Evidence from a pilot project in Kotkasim in Rajasthan tells a very different story about direct cash transfers
Himanshu
First Published: Thu, Dec 20 2012. 08 16 PM IST
It is just a few weeks since the government announced its Aadhaar ID-based cash transfer scheme, and the Congress party, which leads the ruling coalition, promptly touted it as a game-changer, hoping that it will win it the 2014 national election.
Yet, there was some caution, notably voiced by finance minister P. Chidambaram, who said the government would move ahead only after all the systems were in place. The negative feedback from two pilot projects in Kotkasim in Rajasthan and the Jharkhand wage payment pilot for the rural jobs guarantee scheme no doubt forced this rethink. Although the government is still determined to move ahead with its plans, the kick-off may take longer than what was initially anticipated.
This is precisely what I argued in my last column. The government is not only rushing through a untested and unreliable system but also putting to risk the very foundation of public-service delivery. Unfortunately, many read it as a critique of Aadhaar.
I do have reservations on the potential of personal data being compromised, especially since the government is yet to enact a law protecting individual privacy. But, the larger point was that the government has not been honest in detailing its intent on moving to a regime of cash transfer, or, to give them the benefit of doubt, has been blissfully unaware of the pitfalls—where the solution would be worse than the problem.
If indeed targeting the poor was the intent, then why would the first set of districts not only exclude the crucial poverty alleviation programmes but also not cover states such as Uttar Pradesh, Bihar, Orissa and West Bengal, which are not only the most populous but also have a high concentration of those living below the poverty line? Instead, what has been included in the pilots are items such as university scholarships, which are yet to see any identity fraud or leakage.
Similarly, the pilots do not extend to states covered by the National Population Register (NPR). The fact that this set of districts does not include any covered by NPR is puzzling, especially since it currently covers half the country. Any serious pilot project would have taken these states, which are also leakage-prone, as test cases.
More importantly, if indeed targeting was the key purpose of shifting to Aadhaar ID-based cash transfers, then the government should have focused on proof of eligibility. Aadhaar can identify an individual but cannot show whether the person is eligible to claim subsidy. In most instances of leakages, it is the problem of eligibility and not the one of identity.
So, unless you fix the eligibility and targeting issues, using Aadhaar on the existing platform will only damage the reputation of the country’s ambitious programme to provide everyone with an identity. It will also vitiate the environment and create obstacles for the successful rolling of another big initiative, which is the socio-economic caste census (SECC). In fact, it is SECC that is the primary instrument of defining eligibility, with coverage of more than 80% unlike the less than 20% penetration Aadhaar has achieved so far. It would have made more sense to roll out SECC before rushing in with the cash transfer announcements.
What has been missed out in this polarized debate is that any technological solution is neutral to whether the subsidy is delivered in cash or kind. The successful use of short message service and global positioning systems in Chhattisgarh and Tamil Nadu for the public distribution system is a good example of reducing leakages with minimal costs. Unfortunately, the only successful example of Aadhaar-based validations has also remained unnoticed in this debate. Although no independent evaluations are available, the official evaluation of the East Godavari experiment is sufficient proof that the system can work if implemented properly.
Going by the official report, the project was successful in eliminating bogus cards (although only 12% bogus cards were detected). But, there are three important reasons why this pilot was successful. First, the Aadhaar coverage was more than 99% in the project area. Second, the programme was implemented as a universal entitlement (everybody was treated as living below the poverty line). Finally, the programmes relied on transfers in kind and not cash. Had it attempted cash transfers instead, East Godavari would have probably met the same fate as Kotkasim or the Jharkhand experiment, simply because unlike the 99% coverage of Aadhaar numbers, the banking access was less than 40%.
If the government was really serious in plugging leakages in the subsidy regime, the solution lies in ensuring that these three basic ingredients are in place instead of engaging in political grandstanding that could risk creating a bigger mess than what we have at the moment.
Himanshu is an assistant professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.
