Sumita Kale | Published: Oct 27 2014, 01:24 IST
SUMMARY
Going beyond the subsidy payments, Aadhaar will help in de-duplication and better targeting
As the government gets on with clearing the backlog of unfinished work, it has now announced the Modified Direct Benefits Plan for LPG (DBTL). This is a programme that is crucial to rationalising our subsidy bill but has been stuck in a limbo since March this year. The DBTL scheme was rolled out last year for more transparency and preventing diversion of subsidised cylinders for commercial use. There are strong fiscal reasons behind the compulsion of direct transfers; the LPG subsidy rose from R14,257 crore in FY10 to R46,458 crore in FY14. As consumers do not pay the market price, there is currently little awareness about the amount the government pays for each cylinder; the programme therefore sought to make consumers pay the market price for the cylinder and receive the subsidy in an Aadhaar-linked bank account.
By linking Aadhaar to the bank account, the issue of misuse of benefits was also to be addressed. DBTL aimed at covering 291 districts from June 2013 in six phases, targeting 10 crore consumers with more than 3,700 distributors across the three PSU companies. It was an ambitious plan, and got off to a good start in some districts where the Aadhaar enrolment was substantial; however, other places reported severe problems when lack of coordination and communication between the various agencies involved made for confused dealers and consumers. The key issues hinged around the issuance of Aadhaar and poor coordination between the multiple players in the chain.
Even as the government was floundering on fixing the issues, the entire programme, ground to a halt in January with rising complaints. A committee was set up in March under the chairmanship of Prof S G Dhande to review the performance of the programme and in the meantime the Supreme Court stayed the mandatory use of Aadhaar for receiving benefits from the government. The committee submitted its report at the end of May, and now the present government has got its act together, pushing ahead with the DBT for LPG scheme in 54 districts with some important changes; the scheme will roll out across the country over the following months. Given the legal issues and low enrolment of Aadhaar in many districts, the beneficiaries are now expected to submit either an Aadhaar-linked bank account to receive the subsidy or any bank account.
The Modified DBTL is a good move as the programme gets up and running again. With learning from the past rollout, there should be a smoother process this time round. However, there are still some issues to be straightened out. The government has to make that massive outreach to LPG consumers and dealers to inform them of the new process of receiving the benefit. Processes should be streamlined and the consumer grievance redressal cell that is to be a part of this programme now must be efficient and transparent. With no details yet on the proposed revamp of the cell, posting all grievances and their redressal online will improve confidence in the entire system. There is a lot to be done; the problem of diversion of cylinders for commercial use will still need significant monitoring and supervision by the companies and the government.
The question that is probably on top of most people’s minds is, if bank accounts work just as well, does the system of DBTL really need Aadhaar? True, if the aim is just to give the subsidy directly to the consumer, then yes, Aadhaar is not really needed, a bank account is enough. Yet, DBTL has to look beyond just the payment. For instance, de-duplication of accounts. The Dhande Committee has reported that under DBTL last year, 6.18 lakh duplicate connections were identified out of more than 40 million LPG consumers who provided their Aadhaar numbers, and this is where the Aadhaar link will be of real value. More importantly, if there is any intent in the future of moving towards more targeted subsidy, e.g., higher caps in number of subsidised cylinders or higher payouts for BPL population, here again Aadhaar will play a crucial role.
The revamped DBTL programme will take time to settle, and though there may be several glitches, it will prove its worth over time, even to its sceptics.
The author is with Indicus Centre for Financial Inclusion
