 - ‘Link everything to Aadhar’

‘Link everything to Aadhar’

Dec 12, 2012 | Age Correspondent | Mumbai

The Bombay high court on Tuesday suggested the state to link the Aadhar card of each individual to the ration card in order to eliminate the issue of bogus and duplicate ration cards. Observing that the government is short of staff and vision, the court once again pulled up the state authorities for their inaction on the issue.

The court was hearing a public interest litigation (PIL) filed by Pune-based activist Jayprakash Unecha in 2010 alleging that hundreds of bogus and duplicate ration cards were in existence in Pune and other parts of the state.

In a previous hearing, the court had asked the Maharashtra government to give a district-wise break-up of fake ration cards in the entire state. The state on Tuesday filed an affidavit claiming that it had arrested 276 government officials for issuing fake ration cards and 36 civilians for using such cards between the years 2005 and 2012.

A division bench of Justice A.M. Khanwilkar and Justice R.D. Dhanuka questioned the state as to why the government had not thought of a method to stop the issuance of fake ration cards. “Will it not be a prudent approach in the matter to make it compulsory to produce the Aadhar card for the issuance of a new ration card? Why is the government not considering this? Unless you put a verification process in place, you cannot track the duplicate or bogus ration cards,” said the division bench.

When public prosecutor Aruna Pai, appearing on behalf of the state, said that the government is short-staffed and also has the burden of the LPG scheme, the court observed that the government is not only short-staffed, but also short of vision. “Link everything to the Aadhar card and make one team to run it. No great changes need to be made, the state will have to only link the card to the other via a software,” remarked the court.

Ms Pai then informed court that the state is considering the approach. The court directed the state to inform the court within one week whether it will accept the approach and make the required changes.

2856 - Why cash transfer of subsidies is not helping the poor

Why cash transfer of subsidies is not helping the poor

Last updated on: December 11, 2012 06:00 IST

As the government gets ready to roll out its ambitious cash transfer of subsidies scheme on January 1, Veenu Sandhu, Santosh Tiwari & Indulekha Aravind get on the ground to investigate how the experiments are working out.

M B Chinnappa, chief manager of State Bank of Mysore, has been rushing from one meeting to another. It's his job to ensure that by December 15, at least one member of each of the 535,000 households in Mysore district has a bank account. 

The account will be linked to his unique identity number, Aadhaar, and subsidies for different welfare schemes will be transferred directly to the account from January 1. For Chinnappa, the challenge is to make sure that over 200,000 accounts are opened in a little over a week in the 360 bank branches in the district. 

"Efforts have been launched on a war footing and I'm sure we will meet the target," says Chinnappa, before rushing off to his next appointment at the Akashvani station where he is scheduled to give an interview on the subject which will be broadcast all over Karnataka.

Men like Chinnappa have been galvanised into action for what is being seen as the biggest governance reform of recent times: transfer of subsidies directly to the poor and needy. 

The spin doctors of the United Progressive Alliance, or UPA, have begun to call it a game changer — something that will help it overcome the negativity generated by recent scams before the 2014 general elections. 

The political overtures of the tagline leave nothing to the imagination: Aapka paisa aapke haath (Your money in your h#8743 the Congress's election symbol is the hand). 

Ever since Prime Minister Manmohan Singh announced at Dudu in Rajasthan on October 20, in the presence of UPA Chairperson Sonia Gandhi, that the scheme would soon be unveiled, his office has worked overtime to ensure that it is launched in 51 districts on January 1, 2013, and the entire country by April 1, 2014. 

The real force behind the initiative is none other than Rahul Gandhi. 

The starting point was the observation made by his father, the late Rajiv Gandhi, that only 15 paisa out of every rupee given in subsidy reaches the poor. From the government, it is being piloted by Rural Development Minister Jairam Ramesh.

He is supported by Finance Minister P Chidambaram who had, when he was home minister, raised serious doubts about the Aadhaar drive. Singh's principal secretary, Pulok Chaterji, a bureaucrat known to be close to the Gandhis, is coordinating between the various agencies.

Nandan Nilekani, the Infosys promoter and honcho who left the corporate world to head the Unique Identification Authority of India, or UIDAI, is overseeing the Aadhaar rollout. That's actually the real challenge.

The Aadhaar numbers currently stand at 220 million, about 18 per cent of the country's population. And about 40 per cent of these enrollments have come from just two states: Andhra Pradesh and Maharashtra. Nilekani's job is to enroll another 400 million by April 2014 in 16 states (the rest of the country will be covered by the home ministry in its National Population Register), or about 25 million a month. 

Recent numbers aren't encouraging. At the most, UIDAI has done 24.7 million enrollments in a month (January this year). In the last four months, enrollments have ranged from 5.31 million to 11.6 million a month. In at least half of the 51 districts that will go live with cash transfers from January 1, the target of 80 per cent Aadhaar penetration is yet to be achieved.

To begin with, the government plans to put 29 social schemes on cash transfer mode. These include payments of wages and pensions. 

The first pilot was run in four districts of Jharkhand a year ago; wages under Mahatma Gandhi National Rural Employment Guarantee Scheme were put into the bank accounts of more than 3,500 beneficiaries using their Aadhaar numbers. 

In Aurangabad, Maharashtra, pensions under five social-security schemes are now paid on the basis of Aadhaar. Another pilot for pensions is running in Tripura. That's the easy bit. The tough part will be fuel, food and fertiliser subsidies. The first of these will be fuel subsidy: kerosene and liquefied petroleum gas, or LPG.

Kotkasim, a block of 24 villages in Alwar district of Rajasthan, some 180 km south of Delhi, is where the pilot on kerosene is being carried out. Since last December, ration shops here no longer sell kerosene at the subsidised price of Rs 15 a litre; it's sold at Rs 50 a litre (the price was recently raised from Rs 45 a litre). 

The difference is put into the bank accounts of the people by the government. There are 25,000 ration-cards in Kotkasim. Those with two LPG cylinders were told that they are not entitled to subsidised kerosene. Finally, 20,000 eligible beneficiaries were identified. Those with a gas connection could buy two litres of kerosene, and those without could buy three litres. 

As many as 14,000 new bank accounts were opened. The subsidy for the next three months, which ranged from Rs 175 to Rs 263, was deposited in each account. Subsequent subsidy would be deposited into the accounts of only those ration-card holders who buy the kerosene from the ration shops. 

Kerosene, admit both the shopkeepers and ration-card holders, was being sold in bulk to anybody who came armed with ration cards. At Rs 15 a litre, it was much cheaper than diesel (around Rs 42 a litre) and was used to run generators, water pumps and, as one dealer claims, even tractors after mixing it with diesel.

Not every family in this rather well-to-do area needed three litres of kerosene a month and would willingly lend their ration cards to proxy buyers, for a cut of course.

The difference between the market price and the subsidised one was a huge incentive for shopkeepers to divert supplies. Most succumbed to the temptation.

The year-old pilot project has, however, put an end to this. "Kerosene sale in the area, which was about 84,000 litres a month a year ago, has plunged by nearly 70 per cent," says Alwar District Collector Ashutosh A T Pednekar with evident satisfaction. This, he claims, has happened because leakages have stopped and the black market has disappeared. 

Shopkeepers and buyers, on their part, say many poor people can't afford to buy kerosene any longer. Maybe they've found some other use for the money, though liquor shops and sweetmeat sellers haven't seen any noteworthy rise in demand. People also blame the administration, saying it doesn't deposit the money on time in their accounts.

There are other problems too. Dharamvir Singh Chaudhary has been running a ration shop in Kotkasim for 13 years. Till last year, he would get 1,800 litre of kerosene a month and every drop of it would get sold.

His commission was 90 paisa a litre. Now, he has to buy kerosene at Rs 50 but the commission remains the same, 90 paisa.

This has seriously cut his return on investment. "Initially, the district supply officer gave each dealer a cheque of Rs 3,000 to compensate for this sudden burden, but we've got nothing since then. On top of that, I'm straddled with this," he says pointing to the 220-litre drum of kerosene lying in the courtyard in front of his shop. "The government is forcing us to buy it and stock it." 

Last month, after much resistance, Chaudhary bought two drums (440 litre) for Rs 22,000 from the supply van. "The inspector said if I don't stock it, my licence as dealer would be cancelled," he says, calling it blackmail. He then decided to pass on this "burden" to the people who came to buy ration from his shop.

"We (the shopkeepers) told them that if they wanted to buy wheat from our shops, they would have to first buy kerosene," he admits, adding that he managed to "get rid of" one drum between 90 ration-card holders. Nirmala Devi, another shopkeeper, wants her commission to be raised from 90 paisa a litre to Rs 5-6.

Beneficiaries make numerous visits to the designated banks (State Bank of India, Punjab National Bank and Rajasthan Gramin Bank) to find out if the subsidy has come into their accounts. But there are others, daily-wage earners, who cannot afford to make even one trip.

The villages in Kotkasim are spread out; some are 17 km away from the bank. One trip to the bank would mean a day's work gone, a day's wages (Rs 150-300) lost. 

Sensing a business opportunity, a team from Vodafone has been visiting Kotkasim to study the feasibility for mobile-banking solutions. 

Teams from Kerala and Chhattisgarh too have descended on Kotkasim to study its cash transfer model. The verdict: the administration is satisfied, shopkeepers are hassled and consumers confused. 

Several hundred miles to the south, in Mysore, another pilot was launched in January this year for the targeted delivery of LPG cylinders using Aadhaar: gas connections will be linked to the Aadhaar number. 

In the next phase, consumers will be given the subsidy directly in their banks. The district was chosen for its high Aadhaar enrollment rate — till last month, 94.8 per cent of the total population of 2.99 million had enrolled. Three gas agencies have been chosen for the experiment, one each of state-owned IndianOil, Bharat Petroleum and Hindustan Petroleum. 

At his swank Indian Oil agency in Vani Vilas Market, Vinod Maroli says he has delivered close to 18,000 cylinders so far in this manner. (The agency has over 25,000 customers.) The new delivery mechanism has helped check diversion to the black market, says Maroli.  

Due to the streamlining of the process, the number of days a customer has to wait for a new cylinder has gone down from seven to two. Tellingly, the number of cylinders the agency delivers has also reduced, though Maroli cannot say by how much. "But the fact that there has been a 40 per cent dip in product movement across the country should give you an idea of the scale," he says.

An IndianOil executive, requesting anonymity, says the results have been encouraging. "We have established that the first phase [the delivery of cylinders via Aadhaar biometric identification] works, so now we have to test the next stage," he says.

All three agencies have delivered around 40,000 cylinders that were Aadhaar-verified since the scheme was launched in January, he says, and subsidy transfers have already taken place in small groups.

At the moment, all agencies in the district have been asked to focus on ensuring their customers have Aadhaar-linked bank accounts, he adds. From January, the project will go live. The first phase seems to have gone off without glitches. The next phase is the acid test.

However confident State Bank of Mysore's Chinnappa may be, it will be no mean task to ensure that over 200,000 people open bank accounts in the space of a week. Many feel that the deadline could well be postponed. 

At the food and civil supplies department, the overseeing authority for LPG cylinders, officials are unclear about the next phase of the Aadhaar pilot, saying they are yet to receive any kind of official notification of the January 1 rollout. 

"Whatever we know is from what we read in the newspapers," says one of them.

2855 - If this proof of concept works, everybody will want it done this way: Montek Singh Ahluwalia

If this proof of concept works, everybody will want it done this way: Montek Singh Ahluwalia

Interview with Deputy Chairman, Planning Commission

Santosh Tiwari And Devjyot Ghoshal / New Delhi December 10, 2012, 0:56 IST

There is an expansive Madhubani painting, probably from the eponymous district in Bihar, behind Planning Commission Deputy Chairman Montek Singh Ahluwalia’s desk at New Delhi’s Yojana Bhawan. As he helps direct the government’s ambitious direct cash transfer scheme, riding on Nandan Nilekani-led UIDAI’s Aadhaar platform, it is rolling out the programme in remote districts such as Madhubani that will be Ahluwalia’s biggest challenge. It will involve dealing with differently tempered state governments, a creaking post office network and thousands of banking correspondents, among other issues.

In an interview to Santosh Tiwari and Devjyot Ghoshal, he says the initial experience of taking the scheme to 51 districts, starting January 1, will allow the government to identify the problems and, hopefully, find a way to dealing with these. Edited excerpts:

You have said this will be a gradual introduction across 51 districts, starting January 1.

What we’ve said is that we’ll roll it out on January 1. It’s possible for some schemes we are able to do it by then but if it gets delayed to January 30, we shouldn’t regard that as a failure; there are so many districts and so many schemes. Each scheme will roll-out separately because the work of digitising the database and seeding it will be scheme-specific. So, you might have a situation where one scheme gets the transfers effective on January 15, another on January 20. By the end of January, certainly, a substantial number of schemes in a substantial number of districts should actually have been implemented, in the sense that money should have moved.

So, from January 1, at least for some schemes, work on the payment platforms will begin and gradually the digitisation will happen.

That platform work is already on. My impression is that the moment the electronic cash transfer happens, any other mode (of payment) would cease. We cannot have two running together within the same district. We have to make sure the list of beneficiaries is sufficiently seeded. We have to keep a window where people who didn’t get into the list fully are able to claim their scholarship or whatever it is in a very short time.

Is there a time frame where all the 29 schemes across 51 districts will be rolled out?

That’s being done right now. We are probably going to have a video conference with all the district collectors, on December 13 or 14. That is when clear instructions will be given, and when we will hear from the collectors whether they can implement it or it will take a few weeks more.(TRANSFORMING THE TRANSFER)

Are you hopeful that within six months, say, in the majority of the 51 districts or in all, at least the initial clutch of schemes will be rolled out?

For these districts, absolutely. There is a lot of concern that the Aadhaar penetration in some of these districts is 80 per cent but in many others is 40 per cent or lower. The important point is not the overall Aadhaar penetration because that is a long-term objective. The important question is how soon we can get the beneficiary lists seeded with Aadhaar lists.

You can never be sure what electronic glitch or the other exists. It is my expectation that by the end of January, we should be able to say, ‘For this district, for these schemes, it has visibly worked’ and if you like, you can do a random check of the beneficiary list and ask them if they got any money.

It can take up to three months for an Aadhaar card to be delivered after the registration. Played out at scale, if it takes this long, it will mean that there will be a large number of people without Aadhaar and without access to schemes.

I accept that the speed will have to be totally different from the normal roll-out of Aadhaar. I think they can do that. You can’t have a system where you say it will Aadhaar-enabled, and Aadhaar-enabled adds a three-month delay. That is one of the things that will have to be sorted.

In a recent interview, you said ‘only a few more’ banking correspondents (BCs) were required for the initial roll-out. Are you concerned that as this programme reaches scale, this will be a crucial issue?

I accept that when you’re rolling out, you do need BCs for two purposes. One, to actually enroll and give the person a bank account number. Also, so he can have access to the fellow, to withdraw cash. In the districts we are talking about, if there is a deficiency of BCs, that will weaken the operation. But, remember, it won’t weaken it in the sense that today scholarships are being paid into their bank. If they are currently working by cheques, the same cheques will work. If they are currently drawing money by going to the bank, they can still do that. The only things the BC does is that if he happens to be living next to you in a village and you want Rs 200, you can go there, use your thumb imprint and get the money.

The main glitch is if they can’t find enough BCs at the time of seeding but I don’t think it’ll be very difficult.

If you look at MGNREGS (the rural job guarantee), 55 per cent of the accounts are held with post offices (POs). Beneficiaries of other schemes also hold accounts with POs. How will you deal with this?

If you have been traditionally getting your money credited to a PO account, you’ll have to open a bank account through this mechanism and it will be credited to your bank account. The key thing is that this should not be a problem.

Are you saying that for this platform to work, beneficiaries will have to mandatorily migrate away from PO accounts?

Not if the PO puts in place a combined banking solution comparable to what the bank have, which would enable an Aadhaar-gateway to send the money. But I don’t see why anyone should mind if someone is told a scholarship was being sent to a PO account and is now being sent to your bank account. The only disadvantage is that the PO is next door and the bank is not, to which our answer would be, there is a BC. Then, the person could say there isn’t a BC in our village. We have to address that issue. But making the PO competitive is not a bad idea.

Have you got any indication that the department of posts will sort out its system?

In principle, they say, of course, we will do that but it’s going to take them a long time. So, initially, at least, my guess is these beneficiaries would move to the banking system.

Andhra Pradesh and Maharashtra together have more than 40 per cent of India’s total Aadhaar enrolment and in the 10 most populous states, Aadhaar penetration is very weak for many. How critical is the participation of the state governments in expanding this programme?

The government, presumably, has an ongoing programme for rolling out (the enrolment process).

Nandan (Nilekani) has not said to me that the states are not willing to do it. So, I am assuming whatever the programme is, that will be continuing. At the moment, the focus is on these 51 districts. For the larger states, too, we have to do that. And, if this proof of concept works, everybody (state governments) will want it done this way.

If state governments say, ‘No, it can’t be done’, there is a problem because it can only be done through district collectors. When the collectors have the video conference with the finance minister — I would be there and Nandan — they make sure they have state government approval.

In states where the National Population Register (NPR) is responsible for enrolment, the penetration is still very low.

My view is that that was an original agreement, that let NPR do half the states and let Nandan (Nilekani-led UIDAI) do the other half. If NPR is not rolled out to the extent required, we can unleash the Nandan mode just for Aadhaar purpose in those states, too. A little bit duplicative but there’s no harm in that. So, it’ll be a combination of both.

2854 - Cash transfer roll-out for LPG difficult by 1 Jan: Petroleum secretary

Cash transfer roll-out for LPG difficult by 1 Jan: Petroleum secretary

Only 20 of the 51 test districts have more than 80% Aadhaar coverage, he said

Utpal Bhaskar

While the Unique Identification Authority of India is mandated to issue 600 million Aadhaar numbers by 2014, so far 200 million, or about 16% of the population, have got them. Photo: Ramesh Pathania/Mint

New Delhi: India will be unable to roll out the direct cash transfer scheme for domestic liquefied petroleum gas (LPG) cylinders in around two-thirds of the targeted 51 districts from 1 January next year, said petroleum secretary G.C. Chaturvedi.

The Congress party-led United Progressive Alliance, fighting allegations of corruption and trying to build up support ahead of general elections in 2014, has dubbed the scheme to pay subsidies directly as a “game changer”.

“Direct transfer of gas subsidy is a good method to reach directly to the beneficiaries and will reduce pilferage but it is not easy as yet,” Chaturvedi said at a conference in New Delhi on Tuesday.

The penetration of the unique ID or Aadhaar numbers that the cash transfer scheme is based upon is currently around 200 million, he said. Only 20 of the 51 test districts have more than 80% Aadhaar coverage, he said.

India subsidizes most fuels and its bill towards this is expected to be `1.67 trillion this year.

While the Unique Identification Authority of India (UIDAI) is mandated to issue 600 million Aadhaar numbers by 2014, so far 200 million, or about 16% of the population, have got them.

“Wherever it is less than 80-90%, it (Aadhaar) can’t be the basis of transfer. 

This will create exclusion... It is a very difficult task. While 20 districts are ready, for the balance 31 districts it will take another one to two months,” Chaturvedi added.

There are 140 million LPG connections in the country, of which 99.57% are for domestic use, comprising 14.2kg LPG cylinders, according to official data. The LPG customer population covers around 56% of India’s total.

UIDAI, chaired by Nandan Nilekani, was set up to assign 12-digit unique identity numbers.

2853 - XIIth 5-yr plan, Use of UID in education, scholarships, surveillance

http://planningcommission.nic.in/plans/planrel/12thplan/pdf/vol_3.pdf

21.78. A key challenge for e-monitoring is the

absence of high-quality data that is updated on a

frequent and reliable basis. Infrastructure such as

the Unique Identification (UID) could be deployed

to keep track of student enrolment, attendance, and

dropouts, and biometric authentication could also be

deployed to improve teacher attendance.

21.149. There would be special focus on Aadhaar

linkage of teachers and students databases with a

view to remove ghosts, fakes, duplicates and cleaning

up databases. This linkage coupled with effective

analytics can help in addressing accountability,

traceability and measurement-related challenges. It

could also be used for tracking students and teachers

attendance, tracking deployment, training programme

attended by teachers, their skills/capability

areas and so on. Using this targeted deployment plan,

skill development programme could be developed.

Tagging records of students with those of teachers

can help build accountability of teachers. In long

run, this may also provide pointers to interventions

(made at teachers’ improvement areas) that have had

a higher impact on improving learning outcomes.

Aadhaar seeding would be used in tackling scholarship

funds misuse. Recently, Andhra Pradesh has

used it to identify fake student enrolments, same student

enrolments in multiple colleges/courses, same

faculty teaching in a large number of institutions.

Aadhaar-enabled payment system could be used for

transferring and managing scholarship payments.

Box 21.11

Student Financial Aid Programme (SFAP)

• Cover higher education at all levels—undergraduate, postgraduate, doctoral and post-doctoral research and include

general as well as professional education;

• Cover significant costs of education in determining scholarship amounts and establish a mechanism to linking its revision

to change in price index;

• Earmark a fixed proportion of these scholarships for SC, ST, SEBC, Minorities and Person with Disabilities as per the

existing policy;

• Create a multi-dimensional ‘Index of Disadvantage’ that measures the inter-sectional dimensions of inequality that

gives due weight to caste/community, gender, poverty and rural background and provide additional scholarships and

individual-oriented financial aid schemes linked to such an Index;

• Simplify processes, self-certification and linkages to the unique identity numbers under the UID scheme; and

• Implement a single portal for delivery of all scholarships under the Central Government and explore the possibility of

allowing States to join and integrate their student financial aid programmes with this single portal.

2852 - Populist policies are short-cuts to power

Populist policies are short-cuts to power

Author:  Joginder Singh

In a desperate bid to shore up its dwindling support base, the Congress-led UPA regime has now resorted to cash handouts. But this is no substitute for good governance

The Union Government has announced that it will directly transfer cash subsidies into the bank accounts of beneficiaries via their Unique Identification Numbers from January 1, 2013. The objective of this scheme is supposedly to plug leaks in the system and prevent corruption caused by middlemen.

However, the Government has, at the same time, also said that getting a Unique Identification Number under the Aadhaar scheme is not mandatory but voluntary. The most dangerous part of the Aadhaar scheme is that it is for every ‘resident’ of the country, irrespective of the kind of documentation they may or may not have. In other words, individuals without any valid documents can also get a Unique Identification Number under the Aadhaar scheme even though the new number will not replace other forms of identification.

This puts a question mark on the scheme and opens the flood gates of corruption as Aadhaar benefits can also be enjoyed by those who may not be citizens of the country. The UID charter says that the ID number does not establish citizenship and it is for anybody residing in India.

But what does this mean? Is UID duplicating the Census of India? Why should the Indian Government issue any form of identification to a foreigner who is already in the country on a valid passport and visa.

One does not have to spend thousands of crores of rupees to get a useless piece of information regarding how many non-Indian citizens are residing in the country at any given time. All official entry points in to this country are controlled by immigration and customs agencies, and they have all the necessary information. What may be required is coordination between the several Government agencies that man the borders.

But coming back to the Government’s recently launched Direct Cash Transfer scheme, it is amazing that the programme is based on the Unique Identification Number, which is not even mandatory. This is not legally sustainable. Also, it is quite possible, and in fact it is bound to happen, that illegal immigrants, terrorists or just about anybody over-staying their visa in India will enjoy the cash subsidy that will start flowing in from January 2013.

The entire Direct Cash Transfer scheme is ill-conceived. And this is not even to mention the fact that it uses tax payers’ money to pay for the subsidies. In the financial year 2010-11, the Union and State Governments spent a total of Rs3.69 lakh crore in the social welfare sector (education, healthcare, social security, etc). The total amount of Union Government subsidy in the social sector in 2011-12 was Rs1.62 lakh crore.

The Congress-led UPA regime at the Centre says that ‘e-transfer’ of money will cut down corruption and delivery delays. But the Government simply does not have adequate infrastructure to do carry out this scheme. Even in a city like Delhi, the Government-run internet service provider remains out-of-order at least 25 per cent of the time. One can only imagine the conditions in the rural areas, where even electric supply is not only erratic but sometimes is missing for days together.

In its report to Parliament on December 13, 2011, a Parliamentary Standing Committee that considered the National Identification Authority of India Bill, 2010, in fact rejected the biometric data-based identification system. The report is actually a severe indictment of the hasty and directionless project which has been “conceptualised with no clarity of purpose”.

If the Union Government still sincerely believes that the benefits of the scheme will reach the poor, then it is either blissfully ignorant of the realities on the ground or it is deluding itself and hoodwinking the people. The result of all this is that the common citizen has to suffer at the hands of corrupt bureaucrats. The corrupt extort money and the others have little choice but to pay up.

Also, let us not forget that nothing happens at the bank for free. Even the opening of a bank account has a price tag attached to it. Similarly, loans too can only be availed from banks at a price. When I discussed this issue of direct transfer of cash with a retired banker, he unhesitatingly admitted that the scheme was another avenue for the bank and in some cases the Post Office to make some more money. He added jocularly that bankers had the right to take a cut as all beneficiaries were getting the money free of cost. Against this backdrop, the Government must perhaps be reminded of a financial inclusion survey conducted by the World Bank, which found “only 35 per cent of Indians had accounts in formal financial institutions. This number dwindles to 21 per cent amongst the poorest. Recent assessments on social pensions — an existing cash transfer scheme — shows that opening bank accounts is tough for the poorest”.

Consequently, then, unscrupulous employees at the bank will now have another opportunity to make money on the side. Worse still, the customers will have few choices when its comes to grievance redressal, as lodging a complaint against an unscrupulous official will be like opening a Pandora’s Box. The accused bank employee will simply ensure that even legitimate work of the complainant never gets done. This is happening every day already.

The cash transfer systems of Brazil and Mexico are touted as examples that India is following. But only about five per cent of the population of both those countries is below the poverty line. In India that figure is anywhere between 37 per cent and 46 per cent.

The Government’s Direct Cash Transfer scheme also has another worrying aspect. For example, when it gives a pregnant woman a certain amount of money, it is essentially telling the so-called beneficiary to deliver her baby at any medical centre but without first strengthening the country’s overall healthcare infrastructure. In fact, the cash scheme is little more than another means of purchasing votes. The UPA Government is clearly taking a short-cut. Instead of delivering to the people good governance, it is luring the voters with cash.

But then again, all political parties that are in power, without exception, indulge in populist tactics such as this Direct Cash Transfer scheme, with a view to garner votes. ‘Flexible morality’ is the reigning mantra these days.

Think of how minorities are pampered through special grants and community-based reservations. Our leaders should bear in mind that good governance alone is ultimately the best politics, and the only sure-shot way to stay in power.

2851 - Reserve Bank of India simplifies account opening norms

Reserve Bank of India simplifies account opening norms

MUMBAI: The Reserve Bank of India has made it easier to open new bank accounts by doing away with the need to provide separate proofs for identity and address. It has also added Aadhar letters and cards as well as the NREGA job card to the list of eligible documents of proof for opening new accounts which are required to meet the KYC or know your customer norms. 

"If the address on the document submitted for identity proof by the prospective customer is same as that declared by him/her in the account opening form, the document may be accepted as a valid proof of both identity and address." The banking regulator said in a notification issued to banks on Monday 

The RBI has also clarified that since introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Bank's extant KYC instructions, banks should not insist on introduction for opening bank accounts of customers. 

As per the revised list of eligible documents, a rent agreement indicating the address of the customer duly registered with state government or similar registration authority may also be accepted as a proof of address. 

If the address indicated on the document submitted for identity proof differs from the current address mentioned in the account opening form, a separate proof of address should be obtained, the RBI notification said.

2850 - Aadhar services to miss Jan 1 deadline

Aadhar services to miss Jan 1 deadline

TNN | Dec 10, 2012, 04.43 AM IST

 JAIPUR: The pilot implementation of Aadhaar enabled services in the three selected districts of Ajmer, Udaipur and Alwar is set to miss the January 1, 2013 deadline as the enrollment of UID cards remains far below the desired level of 80%. As on Friday, Aadhaar cards have been issued to only 21% of the people in Ajmer, while the penetration is 23% in Alwar and 20% in Udaipur.

A top official involved in project told TOI that given the current enrollment status, it would be difficult to implement the pilot projects from January 1.

It is not possible for us to implement the pilot projects for Aadhaar enabled services in Udaipur, Alwar and Ajmer from January next year. The level of Aadhaar cards coverage is very low. We are expediting the whole exercise, but we need more time,a said the official preferring anonymity.

The Centre has announced to roll out the project in 43 districts of the country on pilot basis from the beginning of next calendar year linking 29 government schemes to the Aadhaar. The electronic cash transfers of welfare schemes will be based on Aadhaar (Unique Identification Number) platform.

However, Rajasthan government was planning to initially link only three schemes such as social security pension, scholarships and benefits under public distribution system to Aadhaar, said the official.

Given the present status, the rollout schedule announced by chief minister Ashok Gehlot last month to implement the schemes across state may also miss the scheduled timeline.

Gehlot had set April 1 deadline for CM Rural BPL Awaas Yojana and social security pension schemes. The government has planned to link post-metric and higher education scholarships to Aadhaar from next academic year. February 1, 2013 has been set for payment of salaries to government officials through Aadhaar. But so far, people covered by Aadhaar cards in the state is only a little over 17% of the total population.

The Kotkasim pilot project in Alwar district has failed to live up to the expectations and unless the government cracks the whip, it may again not only miss the deadline but also fall far behind the finishing line.

2849 - Cash transfer scheme hits UID wall

Cash transfer scheme hits UID wall

By Ambika Pandit, TNN | Dec 10, 2012, 01.10 AM IST

NEW DELHI: Sushma emerged from a dingy room at the end of a dark corridor of a building crowded with families of daily labourers in Indira Col8ony in IP Extension area, east Delhi. She reveals a bank passbook from a carefully wrapped plastic pouch. The passbook bears her name. Identified as a beneficiary of the Delhi government's ambitious "Cash for Food" programme "Annshri Yojana" Sushma now has a no-frills account to receive the Rs 600 cash subsidy for her family. But the account has no value for now as she has been denied enrolment for a UID Aadhaar number in the absence of an identity proof. The UID is a must to get the benefit of the scheme. 

The scheme will turn functional on the ground on December 15 in the presence of UPA chairperson and Congress president Sonia Gandhi. Its launch comes at a critical juncture with just a year left for the Delhi assembly polls. 

Case studies from Indira Colony, an area with a high density of families who do not hold BPL or Antyodaya ration cards, show that people know little or nothing about the scheme but are eager to jump onto the "Annshri bandwagon". 

Even as the government harps on the cash subsidy as an attempt to ensure food security, most beneficiaries see the subsidy as a saving for needs that go beyond food. 60-year-old Shanti Devi said the Rs 600 can be saved by families for the marriage of their daughter, school fees of children and medical expenses. Food was the last thing on her mind and she admitted that subsidized rations has its advantages and cater to the food requirements of the family. For Shanti too lack of an identity proof is coming in the way of her UID enrollment. "Humein to koi pehchann chahiye (I just want an identity?)," she said. 

Sushma elaborates on her Annshri experience. She comes from Moradabad has no photo ID proof to get a UID registration. There are many like her who have been identified as beneficiaries but their hopes of getting benefit of the scheme appear distant. Under the scheme the bank account where the monthly cash subsidy will be released has to be in the name of lady of the house. Ironically, in Sushma's case her husband Babu Lal has been issued a UID number as he has a voter ID card. There are many more like Sushma in this colony, who despite being verified by the GRC coordinators as per the state government's directive were refused enrollment for Aadhaar for UID at a station set up at the east district level by the UIDAI, revealed the community mobilizers working here. 

Mission Convergence director Santosh Vaidya said the programme coordinators in the 140 NGO-run Gender Resource Centres, who are in charge of reaching out to beneficiaries, have been authorized to act as verifiers to enable registration under UID for all such cases where identity proof is not available. These cases only reveal that awareness on enrollment process under Annshri needs to be enhanced and there is need for better coordination between the state and the UIDAI. 

Starting December 15, the lady of the house - wife, mother, eldest daughter or daughter-in-law -- from families enrolled under the Delhi government's flagship food security program "Dilli Annshri Yojana" will be able to withdraw a monthly Rs 600 food subsidy from their very own no frills bank account. Their fool proof identification as a beneficiary will come from their biometric imprints generated as part of the "Aadhar Unique Identity" introduced as a mandatory provision to prevent duplication under the scheme. 

Under the ongoing enrollment process the government has to enroll all 4.87 lakh beneficiaries by March 31, 2013. They have been identified as a per a 2009 state survey of vulnerable households. The enrollment was officially launched on Gandhi Jayanti on October 2, is critical for both the Delhi CM who is gearing up to seek a fourth term in power next year and the Congress at the Centre which will face the voters for a third term in the parliamentary polls% in 2014.

2848 - Cashing In

Cashing In

the sunday express Posted online: Sun Dec 09 2012, 02:11 hrs

With the government announcing cash transfers in 51 districts across the country, The Sunday Express looks at how the system works on the ground

Tigra, Jharkhand

Money for work

Deepu Sebastian Edmond

Duda Oraon and wife Gaura Devi of Nava Toli are among the 30 in Tigra panchayat in Jharkhand who have been paid through Aadhaar for their work under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

“We did almost 100 days of work, both in 2010 and 2011. This year, our job card has clocked 60 days,” says Duda. For the 45-year-old Duda, MNREGA meant that he never considered seasonal migration again. “I have been to Varanasi and Kolkata to work in brick kilns. Now that I have work in my own village, I don’t feel the need to go again.”

Tigra is a gram panchayat in Ranchi’s Ratu block, one of three gram panchayats selected for an Aadhaar-enabled pilot to transfer NREGA payments to bank accounts of beneficiaries. The first payment of the pilot, which is on in Hazaribagh’s Sadar and Saraikela-Kharsawan’s Chandil, apart from Ratu, was made on December 24 last year.

Before the pilot was launched in December 2011, Duda had to cycle three kilometres to the post office in the adjacent Pali panchayat to collect his MNREGA payments. “I would spend anything between 15 minutes and half-a-day there, depending on the rush. Even the time taken for payments was erratic. Sometimes, the money came in five days, sometimes 20,” he says. Like most people in the region, Duda does MNREGA work during the February-June window, when the summer sets in. It’s harvesting season now and all MNREGA work has come to a halt.

Once his MNREGA job card was linked to Aadhaar, it ensured that payments were credited much faster to his bank account. On days when a lot of payments had to be made, people like Mahmood Alam would come to the job sites with a hand-held micro-ATM to disburse funds. At other times, Alam works at the Pragya Kendra located at the panchayat office where people turn up to get their fingerprints authenticated. Mahmood is also in charge of giving away old-age pensions, linked to Aadhaar since the pilot’s October 2 inauguration this year.

According to Sangita Kumari Gupta, Ratu’s Block Programming Officer, 142 individuals in the three gram panchayats have been paid their MNREGA money under the system since the launch of the pilot. But since the launch of the employment scheme here in 2006, 780 households have received payment. The gap means that a lot of beneficiaries with Aadhaar numbers continue to go to the post-office, 3 km away, to withdraw money under the job scheme.

Preliminary enquiries suggest that the mismatch has occurred because of the sluggishness and confusion over the ‘mapping’ process. Aadhaar, or the Unique Identification Authority of India numbers, have been issued and MNREGA job cards have been given out. However, the two have not been mapped together as fast as they should have been. The Jharkhand government is responsible for this process.

Discrepancies in fingerprint recognition persist, though the estimates vary. Jhigia Uraon, 46, of Basai Toli is one such case. Her fingerprints didn’t match when she tried to collect her MNREGA payment. But Jhigia is not disillusioned with a system that failed her once. She has applied for a new Aadhaar, with her April 1, 2012 registration slip duly noting that all 10 fingers have been registered. “I won’t have to go to the post office anymore,” she smiles.

Baloda Bazar, Chhattisgarh

Easy cash

Ashutosh Bhardwaj

About eight years ago, when farmer Radhe Painkra had to buy a tube-well under the Indira Khet Ganga Yojana, all he had to do was submit his application at the agriculture department and wait for the subsidy amount—around Rs 35,000—to be deposited in his bank account. He went to the open market and bought the tubewell. No middlemen, no greasing of palms.

“I got the entire money. No cut for anyone,” says Painkra, a farmer of Damru village in Baloda Bazar district. The scheme predates the Raman Singh-led BJP government, which simply rechristened it Kisan Samriddhi Yojna.

In 2005-6, Raman Singh launched a similar scheme, Shakambari Yojana, for marginal and small farmers under which farmers were given a 75 per cent subsidy on wells and electric/diesel/ kerosene irrigation pumps. Here, too, money directly reached the accounts of beneficiaries.

Incidentally, Singh recently opposed the UPA’s cash transfer scheme to replace subsidies, saying it would destroy welfare schemes. Agriculture Director Pratap Rao Kridatt says, “In our schemes, the beneficiary farmer has the choice of buying tubewells and pumps either at subsidised rates from the Beej Nigam office or getting the money transferred in his account and buying from a private dealer. He can also buy at a subsidised rate from a private shop and ask us to pay the dealer the differential. In UPA’s scheme, there is no such flexibility,” he says.

There are more reasons for the BJP government to be sceptical about replacing subsidies with direct cash transfer. “Given the limitations of banking and IT infrastructure (in the state), cash transfers will lead to increased inconvenience to beneficiaries,” CM Singh wrote in his recent letter to the Union Agriculture Minister KV Thomas.

Gollaprolu, Andhra pradesh

All dressed for the rollout

Sreenivas Janyala

At ration shop no 5 in a quiet lane in Gollaprolu mandal, T V Satya watches in amazement as the handheld biometric machine beeps and authenticates his finger print. The touch screen comes alive, displaying Satya’s Aadhaar number and the quota of rice, sugar, oil and dal he is entitled to. The 34-year-old cannot read English so when the dealer T Ravi touches the screen, the machine reads out aloud—Satya’s name, what he is entitled to, and the amount he has to pay. Another touch and the machine prints a small receipt. A few seconds later, Satya receives a message on his mobile phone in Telugu that he has used his quota for the month at the ration shop.

“Two days ago, I got a message on my phone that stocks had been delivered at the ration shop. This system is good. I don’t have to make the rounds of the ration shop to enquire,’’ says Satya, paying Rs 90 for his subsidised ration.

Gollaprolu is the site of a pilot project for Aadhaar-enabled PDS that began in the first week of November. So far, 1,100 ration card holders have gone through it at shop no 5. Now, this system is gearing up for the Centre’s direct cash transfer scheme, where the beneficiaries will buy from the open market and the subsidy amount will be transferred to their accounts. The Aadhaar-enabled cash transfer is only for non-food items like kerosene, pension, NREGS, welfare, scholarships, performance-based cash incentives. The cash transfer pilot hasn’t begun yet. Food items, fertiliser and LPG are included in the Aadhaar-enabled PDS, where an authentication is carried out to remove bogus claims.

“Gollaprolu mandal was selected for the pilot project of Aadhaar-enabled PDS and the cash transfer scheme because all its residents are Aadhaar enrolled,’’ says East Godavari Joint Collector A Babu. East Godavari is one of the 51 districts identified by the Centre across the country where Aadhaar-enabled cash transfer will get rolling.

After a few smooth transactions at the ration shop, it’s Gangamma’s turn. The machine refuses to authenticate the 60-year-old’s fingerprint. After five failed attempts, the machine sends a one-time password to her mobile phone which she can use to identify herself to the machine. But Gangamma doesn’t carry a phone. Fortunately, the Village Revenue Officer is around to give his own authentication after verifying her Aadhaar number. However, the machine does send the information about the rejection to the Electronic Point of Sale Management Information System, an online monitoring system linked to central servers in Hyderabad. Authorities will examine why the fingerprints were rejected and what action is to be taken.

“There are some teething problems. Farm workers and labourers usually have cuts and nicks on their fingers. Sometimes, the PoS machine rejects all 10 fingerprints,’’ says Assistant Supply Officer Subra Raju.

In East Godavari district, 51.50 lakh people had been enrolled into Aadhaar till the end of November. The effects and benefits are already being felt, says Joint Collector Babu. Only authentic card holders can buy rations and the sale of rice at ration shops has come down by 10 to 20 per cent, sugar by 15 per cent, and kerosene by 30 per cent. “We have so far identified 1.20 lakh bogus or duplicate card holders,’’ Babu says.

The district administration plans to open at least one bank account for every household. Of the 60 mandals in the district, in 12 mandals, every household has a bank account as of December 6. “Once the money is transferred, either the beneficiary can withdraw from the bank directly, by either identifying herself through her biometrics, or business correspondents will carry portable ATMs that deliver cash at the village level,’’ says Babu.

The portable ATMs are being provided to Bank of India, Axis Bank, Union Bank of India and ICICI, the banks in which accounts are being opened for cash transfer beneficiaries. A trial run was conducted early this week.

All this has left the intended beneficiaries somewhat bemused. “I have heard that money will be put in our bank accounts but I do not know how I can get that money,’’ says Kaki Rambabu, a small farmer.

HOSHANGABAD, MADHYA PRADESH

More checks, no cheques

MILIND GHATWAI

Ramkishore Rajput, a farmer from Bichhua village in Hoshangabad, sits relaxed in a ground near a paddy procurement centre in Jyasalpur village. “Now we go home immediately after our produce is weighed.” All he has to do is go home and wait for the SMS that will alert him when his money finds its way into his bank account. It usually takes about a week.

Since last year, Government agencies in the state have been procuring wheat and rice from farmers and depositing the money directly in their bank accounts. Before the system was introduced, farmers who sold their produce at mandis would be issued cheques, which they used as instruments to borrow till the money was deposited in their accounts or till they could encash it. Farmers also had to make several rounds of the cooperative bank which would accept the cheque only if it had money.

Farmers now have to register themselves with procurement centres. Once they are registered, they wait for SMS alerts to inform them when to turn up at the procurement centres with their produce.

MP procured a record 85 lakh quintals of wheat last year. According to government records, 10,26,720 farmers benefited from the scheme and Rs 13,250 crore was deposited directly in their accounts. From April 2011 to June 2012, the government deposited a total subsidy of Rs 137.49 crore in farmers’ bank accounts. Also, Rs 38.91 crore was deposited under the National Food Security Mission in the accounts of 36,995 farmers.

Daspur, Orissa

Cradle bonus

Debabrata Mohanty

In September last year, Gitanjali Behera, who lives in Daspur village in Bhubaneswar with her labourer husband Ajay, was pleasantly surprised at the flurry of visits by anganwadi workers.

“They wanted me to fill up a form for opening a bank account. I was told that I would get money in my account for my pregnancy,” says Gitanjali.

So Gitanjali and 24 other pregnant women in her village queued up at the Khandagiri branches

of Andhra Bank and Punjab National Bank for ‘Mamata’, a conditional cash transfer maternity benefit scheme for pregnant women and lactating mothers launched by the Naveen Patnaik government last September.

The scheme, which is aimed at bringing down the state’s high infant mortality rate (65 per 1,000 births) and maternal mortality rate (258 per 1 lakh births), covers pregnant women above the age of 19.

Last December, Behera got her first installment of Rs 5,000. The other installments were tied down to conditions like antenatal check-up, intake of folic acid tablet, tetanus vaccination, BCG, polio, measles vaccination and breast-feeding.

Since September last year, when the scheme was launched, Rs 158 crore has been credited to the bank accounts of about six lakh pregnant women in the state. “What’s more, we have now 6 lakh women with bank accounts,” says Arti Ahuja, secretary of women and child development department.

Amritsar, Punjab

Shagun for brides

Sukhdeep Kaur

Ajaib Singh’s family had never got a wedding card printed. But when it was time for the wedding of the 62-year-old labourer’s eldest daughter Manjit Kaur in 2006, his son took an invitation card to the tehsil welfare office in Amritsar’s Baba Bakala. They tagged it with an application form for claiming Rs 6,100 as ‘shagun’, a financial help extended by the Punjab government for families belonging to weaker sections of the society to meet the wedding expenses of their daughters. The form was accepted after they paid Rs 200 for “assistance” in filling the form. The shagun arrived a year-and-a-half after the wedding. The cheque was handed over to Singh only after he paid Rs 500 to the employee of the welfare department.

Six years later, Ajaib filled out another shagun form, this time for his second daughter, Amarjit, who got married on September 22 this year. The shagun, now increased to Rs 15,000, reached his daughter’s account within a month of her wedding, this time without any commission for delivery. Shagun was made a cash transfer scheme this January to bring in more transparency.