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Aadhaar, the government's massive citizen numbering programme - which added its 21st crore card recipient on Saturday - is now beginning to be coupled directly with state welfare schemes. PM Manmohan Singh has launched the new 'Aadhaar Enabled Service Delivery' mechanism, essentially a way of transferring cash directly from state coffers to a beneficiary's bank account.
To begin with, the cash transfers will be put in place across 51 districts across schemes such as old-age pensions and MGNREGA wages. The government estimates up to two crore senior citizens will now be granted their pensions without the interference of middlemen. Dr Singh, while launching the programme, touted it as a step towards government accountability and transparency. Indeed, cash transfers have been shown to be quite effective as a way of targeting poverty or the needy, particularly if compared to large-scale subsidies or public distribution systems. Directly moving the money to beneficiary bank accounts also leaves a clear paper trail that can be examined, minimising the potential for a percentage of the money to 'disappear' along the way.
But, as a World Bank study on the system in Colombia showed, cash transfers also go some way to improving the chances that an incumbent government gets reelected - meaning it has the potential to be politically manipulated. The announcement of the Aadhaar mechanism in the run-up to 2014 suggests the UPA is thinking along the same lines. In an ideal world, the best 'bribe' a government could give to its voters would be better governance and development for all. While moving to cash transfers will go some way to improving the mechanisms of our welfare safety net, the government must guard against cynically using it only to benefit those who could sway the outcome of an election and, instead, ensure that it is used to benefit those who need the money the most.
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