Two important infrastructural requirements for the plan could end up being constraints
BY YOGI AGGARWAL
Problematic method: The 'unique identity' or UID system, the bedrock of the cash transfer scheme, is far from perfect. Fingerprints of Indian labourers are often unreadable. For Indian peasants, whose work gives them calloused hands, the number of people with unreadable fingerprints could be much higher. -
THE Indian government has embarked on a risky and untried method of "cash transfers" in a bid to change the waste and corruption in the administration of subsidies. The measure is ostensibly to help the poor with financial help rather than by giving them subsidised food, fertiliser or fuel. Prime Minister Manmohan Singh, while announcing the policy, said: "We have a chance to ensure that every rupee is spent truly well and goes to those who truly deserve it by the innovative use of technology and the spread of modern banking."
But since the problems in implementing it for crucial subsidies in food, fuel or fertiliser are anticipated to be formidable, it is first being tried out for welfare schemes such as pensions, scholarships and healthcare. The programme is to be rolled out in about 10 per cent of the country by early next year and the government hopes to cover the entire country in a year's time. The Congress party, the dominant partner in the ruling coalition, is gung-ho about the prospects as the dole scheme is to be in place before the general elections in mid-2014, boosting its chances at the polls.
The idea was first mooted in India a few years ago and found official backing in the budget presented in 2011, when the government announced its intention that, instead of subsidies on kerosene, fertilisers and food, some form of cash handout would be given.
Key organisations pushing for cash transfer policies have been the World Bank and United Nations Development Programme (UNDP). They argue that cash transfer schemes enhance the delivery of government programmes, where corruption and consequently leakages are high and administrative costs are substantial. The money spent on food, fertiliser and fuel subsidies may be better utilised by giving cash directly to either the poor or to local bodies that can implement schemes for them.